Mercer County Housing Authority is facing two budget busters, but the extent of only one of them is known.

The authority is looking at alternatives to swallowing a $72,000 increase in health insurance for employees. Executive Director L. DeWitt Boosel said he plans to talk to other employers to see how they have handled such increases.

"This is a tough nut," he said Wednesday. "We're facing these increases every year."

The authority pays all the costs of employee health insurance, which might change.

"I think it's really becoming time to share costs with the staff," he said.

At least with the insurance question, Boosel knows what he's dealing with. The authority is likely to receive less subsidy from the federal government, but does not know how much of a hit it will take.

According to the Public Housing Authorities Directors Association, the U.S. Department of Housing and Urban Development has said it will have $250 million less than it expected.

HUD blamed the shortfall on a new operating formula that resulted in cost increases, higher than expected inflation and utility costs, faulty information systems that have not accurately projected operating fund eligibility for housing authorities or monitored payments, and the HUD staff practice of borrowing from future-year allocations, PHADA said.

The shortfall most likely will first affect authorities whose fiscal years begin Oct. 1. Mercer County's year begins July 1.

"There probably will be a reduction in subsidy somewhere down the line," Boosel said. "What it will amount to, I don't know."

PHADA said Congress and President Bush probably would have to enact legislation to keep funding flowing at the proper level. The federal government was expected to provide 75 percent of the authority's $2,874,843 budget.