The Chestertown Council voted unanimously Monday to cut a “post employment benefit” stipend for long-serving Chestertown employees — to save roughly $12,000 in the fiscal 2021 budget.
The measure reduced a benefit adopted in 2006 from a maximum of $5,000 annually to $1,000 annually.
“It gave a post employment benefit to employees that is no longer sustainable for the council,” said Chestertown Town Manager Bill Ingersoll in his recommendation to pass the measure. “It basically reduces something that is soaring in costs to a stipend of $1,000 a year to help people in their senior citizenship.”
Ingersoll said it would apply “to each employee that is still alive that’s retired.”
Chestertown Treasury Specialist Amanda Miller said there were currently six or seven retirees receiving an annual stipend in the range $2,500 to $4,000.”
“We’re fastly approaching the max of $5,000 for everybody that’s’ receiving” the stipend, she said. She said the total cost per year was roughly $18,000.
Mayor Chris Cerino said “it was like a pension plan but nobody really paid into it, so it just comes straight out of our budget and we just need relief from it.”
The resolution revises the Manual of Rules and Regulations for Employees that offered the stipend for workers who retired from full time employment with the town at age 65.
Retirees will now receive the $1,000 benefit at age 62 when retiring from full time employment with the town.
Raises coming for current employees
The fiscal 2021 draft budget gives a 2 percent across the board pay raise to all municipal employees, including police, at a cost of $44,000.
Total police salaries drop by $110,000 over last year from 827,000 to $717,000 because of a cut in force from 14 to 12 officers.
Town officials have said the raises were needed to remain competitive with other jurisdictions.
The total public safety budget decreases by $70,000 over fiscal 2020 even with the increase in salaries and other expenses.
The town’s anticipated share of income tax revenue drops from $500,000 to $450,000 over last year because of higher unemployment rates due to COVID-19. The drop comes even though the county raised the income last year to the legal maximum allowed by law.
Excess revenue over expenses is $137,000 of which $94,000 is peeled off to make the principal payment on the Chestertown Marina–leaving a positive balance of $43,000.
The town also finds savings this year by eliminating costs that will not be incurred this year due to COVID-19 restrictions, like the recreation budget, which was reduced from $6,100 to $2,000. The Main Street budget was reduced from $5,000 to $1,000. Music in the Park was eliminated for a savings of $5,000 because performances had to be canceled to comply with Gov. Larry Hogan’s order to limit public gathering to 10 persons or less.
These budgets are likely to be restored when community life is again unrestricted and revenue projections return to normal.