AGENDA #4e
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Daniel Jones, Fire Chief
SUBJECT: Status of NC State Fire Protection Funding
DATE: April 27, 2005
This budget working paper explains the current status of discussion on the State Fire Protection Funding program. This is response to a question by a Council member on April 6, 2005.
BACKGROUND
Based on State Statute GS 58-85A-1 the current fund was set in 1997. It includes language stating the intent of the General Administration to appropriate at least $4.2 million annually, from the General Fund, Highway Fund and University receipts to compensate local fire departments for protection of state owned properties. The General Administration actually appropriated $3.8 million for each of the last two fiscal years to be disbursed among fire departments that protect state property. The fund distribution formula which has not changed since 1997 is based on the value of the total state property protected by a jurisdiction figured as a percentage of all property and divided into the fund.
Chapel Hill currently receives $849,000 annually from the fund for the protection of the University of North Carolina and UNC Hospitals. Based on increases in state properties over the last 7 years, we believe an equitable compensation for Chapel Hill for fire protection should be between $1.4 and $2.7 million annually (the range depends on the criteria of cost identification; percentage of service demand, balance of property value protected with the community or updating the State’s insured property value at the 1997 rate of distribution). Please see table on page 3.
DISCUSSION
Sate Representative Verla Insko has been working with Town officials for the past year to try and address this funding deficiency. On December 21, 2004 Representative Insko, along with Mayor Kevin Foy, Manager Cal Horton and Fire Chief Dan Jones met with Dan Gerlach of Governor Easley’s budget staff to make the case for increasing the fire protection fund. The Governor’s proposed budget for FY 2005-06 includes an increased appropriation of $1 million in each year of the biennium for state property fire protection reimbursement, up from the current statewide annual amount of $3.8 million, for a total of $4.8 million per year. The proposed increase of $1 million to the fund is an increase of 26%. A similar increase to Chapel Hill’s distribution share would result in an annual compensation level of $1,070,000 or an increase of approximately $221,000. This is based upon an assumption that the distribution formula does not change. There is the possibility that the formula could be revised which might result in Chapel Hill receiving a larger or smaller share but we believe this is unlikely.
On March 7, 2005, the Town Council adopted legislative requests for the 2005 NC session and included support for the effort to increase the state fire protection fund. We have worked with other municipal fire departments across the state to develop support within the Legislature to endorse and maintain the Governor’s proposed increase to the State budget. The North Carolina League of Municipalities has also endorsed and support this proposed increase. The Legislature is expected to act upon the budget in late June.
RECOMMENDATION
Chapel Hill Town staff continues to work with the Legislative delegation and other municipalities to develop support for an increase in the fire protection fund. We recommend that any increase in the Chapel Hill share of the state fire protection fund be used to address the staffing deficiencies identified in the Fire Department. If the proposed increase is included in the state budget for FY 2005-06 without change in distribution formula the impact of $221,000 on the current fire department budget would pay the annual cost for 4 to 5 firefighters of the total of 18 firefighters identified as needed by the fire department. By delaying the hiring for six months, we could add 9 of the 18 firefighters needed.
Quick Illustration of Funding Need for Chapel Hill
31% 2000-01
26% 2001-02
22% 2002-03
20% 2003-04
25% average over 4 years
· Value of University and UNC Hospitals buildings compared to total taxable real estate in Chapel Hill
$3,668,000,000 University and UNC Hospitals[a]
$3,690,000,000 Chapel Hill taxable real estate[b]
$7,358,000,000 Total
50% University and UNC Hospitals
· Fair share of service costs for University and UNC Hospitals
$1,364,000 Based on average share of service calls
$1,091,000 Based on lowest share of service calls
$2,728,000 Based on value of property exposures
· Present annual appropriation for fire protection
$850,000
[Based on Fire Department research 2005]