Will the combination of Fire Tax and Consolidation help the City’s Deficit?
As explained in a previous news posting on this website, it's clear that the Fire Tax, if it passes, will not help Sebastopol's $1.7M deficit. It would bring additional money to Sebastopol for Fire Services, which is good, but it would not be enough to allow Sebastopol to release any of it's current $1.8M in budgeted funds for Fire Services for other City needs. See news article here.
The modified question presented here is whether the combination of Fire Tax and Consolidation would help the City's $1.7M deficit. The answer is yes.
Question #1: How much total new funding for Fire Services would Sebastopol receive from the combined Fire Tax and Consolidation parcel tax? Answer: With consolidation, the new money for Fire Services is doubled, to ~$2.2M. That includes $1.1M from the Fire Tax, plus ~$1.1M from a parcel tax.
- The $1.1M Fire Tax revenue is outlined in the separate news article here.
- The ~1.1M in parcel tax revenue from consolidation can be confirmed in the Matrix Report at page 83 and in the Gold Ridge Proposal at page 2.
- Although there is no publicly available estimate of the revenue from a parcel tax in a consolidation with Graton, I have been informed that it would be slightly lower than Gold Ridge, but still approximately $1.1M.
- It is a requirement of consolidation that the parcel tax of the annexing agency extends to the service area of the annexed agency. See the Matrix Report at page 12.
Question #2: How much would be needed from the City's general fund in a consolidation with a Fire District that could operate Sebastopol's Fire Services for $2.2M per year (the Graton example)? $0 would be needed from Sebastopol's general fund for operations. $500,000 to $1,000,000 could be set aside annually toward purchase or loan repayment for replacement equipment or facility upgrades.
- Operations: $0 would be needed from Sebastopol's general fund to cover operations in this consolidation example. $2.2M is the revenue generated by a combined Fire Tax and Consolidation parcel tax, and that full amount would pay for operations costs in a consolidation.
- One Time Funds for Equipment Replacement and Facility Upgrades: $500,000 to $1,000,000 (for purposes of this discussion) could be committed annually out of Sebastopol's general fund to meet the $3.7M amount needed for equipment replacement and facility upgrades. This annual amount could be used for purchases or for loan repayments.
- The actual annual amount needed for equipment replacement and facility upgrades is unclear. The Gold Ridge Fire District proposal provides a starting point. At page 5 it estimates that a $3M loan for equipment could be repaid at $486,000 per year for 7 years.
- In this discussion the loan is for slightly more ($3.7M rather than $3M) and it would be partially for equipment and partially for Facility upgrades (rather than for equipment only). The situation is not exactly parallel, but this is the information available as of this time.
- Bottom Line: This hypothetical assumes that $500,000 to $1,000,000 would be needed from the City's general fund in a consolidation with a Fire District that could operate Sebastopol's Fire Services for $2.2M. The total funding for the Fire House would be as follows:
- $1.1M from the Fire Tax for operations
- $1.1M from the Consolidation parcel tax for operations
- $500,000 to $1,000,000 from the City's General Fund for equipment and facility expenses
- =$2.7M to $3M in total funding for Sebastopol's Fire Services.
Question #3: In a consolidation with a Fire District that could operate Sebastopol's Fire Services for $2.2M annually, would there be any portion of the currently budgeted $1.8M for Fire Services that could reasonably be reallocated to other City needs? Yes. Anywhere from $700,000 to $1.3M ($1.8M minus $500,000 to $1M) would likely be available to reallocate to other City needs.
- If all that is required out of City funds is an amount to address replacement of aging equipment and upgrades to the Fire House, a substantial opportunity to reclaim funds to help address the City's $1.7M deficit presents itself.
- In the consolidation used here as an example, the amount available to reallocate to other City needs would range from $700,000 to $1.3M.
Question #4: In a consolidation with a Fire District that would need more than $2.2M to operate Sebastopol's Fire Services, would there be an amount that could be reallocated to other Sebastopol needs? Yes, but the available amount would be reduced dollar for dollar by any increase in the operating funds needed by the annexing agency.
- Example: If an annexing Fire District requires $2.4M for operations, the amount available to reallocate to other City needs would range from $500,000 to $1.1M.
- Example: If the annexing Fire District requires $2.7M for operations, the amount available to reallocate to other City needs would range from $200,000 to $800,000.