Altoona City Council members Wednesday grew ill-humored upon learning that the city faces a 17.2 percent health care cost hike, or $540,000.
That prediction is behind the original projection of a 10.5 percent increase in Blue Cross-Blue Shield costs.
Last year, the city budgeted $3.14 million for health insurance in a $22 million spending plan.
''This is going to bury us,'' Councilman Joe Rieker said.
The city needs to find a way to put health insurance out to bid, he said. It tried a couple of years ago, but it didn't quite work.
A bidding process is difficult because Blue Cross won't provide the current coverage without the whole account, Finance Director Omar Strohm said.
The city is negotiating with HealthAmerica, but isn't close to a deal, Strohm said. The city also is considering self-insurance.
Councilman Mark Geis said Altoona should try to shame Blue Cross into letting up.
''We're in a tight spot here,'' Geis said.
Councilman Matt Garber agreed, and wondered if pressure will get the company to ease up.
The 7.5 percent annual average increase during the last five years is probably less than most municipalities paid, according to the Pennsylvania Economy League, Strohm said.
The city will need to dip into savings to make the budget balance, Mayor Wayne Hippo said.
There are virtually no expenses to cut because the vast majority of expenses are personnel costs, and most are contingent on contracts, City Manager Joe Weakland said. Then there are utilities and fuel, and those don't allow for cuts, he said.
The city could end this year with about $1.4 million in the bank, Weakland said.
It could end 2009 with about $1 million, he guessed.
That would mean an operational deficit next year of $400,000.
It could be much worse if the economy worsens, especially if unemployment increases, which would reduce earned income tax revenue and make it likely that more residents would fail to pay their property taxes, he said.
