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Fire districts look at arrangements to improve costs, service

The fire chiefs and board members of the Green Valley, Tubac and Rio Rico fire districts met auditors for the first time Wednesday to discuss working together to cut costs and improve services.

Working together could mean sharing services, merging, consolidating or creating a joint power authority, or JPA. A JPA allows districts to maintain local control over services and tax rates, but has members of each of the boards form an Authority to handle personnel, equipment, facilities and daily operations.

The meeting was informational only; a follow-up has been scheduled for Feb. 20 at the Rio Rico Fire District.

The decision made sense because each of the fire districts is facing “out-of-control” health insurance costs and rising pension costs, Wunder said. They are also all trying to keep up in terms of capital assets.

Representatives from the auditing firm of BeachFleischman presented a report that compared the districts in terms of revenue, expenses, assets and liabilities. While the districts share some commonalities — all are funded by property taxes, provide ambulance service, have significant capital assets and big payrolls — there are some differences, said Lydia Hunter, senior manager with BeachFleischman.

For instance, Rio Rico and Tubac have been experiencing a decrease in property taxes while Green Valley has seen an 8 percent increase in recent years. In terms of benefits, Green Valley’s firefighters are paid significantly more than and also pay far less for benefits. At the same time, Green Valley’s state pension liability is more than $11.6 million, while Tubac’s is $2 million and Rio Rico’s is just over $500,000.

The accountants concluded the fire districts wouldn’t increase or decrease their revenue by combining services, but they could reduce costs by sharing certain personnel and eliminating redundant positions.

The districts would mostly likely save money if they shared training, dispatch or administrative personnel, the accountants concluded. They also recommended that there be one fire chief if the districts combined. The accountants also said that if the districts were to combine, they would have to agree on job expectations and compensation levels.

“Pay cuts are not likely to be received well and can adversely impact moral,” so everyone would have to agree to pay at the highest rate currently being paid, the accountants report stated. They further recommended a regional pay step system be implemented.

If the districts merged or consolidated, raising the same amount of combined tax revenue as the three districts individually would mean a tax rate of $2.64. That would be an increase for GVFD, but a decrease for Rio Rico and Tubac. However, Rio Rico and Tubac both have bond levies and property owners would continue to pay for those on top of the tax rate.

A potential solution would be for the new combined district to hold a bond election so they could repay the existing bonds, the accountants said, but noted residents within GVFD’s boundaries may not be willing to do so.

“It should also be noted there are interpretations of the law that suggest that existing bond levies do not have to only stay with the property owners, and should be assessed on all property in a combined district,” the accountants noted in their report.

The Golder Ranch Fire District absorbed the Mountain Vista Fire District in July. Wunder said he believes legislators don’t like having so many fire districts and are trying to make consolidations and mergers easier.

Jim Lovelace, senior advisor with BeachFleischman, urged each of the districts to meet individually to discuss the report and their individual cultures to determine what is important for them to maintain and how they might integrate with the other districts successfully.

Wunder noted that response times, customer service levels and insurance service office ratings would all be impacted if any of the districts opted to move forward for monetary reasons only. The Green Valley Fire District makes staff decisions, in large part, on response times, he said.

The Green Valley chief also wondered if it’s worth any one district’s time and energy to explore merging or consolidating if it’s determined they’ll only save a few thousand dollars in one area.

It might make more sense, Wunder said, to further explore sharing personnel.

Wunder pointed out he has saved money by contracting the services of a Drexel Heights Fire Department staff member as the GVFD fire marshal. There are other areas within the GVFD he thinks could be “shored up” with help from Tubac or Rio Rico, he said.

Mike Connelly, Tubac Fire District board chairman, echoed Wunder’s sentiments, saying if they’re not going to “go big” he’s not sure what the benefits would be. He also expressed concern over pension liabilities, the ongoing discussions about adjusting the Arizona Public Safety Personnel Retirement System and how they would impact the districts if they did merge or consolidate.

Dean Davis, the board chairman for the Rio Rico Fire District, said it appears there may be more of an opportunity for Rio Rico and Tubac to work out something than for all three districts.

“I’m encouraged there’s at least a dialogue going on between the districts, but I don’t perceive anything is going to happen overnight,” he said.

Tubac Fire Chief Kevin Keeley concurred with Davis about Rio Rico and Tubac exploring the matter further. He pointed out they are in the same county and share the same radio system.

The participants agreed to meet with the rest of their board members and staff before returning for the follow up meeting in February.