Earlier this year, the city of Huntington laid off two dozen police and fire department employees. City officials said the move was necessary because of the nearly $5 million budget deficit the city faces.
Two major components of Huntington's deficit are rising health care and pension costs - issues that are also felt in Charleston, West Virginia's only other city with nearly 50,000 residents.
But several factors suggest Charleston likely won't experience the same issues as Huntington anytime soon, officials from both cities say.
Huntington has a current budget of $56 million, but City Manager Cathy Burns said about $10 million of that is "pass-through funds" such as grants. The city's general revenue fund is about $46 million, she said.
According to public information officer Bryan Chambers, pension costs and health care make up about 45 percent of Huntington's budget.
The city has a $5 weekly user fee, deducted from the paychecks of anyone who works in city limits. The user fee was raised from $3 to $5 in the fall of 2015.
"That money is used for public improvements, street paving, sidewalk repairs and police operations," Burns said. "The police budget alone for Huntington is $13 million."
She said the user fee generates a total of about $8 million.
"It does not support the police department, much less public works," Burns said.
In addition, all pension and health care funding for Huntington employees comes directly out of the city's general revenue fund. That means unexpected changes, such as a major illness or actuarial changes to pension plans, have a greater impact on the city's budget because there are no reserve funds to help absorb those costs.
Following the layoffs announced Jan. 26, Huntington has 99 police officers and 88 firefighters.
Charleston's budget of $94 million was bolstered this fiscal year by an additional $5.6 million from B&O taxes, the increased $2.50 user fee and the half-cent sales tax hike.
The city's expenditures for health care and pensions comprise roughly 25 percent of its general fund.
Charleston City Manager David Molgaard said the city has made cuts in past years to help absorb growing pension and health care costs, saving a total of about $2 million.
Those included cuts to the Charleston Fire Department in 2011 through an agreement with South Charleston, in which the latter staffed Charleston's Dudley Farms Road fire station.
"We were about to reduce our force by about 12 members," Molgaard said.
Charleston also eliminated the executive director of its Human Rights Commission, saving roughly $200,000.
Currently, the Charleston Police Department has 162 active officers and 156 firefighters, with two firefighters out and receiving worker's compensation.
Charleston implemented a 0.5 percent sales tax increase in 2014; the revenue it generates goes into a pension reserve fund to help absorb the costs of police and fire pension payouts over time for the city's conservation plan, which includes employees hired before June 1, 2010.
Other than the general fund, Huntington has no other funds to help fill its pension gap. That proved to be a major issue late last year when the state's Municipal Pension Oversight Board announced actuarial adjustments to closed pension plans for city police and fire departments across the state.
Those adjustments were even more dramatic because they were based off life expectancy tables from 2014. Previously, those tables were based off data from 1994, when people didn't live as long. The changes left Huntington dealing with a $1.8 million hole to fill in the middle of the fiscal year.
Burns said the increased pension costs have further strained Huntington's finances. She said she thinks there has been misunderstanding between the state and cities about the projected impacts of closed fire and police pension plans.
"No new people are going into the old fund, yet our costs continue to go up every five years. At the time when those changes were made, I think there was an implication that the legacy fund would moderate, then eventually those costs would start diminishing, and that has not been the case," Burns said.
The latest actuarial changes were announced in October.
"It was after this fiscal year started, and this year was an unexpected large jump," said Jon Blatt, Huntington's assistant finance director. "That's what threw it out of whack."
A proposed bill in this year's legislative session would change state law so cities would not be required to contribute the increased pension amounts they owe until the start of the next fiscal year.
While Charleston's police and fire employees may be members of their respective unions, they do not have collective bargaining power.
"They're essentially trade organizations," Molgaard said. "They often act more as lobbying groups, as it relates to our city."
Huntington's employees are represented by the Fraternal Order of Police Goldstar Lodge No. 65, the International Association of Fire Fighters Local 289 and the American Federation of State, County and Municipal Employees. Those unions have collective bargaining power.
