Fire Rescue & Property Tax Reform

March 18, 2008

Alternative Funding Alternative Funding StrategiesStrategies

Follow-up on EMS Follow-up on EMS PresentationPresentation

Outline

June 2007June 2007 Special Session B – Special Session B –

Property Tax ReformProperty Tax Reform

JulyJuly Budget WorksessionsBudget Worksessions

SeptemberSeptember Budget HearingsBudget Hearings

OctoberOctober Implemented Statutory Implemented Statutory

ChangesChanges

BackgroundBackground

Jan. 2008Jan. 2008 Constitutional amendment passesConstitutional amendment passes

MarchMarch Fire MSBU Fire MSBU

EMS transport EMS transport

April/MayApril/May Fire Rescue operational review Fire Rescue operational review

Consequences of not constructing Consequences of not constructing new fire stations new fire stations

• JulyJuly Budget WorksessionsBudget Worksessions

BackgroundBackground

Fire Rescue BudgetFire Rescue Budget

31st largest in the country31st largest in the country

44thth largest in the state largest in the state

Serves a population of Serves a population of approximately 700kapproximately 700k

Total number of dispatch Total number of dispatch alarms >100Kalarms >100K

42 fire stations42 fire stations

6:27 average response time6:27 average response time

Fire Rescue’s BudgetFire Rescue’s Budget

Where does Fire Rescue’s operating Where does Fire Rescue’s operating revenue come from?revenue come from?

Property Taxes Property Taxes 89%89%

Other Other 11%11%

Fire Rescue BudgetFire Rescue Budget

Personal Svs. – 66%Personal Svs. – 66%Operating – 28%Operating – 28%Capital Outlay – 6%Capital Outlay – 6%

Where did Fire Rescue’s operating Where did Fire Rescue’s operating expenditures go?expenditures go?

MSTU millage rate = 2.5862MSTU millage rate = 2.5862

MSTU millage rate = 2.5862MSTU millage rate = 2.5862

2.24372.2437

Fire Rescue BudgetFire Rescue Budget

Impact of Property Tax ReformImpact of Property Tax Reform• Statutory CutStatutory Cut $20$20• ConstitutionalConstitutional AmendmentAmendment $11$11• TotalTotal $31$31

*In millions*In millions

Fire Rescue BudgetFire Rescue Budget

• Additional property Additional property tax cutstax cuts

• Economic slowdownEconomic slowdown

• Taxation and Taxation and Budget Reform Budget Reform CommissionCommission

Alternative Funding Alternative Funding StrategiesStrategies

Follow-up on EMS Follow-up on EMS PresentationPresentation

Outline

Alternative Funding Alternative Funding StrategiesStrategies

Follow-up on EMS Follow-up on EMS PresentationPresentation

Outline

EMS Transport Discussion EMS Transport Discussion on Oct. 9, 2007on Oct. 9, 2007

Board extended existing Board extended existing provider agreement with provider agreement with Rural Metro through Rural Metro through October 1, 2008October 1, 2008

Effective October 1, 2008 Effective October 1, 2008 Fire Rescue to extend its Fire Rescue to extend its EMS transport services, EMS transport services, subject to fiscal analysis by subject to fiscal analysis by the County Administrator the County Administrator and Comptroller’s Officeand Comptroller’s Office

EMS TransportEMS Transport

Fire Rescue & Property Tax Reform

March 18, 2008

Fire Rescue’s BudgetFire Rescue’s Budget

Fire Rescue is operated as a Fire Rescue is operated as a stand alone entity with its own stand alone entity with its own dedicated fundingdedicated funding

Fire Rescue is a separate Fire Rescue is a separate MSTU millage assessed in the MSTU millage assessed in the unincorporated areaunincorporated area

Additional revenue from EMS Additional revenue from EMS transport, interlocal fire transport, interlocal fire service, impact fees and other service, impact fees and other feesfees

Fire Rescue BudgetFire Rescue Budget

Impact of Property Tax ReformImpact of Property Tax Reform• Statutory CutStatutory Cut $20$20• ConstitutionalConstitutional AmendmentAmendment $11$11• TotalTotal $31$31

*In millions*In millions

Fire Rescue BudgetFire Rescue Budget

• Growing urban fire Growing urban fire departmentdepartment

• Opened two new fire Opened two new fire stationsstations

• Personnel and operating Personnel and operating costs are going upcosts are going up

Strategy for Dealing with Property Tax CutsStrategy for Dealing with Property Tax Cuts

• Short-termShort-term

• Cut expenses to conserve cashCut expenses to conserve cash

• Postpone equipment purchasesPostpone equipment purchases

• Postpone capital projectsPostpone capital projects

• Utilize reservesUtilize reserves

• Long-termLong-term

• Develop a new option for a sustainable Develop a new option for a sustainable funding modelfunding model

Fire Rescue BudgetFire Rescue Budget

Long-Term OptionsLong-Term Options

• Adjust MSTU rateAdjust MSTU rate

• Implement MSBU Implement MSBU optionoption

• Make operational Make operational adjustmentsadjustments

• Other feesOther fees

Fire Rescue BudgetFire Rescue Budget

MSBU StudyMSBU Study

MSBU StudyMSBU Study • Funding SourcesFunding Sources

• MSTU – Ad-Valorem TaxesMSTU – Ad-Valorem Taxes

• Impact FeesImpact Fees

• GrantsGrants

• Fees for ServicesFees for Services

• Funding OptionFunding Option

• MSBU – Non-Ad Valorem AssessmentsMSBU – Non-Ad Valorem Assessments

$

Definition:Definition:

Special assessments are charges Special assessments are charges assessed against the assessed against the propertyproperty of of some particular locality because that some particular locality because that property property derives some derives some special special benefitbenefit from the expenditure of the from the expenditure of the money.money.

