Accelerating salary and benefits costs are pushing expenses past revenues in Contra Costa's largest fire district, according to a report commissioned by county officials.
The fiscal health of the Contra Costa County Fire protection district could depend on county supervisors' frugality in future contract negotiations. The study by Sacramento-based Economic & Planning Systems states the district would delay consistent shortfalls for seven years if the board grants 2 percent raises or less.
But with anything more generous, "the deficits ... soon elevate to a point where cost reductions and/or additional revenues will be required," the report states.
Under the current contract, which expires next year, county firefighters receive 5 percent annual raises. If that rate were to continue, the district would face about a $3 million deficit in 2007, mushrooming to about $40 million in 2015, the report states.
"In the short term at least, there's an argument to be made that smaller (raises) are better," said Contra Costa County Administrator John Sweeten. "In the meantime, we can check our revenues and expenditures to see if they track the study."
The problem stems, in part, from soaring medical and workers' compensation costs. Also, supervisors approved a benefits package in 2002 that spiked public safety retirement benefits by as much as 50 percent. The board today will officially receive the report.
The Contra Costa County Fire Protection district covers Antioch, Clayton, Concord, Lafayette, Martinez, Pittsburg, Pleasant Hill, San Pablo and Walnut Creek, as well as unincorporated county areas.
District reserves will protect residents in those communities from experiencing any immediate service cuts. Next year, officials plan to spend $800,000 from a savings account to cover costs, said Chief Keith Richter.
"We have about five years before we would face a negative cash flow situation," Richter said. "It would certainly create a long-term problem if we had to keep dipping into reserves to balance our budget."
The report projects fiscal discrepancies despite recent boosts in property tax intake, the district's largest revenue source. Propelled by an active real estate market, the district's assessed value climbed 27 percent over the last three years, the report states.
However, expenditures increased by 39 percent over the same time period, the report states, mostly caused by staff and benefit costs. The report predicts property tax increases will level off. But personnel costs will force the district into the red.
Debate over district finances could complicate next year's contract negotiations. Supervisors approved the expensive pension benefit with the understanding employees would cover the all future costs after three years.
Workers agreed to do so after winning 5 percent raises to offset the paycheck deductions. The district can't keep offering those raises, and it can't assume a greater share of the benefit, said Supervisor Mark DeSaulnier of Concord.
"Hopefully the labor organizations will work with us to find a solution," he said. "Right now there isn't enough money to pay for everything."