Liability costs head upward

Ben Godar

In addition to increased costs for employee compensation and benefits

packages, Burbank officials say the skyrocketing costs of workers’

compensation and other claims are putting a strain on the city

budget.

City officials are predicting a $1.35-million increase next year

in the cost of general liability and workers’ compensation funds, a

jump of almost 15% over this year.

The hike in general-liability expenses is due in large part to the

rising price of insurance for any potential large damage claims

against the city, Financial Services Director Derek Hanway said.

General liability costs are up $838,000 for the 2003-04 fiscal year

after being up $1.1 million this year.

A variety of factors are raising the city’s workers’ compensation

expense. A new state law will raise the maximum payout a worker can

receive through the system from $490 per week to $840 per week by

2005. The cost of insurance for large claims is also on an upward

trend, city Risk Manager Jim Patricola said.

“Four or five years ago, we were paying $15,000 for worker’s comp

[insurance]. Now we’re paying over $250,000, and the coverage isn’t

even as good,” Patricola said.

The city is budgeting a total of $5.8 million for workers’

compensation costs in the 2003-04 budget, approved by the City

Council on June 17.

With costs continuing to rise, city officials have asked state

representatives to support legislation that would lower the price for

employers, Hanway said.

“To protect our costs, we need to change the legal environment,”

he said.

While the city hopes state officials can help mitigate rising

costs, Patricola acknowledged unions and other groups pushing for

higher payouts have a stronger lobby. But without legislative aid, he

said, the future is not bright for cities such as Burbank.

“There needs to be some relief for employers,” he said. “Until

something is done, I think we’re on a downward spiral.”