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Council reviews HSA boost, car allowances and fleet cost increases in FY2026 plan
Summary
Staff proposed doubling city HSA contributions to $2,000 per employee (costing $1.5 million) and presented one'time car allowances and a $2.2 million fleet shop increase as citywide supplementals; staff said the HSA change may reduce long'term claims if employees shift to high'deductible plans.
City staff proposed a set of citywide supplementals tied to benefit and operational costs during the April 1 budget workshop, with the largest being an increase to the city's Health Savings Account (HSA) contributions.
Assistant City Manager Vicki Rios explained staff'recommended increasing the city's HSA contribution from $1,000 to $2,000 for employees enrolled in the high'deductible health plan, and said the change "is expected to cost the city $1,500,000 in additional costs" but could reduce long'term claims if enough employees migrate to the high'deductible plan. Rios and other staff noted HSA funds are portable and can aid recruitment and retention.
Other citywide supplementals highlighted: - A $70,000 one'time car allowance to help directors and key staff displaced during the downtown Civic/City Hall project (DCRP) move; staff said the allowance ends once staff return to City Hall. - A $2,200,000 increase in fleet shop charges to cover higher parts and labor costs for vehicle repairs.
Why it matters: the HSA increase and the fleet and car allowance supplementals are citywide costs that affect the general fund and other funds; staff emphasized the HSA change is intended as both a recruitment tool and a long'run cost containment measure if claims decline.
Staff context and caution: "This proposal to increase the HSA contribution, while it does show a cost of $1,500,000, it is actually expected in the long run to reduce the city's costs," Rios said. She cautioned that short'term budget capacity is required to fund the full amount until employees' plan selections create any savings.
Council questions and clarifications: - Council asked which positions qualify as "key staff" for the car allowance; staff said directors, the city architect, a chief inspector in development services and others displaced by DCRP work qualified while they remain at alternate facilities. - On fleet increases, staff said inflation and higher outside contracted maintenance are driving the $2.2 million adjustment.
Budget placement and next steps: these citywide supplementals were presented at the start of the workshop and will be carried forward to the April 22 workshop for council consideration and affordability modeling before formal adoption votes.
