HomeMy WebLinkAboutFIN 2019-08-12 Item 2C - Discussion - Source of Revenue for Fire DepartmentsCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Vicky Carlsen, Finance Director
CC: Mayor Ekberg
DATE: August 7, 2019
SUBJECT: Sources of Revenue — Fire Departments, Fire Districts, and Regional Fire
Authorities
ISSUE
Provide information on how fire departments, fire districts, and regional fire authorities are funded.
BACKGROUND
Fire services in Washington State can be provided several ways including maintaining a fire
department run by City personnel, contract with another city or fire protection district for fire
protection services, annex directly to a fire protection district with voter approval, form a fire
protection district coextensive with voter approval, or establish a regional fire authority (RFA) with
voter approval.
Regardless of what method is in place to provide these services, funding can come from a variety
of sources. Outlined below are the sources of funding available to cities, fire districts, and RFAs.
Also included is a discussion on how Tukwila's fire department is funded, along with historical
data.
DISCUSSION
Fire departments, fire districts, and RFA can be funded from a variety of sources but the main
source of funding is from property taxes and the Fire Benefit Charge (FBC). Some sources are
only available to cities, while others are only available for fire districts and RFAs. Below is a chart
showing available funding options for each method of providing fire services.
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Regional
City Fire Fire Fire
Revenue Source Departments Districts Authorities
Primary Revenues
Property Taxes - Regular Levy
Property Taxes - Excess Levy
Property Taxes - Levy Lid Lift
Property Taxes - EMS Levy
Fire Benefit Charge
Other Revenues
Grants
Other Taxes and Fees
Contract for Services
Fines and Penalties
*Fire Impact Fees
Local Improvement District
Revenue Generated by Fire Marshal
*Fire Permit, Inspection Fees
*Plan Review Fees
*Only available to districts and RFAs if contracted by City to provide service
Sources of Revenue
1. Property Taxes
x x x
x x x
x x x
x x x
x x
x
x
x
x
x
Regular Levy:
Cities, districts, and RFAs can levy a regular tax levy but cities have a different maximum levy
rate than districts and RFAs. The City of Tukwila's maximum levy rate is $3.825 per thousand of
assessed value less the regular levy for the library district. However, districts and RFAs are
limited to $1.50 per thousand of assessed value. If they impose a fire benefit charge, the limit is
lowered to $1.00. Regular tax levies are limited to a maximum increase of 1 % unless voters
approve a levy lid lift (discussed below).
Excess Levy:
Excess levies are voter approved and are typically used for capital purposes. Excess levies for
capital are used to repay debt proceeds and are levied each year until the debt is paid in full.
Excess levies for capital require a super majority and are subject to validation.
Levy Lid Lift:
Because property tax law restricts the growth of property tax revenue to a maximum of 1% each
year, when assessed value increases, the levy rate for taxing districts decreases. Voters can
approve a levy lid lift to increase the regular levy rate limit back to the maximum levy rate (or
anywhere in between). As an example, the City of Tukwila's current regular levy rate is $2.39148.
The City could ask voters to approve a levy lid lift to reset the current levy rate to anywhere
between our current rate of $2.39148 up to $3.825 less the library rate. Levy lid lifts require a
majority approval and are not subject to validation.
EMS Levy:
EMS levies are another voter -approved property tax levy that is restricted to EMS type functions.
Because the City and surrounding fire jurisdictions are part of Zone 3, each entity does not levy
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their own EMS levy. Rather, King County collects this levy to fund the Medic One program. The
City, along with other participants in this program receive a distribution from this levy. Distribution
is based on call volume.
2. Fire Benefit Charge (FBC)
The FBC is a fee that is based on the benefit of having fire -based services. It considers that those
who benefit more from fire protection services should pay more for that service. The charge is
applied to improvements to real property but does not apply to land. It is a fee based on size of
the structure, use, and risk. This revenue source is only available to districts and RFAs. Cities do
not have authority to impose an FBC.
3. Grants
State and Federal grants are available to cities, districts, and RFAs to fund a variety of
expenditures including capital, equipment, and staffing. Grant funds received are restricted to the
expenditures specific to the purpose of the grant and cannot be used to supplant other funding
sources for expenditures approved by the grant.
4. Other Taxes and Fees (not specific to fire)
Unlike districts and RFAs, cities have the ability to levy other taxes and fees to fund fire services.
For the City of Tukwila, sales, admissions, and utility taxes, as well as business license fees and
miscellaneous revenue can be used for any service provided by a city, including fire services.
These taxes and fees are not available to districts and RFAs.
5. Contract for Services
Cities, districts, and RFAs, can enter into contracts with other entities to provide fire and EMS
services. Contracts for services can be used to regionalize services, resulting in economies of
scale while still providing a high level of service.
