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Are You Ready for the Politics of Fire Service Finances?

My friends I believe that it is once again time to take a look at the world of budgets and finance. Money is the fuel which runs the machine of our operations and the oil which lubricates the engine as we move forward to protect out communities.  It is important to remember, that no matter what government administrators wish to do, the people can still have a voice.  We hear this voice through the approval of those representatives directly elected by the populace.  It is up to us to insure that these people hear us.

What may seem like a reasonable expenditure to provide municipal fire protection may fail to meet the needs or election promises of elected government officials in their quest to remain in power.  You will soon discover that very few politicians will ever jeopardize their political careers for the good of the fire service.  They will pat you on the back and gush over you with praise, but they will frequently keep their municipal checkbook in their pocket.

Fire administrators or would-be administrators must remember that political expediency frequently takes the place of a viable government policy.  Taxation is not different.  The matter of public finance is frequently the target of partisan bickering.  It is important to remember that, politics will always be a part of the manner in which government raises its operating capital.  It would be wise to gather three elements in any battle for fiscal resources which must be fought with politicians.  Facts-Figures-Friends

Facts must prove fire department need and create rock-solid arguments which can withstand the glare of the public spotlight.  It is difficult for a politician to argue against a reasonable presentation supported by facts. Figures are essential to the fire administrator in search of organizational improvements.  Funds which come from the public’s treasury must be justified by figures which show exact costs.  Better yet, they should show how much will be saved by their expenditure. The shrewd fire administrator will gain friends throughout the community who can fight the political battle he should avoid such fights.

It has been said that the setting and collection of user-based fees and charges is an extremely efficient way for local government to bring in the funds necessary to provide governmental services to any jurisdiction.  When taxing capacity in an area is exhausted, government frequently turns to specific user fees to fill in the revenue gaps.  But are these not taxes with a new name?

This was frequently the case in California following the effects of Propostition-13 fever in the late 70’s and early 80’s.  Fees were assessed for many of the services normally provided as part of governmental tax collection.  In some instances they were overturned in court for being too vague in their justifiable expense of doing business. There are still a number of jurisdictions that charge separate fees for services such as fire inspections, code and plan reviews and extinguisher charging.

I can recall the time that one innovative fire department in Texas even developed a program to rent Wet-Vacs for dewatering purposes in their community.  While the funds raised by such efforts are often too low to cover the cost of providing the service, they can create additional income and a bit of good will by providing these extra services.

One good example comes from New Jersey’s Uniform Fire Code.  It establishes a system where fees are set by the various local, county and state inspection programs.  Fees are collected by the level of government which performs the service and forwarded to the Bureau of Fire Safety for processing.  The state retains 20% of the fees for agency expense and fire code administration.  Local and county enforcement agencies receive the other 80 percent to fund their operations.  The program has allowed most fire prevention bureaus in New Jersey to increase their size and improve the delivery of fire prevention and inspection services.

Fire administrators who seek to gain funds from a dedicated user-oriented fee schedule must seek both political and legal advice before proceeding with such a program.  This may speed success and eliminate opposition.  An additional funding source for local fire protection programs once came from the transfer funds available through federal revenue-sharing programs.  Community Block Grants frequently bought the land and built the fire stations now used in many cities, towns and villages across America.  This is typified by loans available from the Farmer’s Home Administration (FHA) and various urban development grants.

Intergovernmental transfers of funds are still quite prevalent in such areas of government service as health and educational programs.  In these cases, state and federal programs mandate the delivery of certain programs.  If monies are not forwarded to accomplish these tasks, they would be underfunded and would probably miss most of the targeted user population.

It has been a proud part of my career to have been one of the early supporters of what developed into the FIRE Act and SAFER Act programs.  I can recall our many meetings back in the late 1990's and the early 2000's when we came together as a national fire service to support the important work of Congressman Bill Pascrell of New Jersey.  He and a number of his fire service associates crafted the programs which have been provided needed funding to our fire service for more than a decade now.

Let me assure you that politics played a great part of bringing all parties to the table to make these vital programs happen.  I also want you to know that the battle to keep them alive and properly funded is one that is still being fought.  There are still those who think that fire and the problems it causes are a local issue.  You and I know the depth and breadth of the problem.  My Road Trip back in 2006 confirmed for me that great good had been done in a wide variety of places by the funding which came to communities big and small through the FIRE Act.  The battle is ongoing. Please remember that.

Getting back to your local battle, please try to remember that in far too many cases insufficient capital is available to do what the politicians and administrators desire.  Borrowing money to pay for the daily expenses of governmental programs and services is a poor practice.  One needs to look no further than the federal deficit to understand how wide spread is this practice.  While the federal deficit may see, to indicate that borrowing for governmental purposes is a poor practice, the converse may be accurate.

