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Beline Obeid

Auditors warn of insurance costs

November 15, 2012
By Brad Lindberg

Staff Writer

CITY OF GROSSE POINTE — Obamacare means employee health insurance may become a long shot.

“We are anticipating, in many non-collective bargaining situations, people getting out of offering healthcare, believe it or not,” said David Herrington, of Plante Moran.

Surviving plans will cost more, he said.

“I foresee (costs) moving up, potentially dramatically, between 5 and 30 percent,” Herrington said.

He gave the forecast this week while presenting the City of Grosse Pointe’s annual audit for fiscal year 2011-12.

Plante Moran is preparing seminars for municipalities on the impact of President Barack Obama’s reelection and his platform of nationalized healthcare.

“We’re in a new world,” Herrington told council members Monday, Nov. 12. “The Supreme Court’s not going to repeal it. There are changes coming.”

Part of increased premiums are due to “inclusion of coverage,” Herrington said. “All we know is, it’s going up in 2013.”

“We should be fine,” said Councilman Andrew Turnbull. “We’re self-insured in our current pool, which takes us out of a lot of requirements and mandates.”

The City passed the audit with honors, “the best you can get,” Herrington told the council.

He praised city officials for managing costs.

“On a relative basis, you’re in much better shape because you took proactive steps,” he said.

Revenue lag

Property tax revenues decreased $121,108 from 2011 and $900,796 from 2010, according to the audit summary.

“It appears that taxable value is going to stagnate for a while,” said Manju Patnaik, a member of the audit team.

When values turn around, their impact on revenues will lag about 1 1/2 years, she added.

The delay is due to the time between assessing and collecting, she said.

“Hopefully, you’re going to see an increase,” Patnaik, said. “But, it’s going to be a few years before that increase actually converts into revenue for the city.”

Parking revenue increased $280,900 from 2010. So did interest income, by $202,492.

The budget stabilization fund remained $475,000 for the last three years.

Unassigned funds, which the city can use at its discretion, total $1,090,481. The figure is about $25,000 more than last year, yet nearly $750,000 less than in 2010.

The cost of providing retiree healthcare is expected to increase about 5 percent per year through 2016.

The pension plan is fully funded, but healthcare isn’t, Herrington said.

“But, you’ve done some things to limit your exposure,” he said. “The work that has been done allows you to be in solid shape today.”

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