Whitesburg KY

City of Whitesburg to insure employees only

The Whitesburg City Council has voted to stop paying insurance premiums for family members of city employees.

The council took the action at its September meeting after Mayor James Wiley Craft said the city could not meet a price increase that would raise the annual cost of premiums from $176,000 to $250,000.

Under the new insurance plan, individual employees will still be fully covered but must pay the extra cost of coverage for family members. Craft said he has asked that the employees’ families be left in a pool so their costs would be lower. The same applies for dental insurance, but the city will continue to pay for life insurance policies for family members. Craft also the new individual coverage will be an improvement over the current plan.

“We eliminate all insurance to everybody but employees,” said Craft. “We will continue to insure them. To compensate, I have had Garnett (City Clerk Garnett Sexton) talk to the insurance provider to give our employees a better policy.”

Craft said the council had never actually voted to extend coverage to family members, but the practice of doing so became the way of doing business somewhere over the years. He said he had spoken with several previous mayors, and that he and Sexton had gone over the minutes of several years of meetings, but hadn’t been able to find a record of any vote to extend coverage to employees’ families.

“I don’t know how it crept up on us to fall into my lap,” said Craft. “But it is in my lap.”

Craft told the council the new package would cost the city $120,000 and the new coverage would reduce co-pays and provide for other improvements on the old plan. The vote to follow Craft’s recommendation was unanimous.

In other business, the council found that the money saved on insurance will have to be spent on a re-negotiated contract with Veolia Water to continue managing the city’s water and sewer systems. Mayor Craft told the council that Deputy Fire Chief Gary Mullins, who was a member of the city council during the entire time period that Veolia has operated the utilities until resigning to become Deputy Fire Chief, had helped to work out a satisfactory agreement with Jeff Kilgore, who manages the Whitesburg facilities for Veolia.

At a special meeting held in late August, Veolia Area Vice President Ted O’Brien asked the council to raise its payment by over $180,000 per year just so Veolia could break even. Mullins and Kilgore worked out several arrangements such as having city workers take over reading water meters, removing sludge from the sewer plant and transporting it to an appropriate place, along with changes in other areas to reduce the amount of the cost increase by $65,000. Lab services, testing water quality etc., will become a limited account. A limited account means the city pays a base rate for a service. If the cost of the service goes over that amount, the city must pay it, but if it goes below the agreed upon amount, Veolia will reduce the city’s bill by that amount.

Craft said that with the changes Mullins and Kilgore negotiated the city and Veolia will be able to break even at the end of the current contract which expires in 24 months. He said that both parties could then negotiate a new agreement or part company if they desire.

“We owe them nothing and they owe us nothing,” said Craft.

Mullins said if the city had chosen to terminate the agreement last week, it would have owed Veolia $100,000. He said that sum would be paid to Veolia over 24 months under the new agreement. Craft said Mullins had a great deal of experience working with Veolia and thanked Mullins for his assistance.

The council also learned that a $1 million loan needed to complete the funding package for the city/county sewer plant will force the city to raise sewer rates.

Kevin Howard of Summit Engineering told the council that the loan, which comes from the Kentucky Infrastructure Authority (KIA) of the Governor’s Office for Local Development (GOLD), comes with the specification that the sewer system must pay for itself. He said the city can no longer continue to borrow money from water profits to make up losses in sewer bills.

“The city will need a 30 percent increase in sewer rates to break even,” said Howard. “The sewer department must stand on its own two feet. It will require the separation of sewer and water accounts. To go for the loan you should break even effective January ’08.”

Howard said the KIA loan analysis had provided much the same information as a 2006 report delivered by Carryn Lee of Kentucky Rural Water. At the November 2006 city council meeting, Lee recommended a 10 percent raise in water rates and a corresponding increase in sewer rates. Lee said the water fund usually showed a profit of about $30,000, while the sewer fund averaged losing $46,000 annually. At the December 2006 meeting the council voted to table the proposed increase until they got a better picture of the problem.

City Clerk Sexton said that sewer and water accounts are already kept separately, but that sometimes money is transferred from one to the other. Howard recommended an increase in sewer rates of 30 percent for 2008, and ten percent increases of both for 2009 and 2010.

Mayor Craft asked Howard what would happen if the city found another source for all or part of the loan, which is scheduled to kick in toward the end of the project, and Howard replied that raises would be less if the amount of the loan went down. He said if the city could get the entire amount in a grant or an appropriation from the state the raises would not be necessary but that the water and sewer system should still balance out. In her 2006 report, Lee had said the Whitesburg is unique in the state for transferring money from water to pay for sewer.

94th District State Representative Leslie Combs attended the meeting and told the council that she will actively look for other sources of funding. Craft joked as he introduced Combs that she could get the amount included into a line item in the General Assembly’s 2008 budget.

After hearing Howard explain that the additional $1 million was necessary because of an increase in material costs which occurred during the long period of time it took to put the funding package together, Combs replied that increased material costs were a statewide problem. Craft also told Combs the city is extending lines up Craft’s Colly and providing extra water to the county. He said the current drought makes an alternative source of water very important.

“But you all have to have it,” said Combs. “I’m here to help you. We’ll have to put our heads together. The percentage of water being so low in eastern Kentucky is getting people’s attention across the state. People are starting to pay attention.”

The council also:

” Approved the second reading of Ordinance 2007- 6, which establishes a separate classification with a tax rate of 75 cents per $100 on blighted and deteriorated and nuisance property within city limits. The ordinance applies to abandoned urban properties classified as real properties and will become law after being published in The Mountain Eagle.

” Approved Resolution 2007- 12, allowing the city to receive a grant to purchase body armor for city police officers through a grant from the Governor’s Office for Local Development. By approving the resolution, the council authorized Mayor Craft to enter the city into a memorandum of agreement with GOLD.

Reporter’s note: An article appearing in the September 5 edition of The Mountain Eagle wrongly identified city council member Robin Watco as the person who said workers at Mountain Comprehensive Health Corporation make a good deal more money than city workers.

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