Bethlehem City Council members gave preliminary approval to the 2016 city budget at their meeting Nov. 17. While the budget increased, it also featured many line item cuts as city officials sought to keep expenses under control.

Council members approved the various parts of the 2016 budget on first reading by 7-0 votes. They approved proposed tax rates of 17.27 mils for Northampton County, up 0.49 percent mils or 2.9 percent from 2015, and 5.46 mils for Lehigh County on first reading by a 6-1 vote, with council member Bryan Callahan against.

Council has been holding budget hearings to discuss the various parts of the budget. The first budget hearing, held on Nov. 11, covered administration, general fund, and city expenses, including the law bureau.

The second budget hearing, held Nov. 12, covered the fire department, EMS, police and the 911 system.

The third budget hearing was held Nov. 19 and covered Parks and Public Property Department, Golf Course Enterprise Fund, Public Works Department, Liquid Fuels Fund and the Non-Utility Capital Fund.

Councilmembers-elect Shawn Martell and Michael Colon were also present to participate in the budget discussion, with Councilmember-elect Olga Negron joining for the third budget hearing.

City Business Administrator David Brong said the budget was developed with the help of a committee consisting of Thomas J. McGeady from McGeady Mills, Christopher W. Laoktash from Cornerstone Benefits, Ronald J. Jizewski from Just Born, Robert A Ost from Concannon Miller, and former mayor Ken R. Smith.

The budget, which must be balanced according to law, includes $73.85 million in expenses and an equal amount of revenue. Personnel costs are 74.5 percent of the budget, long-term debt 9.1 percent, materials and supplies 2.1 percent, civic expenses 1.9 percent, and equipment 0.8 percent.

2016 also includes a 27th biweekly pay period for city staff, an occurrence that happens once in 11 years and costs $1.3 million. The last time there was an extra pay period was in 2005.

“We dealt with it before; we’re dealing with it now,” Brong said. Each payroll event is a cash transaction, he said. “We’ve got to be able to budget for them.” The extra pay period in 2016 will be accommodated through a cash balance expected going out of 2015, Brong said. He said this impact is on every city employee and will be handled in same way as in 2004.

The city currently has 610 full-time employees, two less than 2014 and down from 670 employees in 2010.

Brong said healthcare expenses are up 9 percent next year, with city employees paying higher deductibles and copays.

The city’s pension is 85 percent funded, placing Bethlehem in top 10 cities of Pennsylvania.

Under the proposed budget, the recycling fee would increase $2.50 quarterly. The revenue from recycled materials is at an all-time low, city officials said, yielding less revenue to the city.

On the expense side, Brong said reductions in spending led to a total cost reduction of $10.828 million.

“I’m proud. That’s a lot of progress no matter how you look at it,” he said.

Brong said he encourages department heads to consider how to make city business more efficient and cost effective. “I like leaders to come in and say, ‘what am I going to change.’ We’ve got to change redo purchasing,” he said.

The city deals with 300 vendors with amounts of less than $10,000 per year, he said. Consolidating vendors and using electronic system tools such as emailing invoices to vendors will help to cut costs. Brong said some vendors will manage inventory and replenish automatically, creating more savings. Other options for cutting expenses include asking vendors for a discount if invoices are paid within 10 days. “There are economies there we just have to use,” Brong said, adding the city is switching accounts from Wells Fargo to TD Bank to avoid paying fees.

Brong also said he plans to have a compensation study of non-bargaining employees, with a request for proposal going out in January. “There’s so much complexity in managing that group,” he said. Ultimately, he said, he would like to see merit-based rewards for performance. “A merit program eliminates steps. I don’t think professionals should get steps.”

The final public budget meeting is scheduled for Dec. 3 at 6 p.m. in city hall, while the final vote on the budget is scheduled for the Dec. 15 council meeting.