The current fiscal year will be the last “break-even year” for the Mehlville Fire Protection District’s general fund, as projections indicate deficit spending will occur in fiscal 2005 unless revenues are increased, according to Comptroller Jeff Geisler.

Geisler discussed the fire district’s financial situation last week during the fifth meeting of the Fire District Advisory Committee for Tomorrow’s Emergency Services, or FACTS. About 60 people attended the July 28 meeting in the Ahrens’ Church Hall at St. Simon the Apostle Church.

The skyrocketing cost of health insurance, workers’ compensation coverage and fuel greatly has contributed to the district’s financial problems, Geisler said, noting that the general fund’s tax rate decreased by 7 percent from 2000 to 2003 because of limitations imposed by the Hancock Amendment.

Showing a chart that displayed general fund projected revenues and expenditures over the next 10 years, Geisler said, “… When we have the revenue growth that we’re having with the double-digit insurance costs, workers’ comp, you can see that the district basically in 2004 this is our break-even year. From this point forward, we’re going to be in a situation where the expenditures will continually surpass our revenues. And this is based on doing our current operations right now. The equipment replacement plan does not enter. This is as if we continue 10 years without even buying one piece of equipment or replacing one building or doing any type of major renovations to any of the facilities whatsoever.”

During his presentation, Geisler reviewed both revenues and expenditures of the district, noting that both the Mehlville Fire Protection District and the Fenton Fire Protection District have the lowest tax rate of all fire protection districts in St. Louis County — 90.5 cents per $100 of assessed valuation. With the current tax rate, the owner of a home valued at $100,000 pays $172 per year in property taxes to the fire district, Geisler said, noting a one-cent tax-rate increase would raise the taxes on that same $100,000 home by $1.31 per year.

For fire protection districts in St. Louis County, tax rates vary from $2 per $100 of assessed valuation to the 90.5 cents that Mehlville residents pay, he said, noting that the average tax rate of the 23 districts is $1.32 per $100.

“… What we find is that local property taxes are the primary funding source for all the fire districts in St. Louis County. Percentages vary, but it’s not uncommon for fire districts to receive about 90 percent of their funding from property taxes. The Mehlville fire district — actually our general operating fund receives 96 percent of its annual revenues just from property taxes. So it’s very dependent on property taxes …,” he said.

“What’s important to note about the fire districts that’s different than from municipalities or other governments is that property taxes are all received at year end in order to fund the upcoming fiscal year expenses,” the comptroller later said. “So districts generally have to have a much larger fund balance in order to carry them through the next operating cycle, and since everyone pays their property taxes generally by Dec. 31st, we get our paycheck up front and we have to use that money to pay our expenditures over the next 11 months until we get another paycheck in the following November.”

From 2000 to 2003, the assessed valuation of property within the fire district increased by 18 percent, Geisler said, adding, “Now what is interesting is that with the assessments going up, there’s this perception that the revenues have to be going up as well, but that’s not necessarily the case because of the Hancock Amendment, which puts limitations on our revenue growth. During this time period specifically, the general operating fund’s tax rate actually decreased by 7 percent while the assessments were going up. So we basically have a situation where the calls are increasing, we have much more property to protect, but we don’t have the resources. That’s kind of out of proportion with the growth that we’re experiencing.”

Under the Hancock Amendment, annual revenue growth is limited to 5 percent or the Consumer Price Index, whichever is less. Based on the CPI, the fire district’s revenues were allowed to increase by only 2 percent since 1998, Geisler said.

“The problem with this is that the Consumer Price Index is based on items such as food, apparel, housing. It doesn’t really include all expenses and in the fire district our biggest problems are health-care insurance, workers’ compensation and fuel (in which) we’re experiencing double-digit expenditure growth in that area. So we have a situation where the expenditures are surpassing the revenue growth. We have a maximum of 2 percent revenue growth and then we have 19 to 25 percent expense growth in health care and also in workers’ comp insurance …,” Geisler said.

As a result of the Hancock Amendment, the general fund tax rate has decreased to 55.1 cents per $100 of assessed valuation this year from 59 cents in 2001, he noted. The total tax rate from 2004 to 2001 has decreased to 90.5 cents per $100 from 92 cents.

