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Upper Pine facing $585,000 deficit
3/28/2013 By: Carole McWilliams
Fire district trying to sell ladder truck
Upper Pine Fire District officials are dealing with a pending budget deficit of almost $585,000 that could use up district financial reserves next year if not addressed
The district board and officials discussed the crisis at their March 21 meeting and scheduled a retreat for Friday, April 5, from 8 a.m. to noon to start fixing the problem and discuss a proposed November ballot question for a tax increase.
“I’ve temporarily suspended any spending unless it’s mission critical, until you review the budget,” Chief Bruce Evans told the board. “I won’t lift that until after the next board meeting. We are trying to get containment on some of these issues.”
The budget shows projected total income this year of $2.88 million and projected spending of $3.46 million for a deficit of $584,970.
That will cut into district reserves of $1.07 million.
“We are going to burn through half of that this year and the other half next year if we stay at this level,” Evans told the Times. “That’s why we have to go to voters. The district under (former chief) Rich Graeber was operating at a deficit for the last three years.”
Audited end-of-year fund balances were $1,637,788 in 2009; $1,931,041 in 2010, possibly reflecting high natural gas prices two years earlier; $1,423,489 in 2011; and $961,882 (unaudited) for 2012. Evans said the larger reserve shown on the Feb. 28 balance sheet reflects recent income from sending crews to non-local wildfires last year.
According to board minutes, the 2013 budget was approved at the Nov. 15, 2012, meeting. The minutes say, “The department is running at a deficit due to reduced tax revenue and anticipates a deficit for next year as well.” The board discussed “carryover,” apparently operating money in a cash account) versus “reserves” kept in bank CDs.
The district has $549,335 in a cash account. Evans told the Times that is meant to cover operating costs in the first part of the year before property tax money starts coming in. The situation there is actually better than usual, he said.
“This is the first year that we haven’t been in the negative in January and February” thanks to payments to the district from sending crews to non-local fires last year, he said. “A lot came in in December, January, and February, so we didn’t have to get into savings to operate.”
As for the 2013 budget approved with the big hit on reserves, Evans told the board last week, “There was a lot of confusion on this budget. The month we should have spent two hours on this budget, we spent two hours going through the check register. It was a surprise to me when that (computer upgrades) went over budget. We never went through the line items in the budget. We need to go back and take a hard look at this on April 5.”
District personnel costs (salaries and benefits) are listed at $2,260,879. Administrative costs bring that up to $2,445,779.
Non-personnel emergency services operating costs (fire and medical) are listed at $250,000.
Capital and lease purchase costs total $461,014, most of that for lease purchase payments on the district administration building and some equipment.
The budget situation could affect seasonal wildfire hazard mitigation this year. “It looks like it’s shaping up like last year for fires,” wildland fire manager Travis Wright said.
The district pays for this seasonal work with grant money and per-acre charges to landowners. The problem is that the district must pay the costs up front and then get reimbursement from the grant.
Evans said, “This is the third year of mitigation. There were huge losses in the first two that affected us in a catastrophic way. Now it’s contained where it should pay for itself… In the first round, we gave away mitigation for $150 an acre when it was costing us $3,000 an acre.”
He told the Times, “A couple years ago when we started doing this, promises were made to homeowners that they could have their lot mitigated for $150 an acre (cost to the homeowner). Just to have the crew out there is $800 to $1,000 a day. A more difficult lot could be three days. … It went on at least two years like that. I think our accounting is very solid now, for instance how difficult the lot is.”
Mitigation by a private operator could cost the landowner several thousand dollars instead of several hundred, Evans said. The discounted cost from Upper Pine depends on subdivisions, such as Deer Valley and Forest Lakes, that have created Wildfire Protection Plans to get grant money.
Board member Bill Kourim said the mitigation “was community-minded. We have some critical threats. Each year we get better at what we are doing with it.”
Wright said, “When you look at something like Waldo Canyon (the fire last year near Colorado Springs that burned more than 300 homes), they said there was nothing to be done. There was, but it was years before.”
Evans told the Times that a major wildfire on private land is another thing that could use up district financial reserves.
The district also has bond repayment obligations. The bond issue passed by voters in 2005 was used to buy emergency vehicles and build stations in outlying areas.
Evans advised, “I have news from Wells Fargo about their sudden reluctance to reincorporate (refinance at lower interest) our bonds based on budget projections. We may need to make some minor adjustments in that mill levy because of decrease in assessed valuation.” He clarified to the Times, “They have been very good to us, working with us to stabilize our budget.”
Bond issues contain authorization to raise bond repayment property tax rates if needed to make payments. Evans said it takes board action to do that.
One of the vehicles purchased with the 2005 bond money is a ladder truck that the district is now trying to sell. It originally cost $782,854, Evans told the Times. According to minutes of the November 2012 board meeting, the board voted then to proceed with selling the truck to replenish budget reserves.
Evans told the Times that he doesn’t see any justification to have that truck. It has been used three times total - twice in downtown Durango (the Seasons and El Rancho fires) and once in Pagosa, he said. It has significant costs for parts, insurance, and annual safety certification of the ladder, he said.
Deputy Chief Randy Larson reported that as of Feb. 28, the district had 120 calls. February was busy, he said.
If that keeps up, the district will handle more than the usual of around 650 calls for the year. Around 80 percent of those are medical, including vehicle crashes. The district also has had substantial write-offs on its billing for emergency medical services. The 2013 budget anticipates $300,000 in billing and having to write off, or not collect, about $125,000 of that.