As Washington’s City Council continues its work on cobbling a budget for fiscal year 2011-2012, it knows the city’s revenue stream likely will stay shallow as expenses deepen.

The proposed budget, presented to the council last month, indicates the city taking in 2 percent less in sales-tax revenue during the next fiscal year when compare to the current fiscal year. The next fiscal year begins July 1.

For the third year in a row, the proposed budget includes no money for cost-of-living adjustment for city employees.

The city also will face increasing costs related to health care.

“Blue Cross/Blue Shield of North Carolina, our health insurance provider, has advised us that over the past four years the cost of health care, annually, exceeded the premiums paid by the City,” wrote interim City Manager Pete Connet in his budget message to the mayor and council. “We are forced to increase these PPO premiums during FY 2011-12 in order to maintain the same benefit plan for this group as previously provided. Employees who choose the PPO Plan will have to pick up additional cost of $225/month for individual coverage. As part of the City’s health care plan, the City contribution to employee (health savings account) remains at $975.72 with the cost to employees remaining unchanged for this plan option.”

The city’s contribution to an employee’s 401k plan or HSA remains at $50 per pay period. The Local Government Retirement System has again increased the city’s contribution to that system, from 6.45 percent to 6.97 percent for regular employees. The city’s contribution to police officers’ retirement system increases from 6.41 percent to 7.04 percent. Those increases amount to $58,300, according to the proposed budget.

The cost for property, casualty and liability insurance increased in all city funds by 5 percent in anticipation of increases in annual premiums, the budget message notes.

The city also faces increasing fuel prices.

“As we have seen personally at the gas pumps, the City is experiencing extreme volatility with petroleum product prices,” Connet wrote. “Consequently, the staff has budgeted for an increase of 10% in fuel costs over FY 2010-11 estimates in all funds. We will continue to significantly restrict the number of vehicles that City employees drive home while striving to accommodate overnight emergency responses.”

Funding for several programs or positions now funded by grants runs out in the next fiscal year. For those programs or positions to continue, other revenue sources will be needed. Those programs or positions include the following:

ź Washington Police Department’s grant for a gang investigator ($22,500);

ź Washington Fire-Rescue-EMS Department’s SAFER grant ($25,245);

ź Washington Police Department’s Project Next Step funding ($50,000).