Rockland city councilors are torn over how to provide suitable pay and benefits while keeping property taxes in check.

The issue arose following the release April 20 of City Manager Rosemary Kulow’s proposed 2011-2012 municipal budget of $10.1 million, which is up 3 percent from the approved 2010-2011 budget of $9.8 million.

Health insurance and fuel costs are the biggest driver of the increases along with increased pay for municipal workers. The manager’s budget includes money to pay for the 3 percent increases for union workers as agreed to in a contract the two parties signed two years ago. The budget calls for 1.5 percent increases for non-union workers, which largely includes department heads.

Mayor Brian Harden expressed concern about the disparity at a council meeting following the budget’s release.

“Our department heads are hard workers,” the mayor said.

He suggested the council look at including money in the budget to bring non-union wage increases also up to 3 percent.

Finance Director Tom Luttrell said increasing non-union pay increases from 1.5 percent to 3 percent would add $21,000 to the budget.

The city manager acknowledged to the council that the raises she proposed for non-union workers was not keeping up with the cost of living.

The current labor contract with unionized workers is in the final year of a three-year deal. The union workers took no increase in the first year and 3 percent in both the second and third years. The contract expires June 30, 2012.

Councilor Elizabeth Dickerson said she understands the concerns about increasing costs for health insurance but asked if there was a way to be more creative to help workers pay for family members’ coverage.

The current union contract calls for the employee to pay 15 percent of health insurance premiums and the city picks up 85 percent. That is the same for non-union workers but the city manager’s budget recommends the city only pay 85 percent of premiums for new people hired for non-union positions. The workers would be responsible for the full costs of family coverage.

Harden said the city needs to begin considering what changes it would like in contracts in preparation for negotiations with union workers. Kulow noted in her budget message “When union contracts are again ready for re-negotiations, we may need to offer suggestions on alternative approaches to health insurance benefits for city employees.”

The city’s share of health insurance for employees ranges from $7,200 to more than $18,000 per worker each year depending on the extent of coverage.

Health insurance costs for city government are up $106,609 (9.8 percent) from the 2010-2011 budget.

The council began its department-by-department review April 25 with the fire and emergency medical services department.

If the overall city budget is approved as recommended and the RSU 13 budget is approved as recommended, the city tax rate is projected to increase from its current $18.20 per $1,000 of assessed valuation to $18.87, an increase of 67 cents. A person with a home assessed at $165,000 would pay an additional $110 for a total tax bill of $3,113, which does not take into consideration the homestead exemption.