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October 23, 2012

Salem hit with rising health care costs

Selectmen struggle to reduce budget

SALEM — Skyrocketing health insurance costs prompted selectmen to meet last night to try and slash $282,000 from a $37 million budget they already approved.

By the time it was over, the police and fire department budgets had each been cut by $35,000 and plans to spend $90,000 on computer system improvements were in limbo.

The special session was scheduled after the town learned late last week it would be hit with an 18-percent rise in health insurance costs after expecting an increase of only about 10 percent, according to Selectmen Chairman Patrick Hargreaves. He called the meeting Friday after consulting with Town Manager Keith Hickey.

Selectmen spent nearly two hours reviewing the proposed budget for 2013 after deciding the town portion of the tax rate would be $7.06 per $1,000 of property valuation.

The entire tax rate, including the county and school portions, is expected to be set this week. The total was not available last night.

Selectmen approved the budget at a meeting Sept. 24 that lasted almost five hours. The Budget Committee was close to finishing its review of the spending plan before presenting it to voters in March.

But selectmen adjourned last night before completing their review. They await further details on health insurance and the impact of proposed cuts. The discussion is to resume Monday.

Hickey said the town’s insurance broker assured him the 18-percent increase in health insurance costs proposed by Cigna may be reduced to 15 or 14 percent. Hickey said he wouldn’t know for sure until Thursday.

Since up-to-date health insurance costs were not available when the budget proposal was drafted, Hickey said he and the town’s finance and human resources directors researched regional trends. They concluded the rates would not rise more than 10 percent and that estimate was used when drafting the budget, he said.

Selectmen want officials from Neoscope, the town’s provider of computer services, to meet with the board Monday. To cut $282,000 from the budget, selectmen considered eliminating the $90,000 for a computer server room.

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