However, when borrowing is done in reasonable amounts, at reasonable interest rates for necessary capital improvements, capital financing is an excellent way to spread the cost of high-priced, large-scale projects over a number of years.  This practice will lessen their impact on any one budgetary year.

You need to take a look back at our fire service history for some example that can stimulate your thought processes for future planning.  An excellent example can be put forward in favor of creative capital financing comes from St. Louis, Missouri.  Many years ago this fire department put together a large-scale bond proposition which replaced every piece of fire department apparatus and refurbished most of the fire stations.  The same issue also paid for a new communication center and a modern training facility.

While the cost was high, every segment of the community benefited and the cost was extended over a number of years to bring it within reach.  A strong word of warning is in order at this time. Please do not consider borrowing long-term capital funds to pay for your current expenses.  This helped to create the financial problems faced by New York City in 1975.  Only the most stringent financial controls, personnel layoffs and program reductions were able to stave off municipal bankruptcy.

Remember that there is always a cost involved in using borrowed money.  The debt service on long-term capital financing can eat up the funds necessary for meeting current expenses.  It is, therefore, essential to maintain a proper debt-to-capital ratio so that current and long-term financial obligations can be met.  It may be wise to seek professional financial assistance before embarking on a large-scale borrowing and spending programs.

Harried taxpayers often ask quite simply, “Where does all the money (that you collect in the form taxes) go?”  Whether spending authority is vested in an independent fire company, a fire district, or a tax supported fire department reporting directly to an arm of government, the question remains the same.  The consequences which impact the authority which is receiving the money also remains the same.  Responsible jurisdictions expect a fair and accurate accounting of how the funds are spent.  It is the astute fire administrator who constantly reinforces this concept of fiscal accountability to those who provide the tax dollars, as well as those who allocate the resources in local government.

No study of local government expenditures would be complete without a look at the ratio of short-range current expenses to the longer and larger periphery of the bonded capital debt.  Two distinct areas of expense make up the local spending arena.  Things paid for on a day to day basis, through the current expense funding mechanism take up the immediate attention of the fire administrator.  Projects whose cost is spread over a number of years require the fire administrator’s talents at planning.

The reasons for varying levels of local fire expenditures go well beyond those things which local government can directly control.  However, the trends must be monitored and local operations and expenditures tailored to meet the newly emerging protective service needs dictated by these trends.  An example of this would stress that those charged with providing fire protection in an area of explosive suburban growth are powerless to influence the influx of new citizens to their community.

Various factors have combined to make semi-rural and suburban areas very attractive to urban dwellers within easy commuting distance.  The fire administrator cannot wish the people away but must adjust financial resource commitments to provide everyone with a reasonable level of fire protection.

It would also be wise for him to meet with developers in an effort to share some of the cost new fire stations and make a case for residential sprinklers in new construction.  You must be responsive to factors which have historically impacted the delivery of services.  Population shifts have been referred to previously, but there are other elements which combine to determine the level of local government expenditures.

The national economy will continue to have an impact upon decisions as to how money will be spent.  When the economy is good, people are more willing to commit funds than during a downturn.  Economic downturns must be monitored for their effect at the local level.  Any change in the amount of income flowing into a community will spell change for that jurisdiction.  As a nation we are still recovering from the fiscal problems we have faced for the past several years.

Cost of delivery is another area of concern for local government financial people.  This may mean more to the person charged with sanitation or municipal recreation than the firefighter, because there are few alternatives to calling the fire department when your house is burning.  However, a long-term swing may occur if the private sector can begin to provide fire protection at a lower cost than local government.

The issue of private contracting for fire protection comes up every few years in the literature of the fire service.  Its popularity seems to ebb and flow with the winds of economic change.  It may be that someday all of our fire protection will come from the lowest bidder.  It is the wise fire service administrator who will seek to become customer responsive now, before the push to convert comes.

Let me suggest that you have to become politically active if you are going to remain competitive for local fiscal resources.  Remember to gather facts and figures to support your case.  You must always be working to gain and maintain friends who can help you in your battle for better budgets.  Good luck and stay active. 

ARRY R. CARTER, Ph.D., CFO, MIFireE, a Firehouse.com Contributing Editor, is a municipal fire protection consultant based in Adelphia, NJ. Dr. Carter retired from the Newark, NJ, Fire Department and is a past chief and active life member of the Adelphia Fire Company. Follow Harry on his "A View From my Front Porch" blog. You can reach Harry by e-mail at drharrycarter@optonline.net.

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