6. Fines and Penalties
Fines and penalties for fire are typically associated with false alarms. Many fire entities will levy
a fine or penalty for false alarms in an effort to reduce the number of false alarms. False alarm
fees are generally not a major source of revenue.
7. Fire Impact Fees
Impact fees are used to offset the increased costs of providing services due to development.
Impact fees are a funding option for cities. Districts and RFAs cannot levy impact fees, they can
only receive impact fees if they provide services within city boundaries.
8. Local Improvement District
Local Improvement Districts (LIDs) can be used to fund capital needs within a specific area,
typically an area smaller than the entity's borders. An example where LIDs could provide funding
would be to construct a fire station. The area that benefits from the fire station would form the
LID and provide the funding for the project.
9. Other Revenue Sources
There are other revenue sources available to fund fire services but are immaterial in nature. Some
of these sources include interest earnings, proceeds from sale of assets, fire insurance premium
tax, and rental revenue.
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10. Fire Permit, Inspection, and Plan Review Fees
Fire permit, inspection, and plan review fees are charged for a variety of services provided by the
fire department and are typically associated with services provided by a Fire Marshal's Office.
This is typically a function of a city or county but can be contracted out to a district or RFA. These
fees are intended to recover a portion, or all, of the costs associated with providing these services.
Districts and RFAs do not provide these services on their own but can provide them if contracted
with a city or county to provide the services.
City of Tukwila Fire Department Funding
Funding for the City's fire department comes from property taxes as well as other general fund
revenue not assigned or restricted for specific uses. In addition to general revenues, the fire
department generates some revenue from services provided. The chart below lists revenue
generated by the fire department over the last several years as well as the budget for 2019.
It should be noted that the hazardous materials response is a new revenue source beginning in
2019. The budget for this revenue is $100 thousand each year. To date, no revenue has been
received. It should also be noted that, while a fee schedule for fire false alarms has been in place
for many years, the fire department has not billed for false alarms since 2014. The fire department
is working on a plan to begin billing for false alarms.
Revenue Source
Actua Is
2014 2015 2016
2017 2018
Budget
2019
EMS Levy (Medic One Levy)
Grants
Contract for Services
Operational Permit Fees
Plan Review Fees
Reinspection Fees
*Hazardous Materials Response
Reimbursement for Deployments
Misc. Fees/Cost Recovery
Totals
*New charge beginning in 2019
398,440
401,453
45,415
76,836
52,363
1,000
212,561
405,792
74,495
51,189
44,175
45,973
300
454,149
90,894
45,958
24,825
66,895
300
20,624 36,094
427,501
10,809
10,775
12,400
74,103
445,880
12,318
2,689
10,507
76,628
100
84,020 80,201
98,910 133,076
470,000
20,511
1,500
21,400
75,000
2,000
100,000
150,000
1,188, 068
642,548 719,115
718,518 761,399 840,411
The chart below shows actual expenditures 2014 - 2018 and 2019 budget and how the fire
department is funded. For purposes of this discussion, it has been assumed that the fire
department is funded by property taxes and revenue generated directly by fire.
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Fire Department Expenditures by Division
Actuals Budget
Division 2014 2015 2016 2017 2018 2019
Administration 848,261 784,462 807,292 896,733 963,811 1,175,610
Suppression 8,489,610 8,892,891 8,793,233 9,151,233 9,311,411 9,173,895
Prev. & Inspect. 824,862 815,137 826,468 864,692 907,865 834,653
Training 447,198 376,402 379,240 443,663 443,176 439,782
Facilities 89,704 98,442 92,391 100,349 99,779 110,860
Special Operations 63,357 30,774 29,038 28,653 20,836 42,291
Rescue & Emerg. Aid 198,453 193,418 246,274 240,478 240,781 265,149
Emergency Mgmt. 399,931 532,935 380,405 341,178 368,541 431,147
Total 11,361,376 11,724,461 11,554,341 12,066,979 12,356,200 12,473,387
Fire Department Funding
Dept. Generated Revenue 1,188,068 642,548 719,115 718,518 761,399 840,411
Property Taxes 10,173,308 11,081,913 10,835,226 11,348,461 11,594,801 11,632,976
Total Funding 11,361,376 11,724,461 11,554,341 12,066,979 12,356,200 12,473,387
Revenues generated by the fire department are budgeted based on information provided by the
department during the budget development process. If data is not received from the department,
Finance staff will budget revenue items based on historical trends. If expenditures are revenue
backed, e.g., grants, both revenue and expenditures are budgeted so that there is no net impact
on the general fund.
RECOMMENDATION
For information only.
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