Special AssessmentsSpecial Assessments

SimilaritiesSimilarities

• Both generate revenue to pay Both generate revenue to pay for services and facilities.for services and facilities.

• Both are mandatory and may Both are mandatory and may be collected through be collected through enforcement of liens on enforcement of liens on homestead.homestead.

Taxes vs. AssessmentsTaxes vs. Assessments

Taxes vs. AssessmentsTaxes vs. Assessments

DifferencesDifferences

TaxesTaxes AssessmentsAssessmentsNeed not benefit Need not benefit propertyproperty

Must specifically Must specifically benefit propertybenefit property

Authorization by Authorization by general lawgeneral law

Authorization by home Authorization by home rule powersrule powers

Legislature must Legislature must prescribe a tax baseprescribe a tax base

Local Governments may Local Governments may develop the rate of develop the rate of assessment and assessment and method of apportioning method of apportioning costscosts

Special Assessments Special Assessments

• Special Benefit to Special Benefit to PropertyProperty

• Fair and Reasonable Fair and Reasonable

ApportionmentApportionment

Case Law Requirements

Special Benefit ExamplesSpecial Benefit Examples

• Fire ProtectionFire Protection

• Street ImprovementsStreet Improvements

• Parking FacilitiesParking Facilities

• Downtown RedevelopmentDowntown Redevelopment

• Solid WasteSolid Waste

• Water and Sewer ImprovementsWater and Sewer Improvements

• StormwaterStormwater

No Special BenefitNo Special Benefit

Case law:Case law:

• Public Hospitals Public Hospitals

• Public Health UnitsPublic Health Units

• Emergency Medical Emergency Medical ServicesServices

• Enhanced Law EnforcementEnhanced Law Enforcement

Not litigated yet:Not litigated yet:

• Parks and RecreationParks and Recreation

Fair and Reasonable Fair and Reasonable ApportionmentApportionment

• A logically and factually driven A logically and factually driven method must be developed to method must be developed to fairly spread the costs among fairly spread the costs among the benefited properties.the benefited properties.

• Does method of apportionment Does method of apportionment make sense in terms of what is make sense in terms of what is being provided?being provided?

• Legislative opinion receives Legislative opinion receives judicial deference.judicial deference.

Why Use Assessments?Why Use Assessments?

• Benefit based, not value basedBenefit based, not value based

• Tax equity toolTax equity tool

• Revenue diversificationRevenue diversification

• Dedicated revenue sourceDedicated revenue source

• Establishes cost per billing unit Establishes cost per billing unit for services and facilitiesfor services and facilities

• Annual decisionAnnual decision

• Pledgeable for debt without Pledgeable for debt without referendumreferendum

Fire Assessment StudyFire Assessment Study

• Service DeliveryService Delivery

• Fire BudgetFire Budget

• Call/Incident Data (Based on Call/Incident Data (Based on historical demand for fire historical demand for fire services)services)

•Non-EMSNon-EMS

• Ad Valorem Tax Roll Ad Valorem Tax Roll

Data Components & Analysis

Future ConsiderationsFuture Considerations

• Flexible methodologyFlexible methodology• Identifying stake holders Identifying stake holders • Public meetings/educationPublic meetings/education• Strategies for:Strategies for:

• government propertiesgovernment properties

• institutional, tax-exempt propertiesinstitutional, tax-exempt properties

• hardship exemptionshardship exemptions

• economic developmenteconomic development

Fire Special AssessmentsFire Special Assessments

• GSG has completed fire special GSG has completed fire special assessment studies and programs for assessment studies and programs for over over 7070 cities and counties since 1996 cities and counties since 1996

• Of the programs implemented,Of the programs implemented,

fire assessment fire assessment ratesrates range from $50 to range from $50 to $206, with an average of $120$206, with an average of $120**

* * Every study is unique and involves different rate Every study is unique and involves different rate producing factors; e.g., not all agencies chose to fund producing factors; e.g., not all agencies chose to fund 100% of the budget, resulting in lower rates.100% of the budget, resulting in lower rates.

Source: Rate information compiled from 21 GSG studies

BackgroundBackground

Property Tax ReformProperty Tax Reform

Fire Rescue BudgetFire Rescue Budget

MSBU StudyMSBU Study

SummarySummary

Outline

TimelineTimeline

Phase I (Dec. 2007 – March 2008)Phase I (Dec. 2007 – March 2008) • Develop full cost of fire servicesDevelop full cost of fire services• Develop property categories & apportionmentDevelop property categories & apportionment

Phase II (March – Nov. 2008)Phase II (March – Nov. 2008)• Develop assessment roll and ratesDevelop assessment roll and rates• Notice of intent resolutionNotice of intent resolution

Phase III (Nov. 2008 – Oct. 2009)Phase III (Nov. 2008 – Oct. 2009)• Community meetingsCommunity meetings• Public hearingsPublic hearings• ImplementationImplementation

SummarySummary

Fire Rescue has some long-Fire Rescue has some long-term financial challenges term financial challenges

Currently evaluating:Currently evaluating: MSBU optionMSBU option EMS transport option EMS transport option

Future DiscussionsFuture Discussions Operational reviewOperational review Issues with not constructing Issues with not constructing

fire stationsfire stations

Fire Rescue & Property Tax Reform

March 18, 2008