And the Benefits to EDH?

Currently, there are thirteen independent fire districts serving western slope communities within El Dorado County.  A good majority of these fire districts are struggling financially and for a few years now the EDC Board of Supervisors has been encouraging greater unity amongst the fire districts to try to keep them solvent and relevant.  EDH Fire’s annexation of the Latrobe Fire District in November 2014 and a shared contract for services arrangement with Rescue Fire Protection District are some real examples of this unity being encouraged by local leaders.

From a county perspective increased cooperation is good as it can lead to better fiscal management through operational efficiencies and some cost savings.  It further allows many of the fire districts that agree to consolidate or be annexed to obtain county approval for an increase in their AB 8 funding rate.  This funding rate is the primary revenue source for most of these agencies and so far, the county has been willing to match EDH Fire’s 17% rate for the Latrobe annexation, and they might possibly even agree to a higher funding rate for other combinations in the future.  Note:  A change in this AB 8 rate is merely a reclassification of ad valorem property tax revenues from one use by the county to another, and it is not a property tax increase to property owners within the affected districts.

Now, I’m a true believer that we have far too many special districts in communities across America.  With a majority of these special districts as well as cities and counties everywhere fighting for added funding to keep operational, and the financial obligations and commitments of past boards/councils honored, I agree that some consolidations are in order.  The question becomes for each of these special districts: what is best for the citizens and businesses in the areas being served?  Just because local leaders believe fire district consolidation is the right way to go for them, should El Dorado Hills buy-in that this is the right choice for us too?

I can only imagine what the long-term ramifications of such annexation decisions will be.  These fire districts are small for a reason: their property tax revenues are very limited and thus result in skimpy budgets, a combination of paid/volunteer firefighters for cost savings and their budget frugality provides great expense oversight.  The Citygate fire district study done for El Dorado County back in 2010 stated “not all of the districts will likely ever experience enough growth to provide a stable revenue base for more than a very low level of fire services.” Increasing funding through annexation provides greater financial resources initially but so will go the expense control and eventually the same financial troubles will resurface down the road just be that much bigger. 

In private industry, corporate consolidations and mergers generally are negotiated on the merit that the surviving entity will be stronger through increased revenue opportunities and increased operational efficiencies (i.e., layoffs, closures, etc.) thereby reducing expenses to drive greater profits long-term.  Unfortunately, in government, there may be an initial bump in revenues (due to the AB 8 rate modification) but rarely is there a strong commitment to on-going expense management and tight fiscal restraint.  Public safety personnel costs are a serious concern for communities everywhere.  EDH needs to be aware that when there becomes a budget shortfall down the road, and surely there will be, we’re on the hook for the majority of it.

Also, personnel costs are only one piece of future funding obligations too.  There becomes a push for improved facilities, equipment, vehicles, etc. to upgrade rural fire stations to standards in existence at the best funded fire districts.  For example:  the same Citygate fire district study identified Latrobe Fire District as having $1.1 million in “immediate apparatus replacement needs” and this was back in 2010. Thus, without growth in these outlying areas, who pays for these needs?  EDH will for sure. Certainly the more EDH citizens allow annexation of other fire districts the more we’ll be subsidizing these outlying areas.  And, the costs will become enormous when projecting out over the next 10, 20 and 30 years.

At the February 19^th fire board meeting your EDH Fire Board voted 3 – 2 to direct staff to explore the merits of an annexation with the Rescue Fire Protection District who’s board the week prior voted 5 – 0 in favor of further exploring an annexation with EDH Fire.  Stay tuned!