Ray Canafax, IAFF Local 289 president, said he thinks the recent police and fire layoffs could have been avoided.
"Somebody within the city could have taken steps to prevent it," he said.
Canafax said two days before the layoffs were announced, Mayor Steve Williams said "he was 99.9 percent sure there would be no layoffs."
The unions have been in negotiations with the city for new bargaining agreements for more than a year and a half, Canafax said.
Those bargaining contracts cover employee salaries, overtime provisions and health insurance. When they expired June 30, 2015, each of those agreements were extended three times while the unions negotiated new contracts with the city. Those negotiations were never finalized.
Chambers said in October the city told the unions, "We remained committed to applying the terms of the expired agreement while we continued negotiations, with the qualification that we may have to change the health care provision if we weren't able to reach an agreement with the unions."
Canafax said he didn't think the process qualified as a negotiation.
"I felt like we were making some headway, and then they decide [they're] making the change. That does not feel like negotiations. We would have meetings, then go weeks waiting on the city to respond to us," he said.
In past years, the five-year contracts have been challenging, Burns said, because the city couldn't make changes to the health care provisions while the agreements were in place.
"We [could not] unilaterally make changes to any of our policies ... to adjust things that may be obvious where we were overspending," she said.
"We've seen double-digit inflation in health care costs, but we [couldn't] pass along any increases to those units because of contractual obligations."
On Feb. 1, the city of Huntington announced changes to its health care plan for city employees, retirees and their dependents, effective April 1. The new plan, developed through the city's Healthcare Task Force and discussed with the unions in negotiations, is more typical of private industry employers plans. It's projected to save the city $400,000 this fiscal year and $1.6 million annually.
A press release noted health care costs increased nearly 70 percent between fiscal 2011 and 2016, from $5.69 million to $9.65 million annually.
The changes will reduce the five different plans currently available to employees and retirees.
The employee unions haven't agreed to all the terms of the new plan. "However, the city has reached a point where it must lock in savings it has proposed in negotiations," a press release said.
The only way it would be stopped is if one of the unions files an injunction in court.
The new plan will mean higher deductibles and copays.
Under the current plan for active employees and some pre-Medicare retirees, deductibles are $1,500 for a single plan and $3,000 for a family plan. That will increase to $2,000 and $4,000, respectively.
Copays for primary care office visits and urgent care visits will also increase between $5 and $10.
Under the new plan, preventive care benefits such as physical exams, immunizations, screenings and mammograms will be covered at 100 percent.
If the city is unable to implement the new plan, it will enter the 2017-2018 fiscal year with a $1.6 million deficit.
Currently, Huntington has five different health plans in place for active and retired employees.
Charleston has dealt with its own share of health care crises. In 2005, employees filed a million dollars more in claims than the city's insurance company had predicted.
Finding that most of the claims stemmed from preventable illnesses, such as diabetes and heart disease, the city became self-funded and placed more focus on preventative care.
Charleston began putting money previously used for its stop-loss insurance into a medical reserve fund, which now has more than $9 million, Molgaard said.
Then, he said, the city began creating incentives for employees, such as offering health care discounts if they got health risk assessments done regularly.
The city also offers discounted premiums for tobacco-free employees, who are subject to random nicotine screenings.
At no additional cost to employees, the city also provides a health and wellness center at 601 Morris St., which is staffed full-time by a registered nurse and physician assistant and part-time by physicians.
Molgaard said the wellness center is heavily used by city employees, which can also be used by their dependents.
"There's no filling out forms for insurance, no deductibles or copays coming out of their pocket for a visit at the wellness center," Molgaard said.
"[Employees] were skeptical of the clinic at first, but when they found out it wasn't an effort by their employer to get information they weren't entitled to, they became very receptive to it," he said.
Molgaard emphasized health care savings through assessments and prevention aren't immediate, but they can be felt in the long term.
"It is an impact that will affect claim dollars in the future," he said. "If you can stop something from becoming a serious issue that requires surgery simply by managing it through medicine, everybody wins."
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