Aided by what could be a $500,000 drop in health insurance costs next year, the Board of Selectmen voted last week to trim $563,000 out of the annual budget.

The result is that the average tax bill will go up to $8,959 next year, an increase of about $311, which is less than the original town manager’s budget proposal, which would have seen taxes rise to an average of $9,006 per year, an increase of $358 over the current fiscal year.

Earlier this month, Town Manager Reginald “Buzz” Stapczynski was prodded by selectmen to rework his budget so that it increased 3.6 percent over last year. His original budget came in 4.9 percent higher than last year.

Selectman Alex Vispoli said current and future town managers, joined by selectmen and other town officials, needed to craft their budgets around an increase that was affordable to taxpayers rather than simply adding revenues to meet rising expenses.

Last week, he said, that’s just what Stapczynski did.

“I’d like to thank him for this,” Vispoli said. “We have put ourselves in a different place starting budgets.”

The change in the budget as proposed is still a “work in progress,” Stapczynski said. The $563,000 change is a combination of reduced spending and increased revenues.

In particular, Stapczynski said building permit revenues will go up this year over last year. In addition, he and Selectman Paul Salafia are negotiating with Merrimack College, part of the campus for which extends into Andover, and Phillips Andover Academy on so-called Payments in Lieu of Taxes, or PILOTs. That revenue will also increase over last year, he said, although he was not at liberty to disclose the amount since the matter is still in negotiation.

There were also some changes in expenditures — the largest being the cost of employee health insurance. Stapczynski said the town’s current health insurer — Blue Cross/Blue Shield offered by the Mass. Interlocal Insurance Association — came in at too high of a price. The BX/BS plan offered by MIIA would have increased 10.9 percent.

The town had expected to pay roughly $17 million in health insurance next year — about 10 percent of the town’s $170 million budget.

Stapczynski said the savings are being realized because employee health insurance will be “self-funded,” meaning the town negotiates terms directly with Blue Cross/Blue Shield rather than going through a third party, in this case MIIA. The result of that decision, which is still in negotiation with the town’s unions, could lead to as low as a zero percent increase in health insurance bills next year to as high as a 9 percent increase.

He said the town is offering unions two options: a status quo plan, which would cost an additional 9 percent next year, or a “higher-deductible plan,” which would result in a 0 percent increase.

If half the unions agree to the higher-deductible plan, the town could save $500,000 in health insurance costs.

“Not everyone will migrate over,” Stapczynski said. “We’d like them to, but we are taking a conservative approach.”

Stapczynski said the town has self-funded insurance before, as recently as 2006, but switched to the BX/BS plan in 2007. When asked why the town switched to MIIA, Stapczynski said he was unsure.

“It must have been a good, bottom-line reason,” he said.

Stapczynski serves on the board of directors of MIIA and until last year, served on the organization’s Insurance Committee. He stepped down from that role on the committee after questions arose about whether he had a conflict of interest. Last week, he mentioned that while he is still on the MIIA board of directors, he no longer serves on the Insurance Committee.


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