Regarding expenditures, the comptroller said, “The district’s budget is people intensive with 87 percent of the budget going toward personnel costs.

Workers’ compensation was not included in personnel costs. He said, “… If you were to add the workers’ compensation in that, that percent would actually be much higher. It would be closer to 92 percent …”

Geisler also provided a number of historical trends for FACTS participants.

“… Our revenues, actually from 2000 to 2003, actually increased 4 percent, which is pretty good for a four-year period, but it’s not all that great because the thing that you have to exclude from this factor is in 2003 is when we enacted charging for medical transports, transporting patients to hospitals. That generated about $1.7 million revenue to the ambulance fund. If we were to separate that out of the revenues, our actual revenue growth has only been 1 percent during this time period,” he said.

During that same period, personnel costs increased 5 percent, health-care insurance costs increased 12 percent, and insurance, including workers’ compensation and property insurance, increased 25 percent, “which is very significant,” Geisler said

Fuel costs also increased 15 percent during that period.

Specifically, Geisler noted that health insurance cost the district $751,473 in 1998. In 2003, that cost increased to $1,432,440.

“It’s gone up 91 percent since 1998. That’s an increase of $608,000,” he said.

The district provides medical, dental and vision coverage for its employees and 100 percent dependent coverage for all employees.

The district’s other insurance costs also increased 149 percent from 2000 to 2003, to $704,018 from $282,780.

“So these two expenses alone have increased $1.2 million during this time period, which this was money that once was dedicated to purchasing equipment, for providing staffing, education and the public education plan that’s no longer available because these monies have been allocated to cover these rising expenditures,” he said. “And one thing that is not demonstrated down here that probably should be is starting in 2003 the district had to start contributing additional money to the pension plan. The pension plan has not been achieving its actuarial rate of return, which is 8 percent is the assumption. It’s been less than 4 (percent), so in order to make the minimum funding contribution, the district has had to contribute an additional $308,000 since 2003 out of the general fund and the ambulance fund just so we can make our minimum funding requirement for the pension plan. So if you actually included that in there, it’s actually $1.5 million that has been siphoned off …”

Employees do not contribute to the district’s pension fund, which is funded by tax dollars and the return on investments.

In reviewing the general fund revenues and expenses since 1994 to the present, Geisler said, “As you can see, the general fund is doing basically pretty good until it gets to year 2000 and then you see this deficit spending. This deficit spending here is represented by some apparatus that was purchased in 2000 and 2001. We actually purchased two 75-foot ladder pumpers and then also an aerial platform that came to about $1.6 million. So that explains the deficit spending or a majority of the deficit spending during this time period.”

Four different options to solve some of the district’s financial problems were presented to residents to generate discussion in a small-group setting.

The scenarios included tax-rate increases of 25, 30, 36 and 39 cents that would allow varying levels of staffing, facility and program improvements. A 25-cent tax-rate increase would cost the owner of a $100,000 home an additional $33 per year, while a 39-cent tax-rate increase would cost the same homeowner $51 per year.

After discussing the scenarios in the small-group setting, residents reached no clear consensus on any of the scenarios.

For example, one table of residents wondered about the possibility of using a bond issue to fund some of the capital improvements, noting a bond issue would keep the district’s base tax rate lower and the bond issue proceeds only could be used for capital improvements.

Another table of residents wanted more information about the equipment recently purchased by the district and a detailed, prioritized list of the equipment the district needs.

Another group looked at the first scenario and “we tore it apart,” believing a 25-cent tax-rate increase was too much. They suggested a 15-cent tax-rate increase along with using a bond issue.

Saying the public needs to be engaged in helping make recommendations, Oakville resident Larry Schreiber spoke of the need to attract and retain quality personnel for the fire district.

“… I’m really concerned because I’ve been concerned with the Mehlville School District and the changes that I’ve seen — a lot of tenured faculty leaving and too many new faculty coming in with no experience. I don’t want that to happen to my fire protection district,” he said.

Participants will begin formulating recommendations for the Board of Directors to consider at the next FACTS meeting, which will begin at 7 p.m. Wednesday, Aug. 4, in Ahrens’ Church Hall at St. Simon the Apostle Catholic Church, 11011 Mueller Road.