Proposed Regional Fire Authority considers various formulas for a ‘Fire Benefit Charge’

The planning committee for the proposed Regional Fire Authority (RFA) met again yesterday and reviewed several options for the Fire Benefit Charge (FBC), a fee that would be sent with property taxes to Olympia and Tumwater property owners.  One option shifts cost from residential properties to commercial properties. 

The RFA, if approved by voters in Olympia and Tumwater, would merge those cities’ fire departments starting in 2024.  The FBC would require 60% approval by voters. 

A FBC is an annual fee on structures based on a formula designed to raise revenue sufficient to meet the Committee’s proposed budget for funding the new fire authority.  The proposed budget for the RFA grows from $27 million in 2022 to $40 million in 2024, a 44% increase over the two years.

At the September 12 meeting, the committee members discussed six options that would adjust the FBC rates (see chart).

The committee members agreed to explore one option, which divides residential into three classifications with the weight increasing with house size; residential sector share reduced by 6%, commercial sector share increased by 6%; there would be no charge for mobile homes.

Karen Reed, one of the consultants hired by Tumwater and Olympia, presented what she called a preferred FBC formula, which incorporates a new lower FBC revenue target - which is now at $10.5 million. The original target was $13.5 million.

"The math changes due to lower FBC target, classification of weights, and shifting of 6% increase from residential to the commercial sector," Reed said.

In terms of total contribution to FBC, Reed said the residential sector is down by $2.2 million.

After discovering during the meeting that her presentation materials showing charges to commercial properties was in error, Reed said they will have to come back to it at another meeting. 

Lower FBC target

Reed said they were able to lower the FBC revenue target because of the projected 32% increases in assessed valuation (AV) of residences this year and in 2023 in both Olympia and Tumwater. In effect, the $1.00 property tax levy would bring in more money because of the increase in assessed valuations; this would allow the Fire Benefit Charge to be reduced accordingly.  Olympia and Tumwater would reduce their charges by the same $1.00 per 1,000 assessed value to the RFA.

With the projected increase in assessed value, Reed said it is "hypothetically possible" for a $1.50 fire levy model to generate enough revenue to support the RFA.

But she warned that the $1.50 fire levy without a FBC is less stable. She said in inflationary periods and economic downturns, revenues may fall short.

Tumwater Finance Director Troy Neimeyer explained the impact of funding RFA with $1.50 per $1,000 AV would put both Olympia and Tumwater in a hole.

Citing the impact of RFA on Olympia, which has about $20 million estimated collection for 2023, Neimeyer said funding RFA at $1/1,000 AV would cut the city's collection down to $8.1 million.

He added if they fund RFA with $1.50/1,000 AV rather than FBC, Olympia would only have $2.6 million in property tax collection for their own use.

He further explained that Olympia's property tax levy rate is currently $1.72 per $1,000 of assessed valuation.

"If we try to go with $1.50 to fund [the] RFA, that would put Olympia's rate down to 22 cents. That is extremely small,” Neimeyer commented.

He added that Tumwater, which currently has a $1.75 property tax rate, would end up with only 25 cents after they shift the $1.50 to the RFA.  

"Although theoretically, we could do $1.50, it [would] significantly impact Olympia. We go into a hole by $2 million. We would have to reduce expenses an additional $2 million beyond where we were to make that work. It is not a viable option," Burney commented.

A Regressive Tax

Olympia council members on the committee continue to express their concerns about the regressivity of the Fire Benefit Charge.  Councilmember Cooper asked for more information on how much per square foot a small house would pay compared to a larger house.  Past presentations show that smaller houses pay a higher charge per square foot compared to larger houses owing largely to the formula that uses the square root of the square footage.

Councilmember Yen Huynh speaking about the regressivity issue said, “We are a regressively taxed state and that’s just how it is.  Almost everything we do is regressive and that’s the landscape we have to work with, unfortunately.   We are in a situation where we must do something.”

Town Hall meeting

Last Thursday, September 22, Olympia Fire Department Chief Todd Carson and Tumwater Fire Department Chief Brian Hurley hosted a Town Hall meeting and discussed the benefits of merging the fire departments.

City Managers Jay Burney of Olympia and John Doan of Tumwater were also present at the Olympia Headquarters Station, 100 Eastside St. NE meeting to answer the community members' inquiries.

Doan said there were only five community members who attended the meeting.

Fire Chiefs’ comments

In August, The JOLT interviewed the two fire chiefs and inquired about the efficiencies should the two fire departments merge.

According to Carson, one of the challenges of the organizations is getting continuity and uninterrupted training.

"What happens right now is that we schedule training. We rarely get to go through the entire exercise without being interrupted due to calls," Carson explained, adding joining forces with Tumwater and putting resources together creates efficiencies.

Hurley said they might have to pull staff from training to respond to calls. Olympia and Tumwater anticipate 16,000 calls combined this year. Carson said response time is a huge issue.

According to Hurley, one of the things that the proposed RFA would do is a “Standards of Cover” analysis, to identify where stations and apparatus should be located for the most efficient response. He said it would help the new organization identify gaps and help plan for future needs.

Another feature proposed for the RFA is a Community Assistance, Referral and Education Services (CARES) program, a paramedic model of delivering health care services to low-acuity patients.

"The idea is to get a social worker and an EMT to help people with a non-emergent situation, taking them out of the 911 system. It is going to reduce our call volumes," Hurley said.

The need for additional meetings was discussed along with an emphasis on finalizing the FBC and how to message the need for an RFA that would be understandable to voters.