Although a windfall insurance refund is helping Baltimore close a $31 million gap in its current budget year, the city's budget director is warning that the financial picture for the 1997 budget year, which begins July 1, has not improved.
In a memo Friday, Budget Director Edward J. Gallagher told heads of city agencies that they should continue to plan to meet budget targets that include reductions ranging from several hundred thousand to several million dollars.
"Nothing has changed regarding budget actions to be taken by agencies," Mr. Gallagher said.
He said there had been no change in projections that revenues for the city's principal operating fund would decline by nearly $6 million for the 1997 fiscal year, mostly because of declining proceeds from property, income and beverage-container taxes. "If anything, [the revenue outlook] has deteriorated," he said in his memo.
The fiscal 1997 budget, which is being prepared, calls for eliminating about 300 positions, finance officials say. They hope that most of that reduction will be accounted for by employees signing up for a new program providing retirement incentives, which was announced Thursday with the $25.2 million insurance refund.
Under the program, a 61-year-old worker who has 27 years of service, earns an average salary of $30,000 a year and has 191 days of unused sick days, personal days and vacation time would receive $14,930 a year in retirement benefits beginning immediately if he retired by June 30, according to calculations by the city.
Without incentives, that same worker would receive $12,688 a year beginning at age 65, according to the city's analysis.
The early-retirement plan is being financed with a $24 million surplus in the pension fund that covers 11,500 workers, about 45 percent of the city's labor force.
The $25.2 million insurance refund from Blue Cross and Blue Shield of Maryland is about twice the amount city officials expected to receive. The one-time refund comes from $125 million the city put aside to cover employee health care costs in 1995, which turned out to be $100 million.