(WMC-TV) - Memphis city employees can expect a sharp rise in health care costs next year.
At the same time, citizens will foot the bill for millions of dollars that were not collected from those city employees this year.
"Like a lot of private businesses, health care costs are going up," said Memphis City CAO, George Little.
But until now, Memphis city employees have not been a part of that rise in costs.
"There will be increases," said Little. "The question is how much and when."
Saturday, the city administration announced in a budget hearing that health care costs for city employees could increase up to 12 percent in 2013.
"In addition to that, the Health Care Reform Act that Congress passed could increase costs," said Memphis City Councilman, Jim Strickland.
In the current budget year, the city delayed an increase in health care payments. Leaving a three million dollar shortfall in the 2013 budget.
"Some type of way, we have to find the money to make up that shortfall, said Memphis City Councilman, Harold Collins.
Memphis CAO, George Little says the delay threw the budget over the tipping point. Putting parks and libraries in jeopardy.
"It runs up the costs overall, and with the city absorbing the cost, that's money the city doesn't have for other services," said Little.
Little also said the city delayed the increase because they did not want to throw salt on the wound of the 4.6% pay cut.
"To come back and say we're going to raise premiums to put the plan back in balance at the same time seemed to be a bit much," Little added.
The city will now restructure employee premiums, deductibles and co-pays.
"I've asked the administration to come back with some recommendations because we as a council need to be able to make these kinds of decisions with full knowledge," said Collins.
The council won't have details before they have to balance the budget by June 30th.