Auburn’s departments are already struggling to maintain services after staffing reductions, City Manager Jennifer Haines says, leaving the city with difficult choices as insurance, electricity and trash disposal costs exceed budget assumptions.
Heading into Thursday night’s City Council meeting, Haines offered a detailed explanation of a financial problem that extends beyond this year’s expenses: The city is trying to rebuild depleted reserves while operating with fewer employees, and $2 million in state assistance supporting the current budget has not been secured for another year.
“We are so thin in so many departments,” Haines said in an Inside Government interview with host Guy Cosentino.
Her warning comes as revenue collections generally meet expectations. The pressure is coming from rising costs, limited staffing and uncertainty about how much additional savings departments can produce.
Insurance increase complicates plans to rebuild reserves
Auburn budgeted for a 10% health insurance increase. Premiums will instead rise 22% on Jan. 1, following a 14% increase the previous year, Haines said.
She estimated the additional expense could exceed $700,000 across the city’s six funds, emphasizing that the figure remains very preliminary. The final cost will depend on employees’ insurance selections during open enrollment.
That distinction matters: The estimate covers multiple city funds and is not a calculated general fund deficit.
Haines said staff are examining grant reimbursements, salary savings from employees moving between positions and other spending reductions. Reserve funds are also part of the discussion, although Auburn is already trying to restore its financial cushion.
The city’s policy calls for reserves equal to at least 6% of its general fund budget, or a little more than $3 million. At the end of June, reserves stood at approximately 4.1%, or a little more than $2 million.
The current budget was designed to bring that balance back above the policy minimum by June 2027. Achieving that goal requires revenue collections to meet expectations and expenses to remain under control.
A financial update to council last week showed how rising costs could undermine that recovery. Haines’ interview outlined the limited options available to absorb those increases.
Electricity is another example. A new four-year supply contract increased the city’s rate from about 6.5 cents per kilowatt-hour to just over 9 cents. Haines said the increase required a budget amendment of approximately $250,000.
Staffing cuts are already affecting capacity
The budget adopted earlier this year eliminated 32 positions through a combination of vacancies and layoffs. Haines said the resulting staffing levels make further reductions a serious concern.
Asked whether additional cuts might be necessary, she said departments are already having to contemplate reductions in service.
“Just where we are right now, we can’t keep up with what we’re doing,” she said.
The city had imposed hiring and spending freezes in November 2025 to contain expenses. Haines credited those measures with helping reduce an anticipated reserve withdrawal of about $3 million to approximately $2.3 million when the fiscal year closed.
That improved the year-end result, but still required the city to spend savings.
Overtime presents another challenge. Police vacancies and recruitment difficulties contribute to those expenses, while fire department overtime is affected by contractual minimum staffing requirements.
Thursday’s reconsideration of the firefighter contract is one decision with potential budget consequences. Haines said the agreement is unchanged from the proposal council rejected in September. It would lower the minimum number of firefighters working a shift from 14 to 12, which she said would help address overtime costs.
Some overtime expenses are eligible for reimbursement. Haines cited police work supported by state grants and municipal utility work associated with the lead service line inventory. Staff are preparing reimbursement requests so those costs can be offset.
Higher trash fees still do not cover costs
Residents’ refuse fees have increased, but Haines said collections still fall short of covering the service’s expenses.
A replacement hauling contract cost more than anticipated, and final bids were not available when the budget was prepared.
“We tried to get the refuse collection fee to the point where it would cover all of the costs, and we’re not quite there,” she said.
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That leaves the city examining expenses as well as revenue.
Haines identified weekly yard waste collection and the allowance of five trash cans as examples of service levels that affect costs. More waste means more tonnage to transport and dispose of.
She discussed those factors as potential areas for review, rather than announcing a change to collection schedules or container limits.
Haines said the landfill fund needs enough revenue to cover its expenses while providing a service residents expect.
Next year’s gap has not been calculated
Haines described revenue collections as generally on track or better than budgeted, including encouraging sales tax receipts. She cautioned against assuming stronger collections will continue.
She also said some expense accounts can appear unusually high because departments have committed money through purchase orders covering the full year. Those commitments do not necessarily mean the money has already been spent.
Even with that more favorable picture, the next budget carries an unresolved question about state assistance.
The $2 million secured by state Sen. Rachel May is helping Auburn make its current budget work, Haines said. Continued funding has not been secured.
The city also has unsettled labor contracts, and the outcome of those negotiations will help determine future wage and benefit costs.
Haines said staff had not yet calculated the gap between revenue and expenses for the 2027-28 budget. That calculation will depend partly on contract settlements and health insurance enrollment.
For now, the city is searching existing budgets for savings while trying to avoid further erosion of reserves and services. Haines said additional staffing cuts would cause her “great concern.”
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