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Underfunded rural districts would annex into El Dorado Hills Fire, but retain identities
The last remnants of El Dorado County’s rural fire districts aid-to-fire subsidies will expire by the end of the year, leaving Western Slope fire chiefs desperately seeking a fiscal life raft for the six rural districts whose revenues don’t meet the costs of fire and ambulance service.
The Chiefs Association called a second meeting of Western Slope fire officials last week to follow up on an October 2010 proposal from Rescue Chief Tom Keating and former El Dorado Hills Chief Brian Veerkamp to annex some or all of the fiscally troubled agencies into the El Dorado Hills district.
Keating led the meeting without the recently retired Veerkamp at his side, but citizen Veerkamp was in the audience, and provided a summary of California’s convoluted post-Prop 13 local government funding machinations, which led first to the aid-to-fire subsidy to keep the rural districts afloat, and its upcoming termination.
Local Agency Formation Commission Executive Officer Jose Henriquez explained that an annexation would provide relief from the revenue-sucking “Education Revenue Augmentation Fund,” or “ERAF,” which redirects up to 10 percent of the revenue from most special districts to local schools. El Dorado Hills’ fire district enjoys a “multi-county” exemption from ERAF because it serves a portion of Sacramento County.
Veerkamp explained that the ERAF relief wouldn’t hurt local schools because their funding is guaranteed by the state, which would have to backfill any loss of ERAF funds.
Longer term, the chiefs hope a reorganization would also open the door for streamlined fire districts to collect a larger portion of the property tax revenues currently split by local government, fire service and schools.
Henriquez explained how new “service zones,” based on the existing rural fire districts, could be annexed into El Dorado Hills fire with relative transparency to both residents and firefighters in the districts, which could retain their identity and even their elected fire boards, renamed as a “fire commissions” or “advisory boards,” with most of the authority they currently wield.
Existing taxes and assessments could be transferred to the new service zones. “Each district could retain what it brings to the table,” Henriquez said.
Henriquez’s research found that annexed districts are in a gray area of state law and as such, “They’re still a question mark,” he said.
The state controller is disputing the right of newly annexed areas in Santa Clara County to inherit an ERAF exemption. By contrast, the Sacramento Metropolitan Fire District gained an ERAF exemption by merging with American River Fire in 2000. The merger survived a subsequent legal challenge.
Henriquez said his sources in the California Legislature indicate that El Dorado County would likely be able to extend El Dorado Hills’ exemption similarly.
His memo of Nov. 18 states that LAFCO’s legal counsel advises the chiefs to get an opinion from the state attorney general because of the undefined legal nature of expanding ERAF exemptions, an action that would require assistance from either county counsel or a state legislator, and could draw attention to the matter and tempt state officials to remove the exemption.
Henriquez advised that, with the support of the county, including Auditor-Controller Joe Harn who has been skeptical of the annexations in the past, an attorney general opinion is unnecessary. He further suggested getting Assemblywoman Alyson Huber and State Sen. Ted Gaines on board, in case they need to defend the action in the Legislature.
Recovery of $1.7 million ERAF loss in Garden Valley, Georgetown, Latrobe, Mosquito, Pioneer and Rescue would go a long way to making those districts fiscally whole, said Keating.
In addition to the ERAF savings, the chiefs would like to see local property taxes reallocated to the 13 percent level that aid-to-fire was based on. District 1 Supervisor John Knight was present at the meeting, but said he couldn’t promise the board’s support for a redistribution of local property tax revenue. Harn previously opined that other agencies, equally desperate for their share of property tax, would likely not go quietly into the night.
Nonetheless, Henriquez advised the chiefs that their timing was good. “You have a lot of things working in your favor. There are people at the state who are aware of your situation here and would help us move this thing along.”
John Bliss, a civil engineer with SCI Consulting, presented other funding strategies to the assembled fire officials.
A “special tax” requires two-thirds voter approval, which Bliss called a “high bar” in the current political climate.
Most California fire districts are having better luck with “benefit assessments,” he said. Despite being more complex, an assessment is easier to get approved, requiring a simple majority of property owners, weighted by valuation. The funds must be focused toward fire suppression rather than ambulance service, said Bliss.
Before asking the voters to approve anything, Bliss advised the fire officials that they should be able to demonstrate recent cost cutting actions and be prepared to argue that their pensions and salaries aren’t out of line with the region.
Proposition 172 and Hotel/Motel Tax revenues are other funding sources the county could redirect to fire service, said Keating, with a nod to Knight, who in turn suggested that the existing “CSA 7” tax, a $25 per household annual tax for West Slope ambulance costs, might be a better source of relief for rural fire districts.
Knight suggested adding a cost of living provision to the CSA 7 tax and raising the tax rate for parcel types that place high demands on emergency medical response. He also suggested allowing CSA 7 funds to be used for advanced life support engines, which rural districts could use for both fire and EMS.
Henriquez agreed that the CSA 7 tax is the quickest way to infuse cash into the broke districts and reminded fire officials that annexing and reforming fire districts would be a complex and time consuming process, and could face opposition along the way.
Keating promised that the chiefs would continue to work with the county, gain more concrete information on potential annexation, tax or assessment measures, and try to determine where they might garner support or encounter opposition for each approach.
He also said he wanted give the El Dorado Hills Fire Board members time to confirm their support of the proposed annexations. He promised another general meeting when he has progress to report.
“Meanwhile, we have to keep looking at other options to save money and demonstrate that we’re working together and streamlining, that we’re not just throwing money at it and nothing’s going to change,” Keating said.
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