Officials flag rising workers’ comp and benefit costs as key driver in Lewiston’s FY27 budget

Lewiston officials warned councilors Thursday that rising workers’ compensation and related benefit costs are a major pressure point in the FY27 budget.

Director Roy said the workers' compensation line showed the largest single fringe increase in the draft—$488,288—which includes a charge tied to an unfunded liability. He reported the city's self‑insured pool unfunded liability fell to $2.9 million from $3.4 million the prior year, but that actuarial rate increases from the National Council on Compensation Insurance have driven higher costs. Staff also said total workers' compensation benefits paid in calendar year 2025 reached $1.5 million, up $224,000 from 2024.

Councilors asked whether underfunding the recommended level carries a financial penalty or affects the city's bond rating. Director Roy acknowledged rating agencies review unfunded liabilities and offered to consult bond counsel on any quantifiable impact. "These reports do go to the bond rating companies... they look at everything on our what we carry for fund balance and unfunded liabilities," he said.

Councilors requested a longer funding trajectory—a decade‑long series of numbers showing the trend and what percent of the recommended pool the city currently holds. Roy agreed to provide prior‑year reports and historical figures to show the trend and clarify how the city moved from a $3.4M unfunded figure to $2.9M.

The discussion underscored that benefit cost drivers—including health insurance assumptions (staff used 8.5% for half a year in projections), premium changes and state policy—are shaping personnel and service decisions. The administration said it will present additional scenarios to the council as it prepares for the April public hearing and subsequent votes.