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Friday, October 18, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Washington Voices

Valley Fire District To Take Out Loan Commissioners Will Seek $1.75 Million Over 14 Months

Valley Fire commissioners, faced with a money shortage, moved to seek a 14-month loan of $1.75 million Wednesday night, the first time the district has sought such relief.

Commissioners then approved more than $200,000 in budget cuts proposed by Valley Fire administration, temporary staffing changes, and directed Chief Pat Humphries to trim an additional $300,000 from this year’s budget.

“I still want this district to operate within the parameters the taxpayers are willing to pay,” Commissioner Tom Gregory said.

The district is faced with $1.25 million in bills that will come due before property tax money is collected during the next several weeks, Humphries said. A delay in mailing property tax statements this year left the district $140,000 behind the amount it had collect last year by April 1.

Extraordinary sick leave and long-term disability cases that resulted in increased overtime costs, early construction of the Liberty Lake station and other costs drained Valley Fire’s ending fund balance, which the district typically uses to pay its bills before property tax payments are collected.

“This is an adjustment and not a crisis,” Humphries said after the meeting.

The fire commissioners voted 3-2 in favor of the 14-month tax anticipation note, against which money is borrowed based on the amount of property taxes expected to be collected, over a two-month loan from county funds. The vote swung in favor of the tax anticipation note when Commissioner Jim Fox’s retreated from his pledge to vote against it.

While a loan from the county would have been repaid quicker, the loan’s higher interest rate could have cost the district more money. The tax anticipation note’s longer repayment period gives the district an opportunity to recover interest costs.

“I think our probability of having a loss is less than the known of going with the county,” said Fox, who added that he did not strongly oppose either option.

Commissioners Harry Larned and Ron Schmidt voted for the note, while Tom Gregory and Ray Allen cast the two dissenting votes.

Jack McLaughlin, D.A. Davidson Co. public finance vice president who arranged the tax anticipation note for the district, told the fire board short-term notes are commonly used by government entities.

But to a district that has never incurred debt for longer than two months at a time, a 14-month note was long-term debt, Gregory said.

“We’ve bought stations and haven’t mortgaged the taxpayers which is what you’re doing when you borrow money,” Gregory said.

Money collected from property taxes will be set aside to repay the tax anticipation note next June, Humphries said. Excess property tax money will then be reinvested in hopes of earning back the interest lost on the tax anticipation note.

Interest rates will have to drop nearly a full percentage point between now and November, when the rate will become fixed, for the district to lose money, McLaughlin said.

However, Valley Fire will only net about half the interest income it has in past years, when the district carried ending balances close to $2 million without significant debt.

To prevent future cash flow problems, the board voted 4-1 to trim $204,149 from this year’s budget and cut overtime costs by implementing a series of temporary fixes. Schmidt cast the lone dissenting vote, calling the measures too lenient. He proposed further limiting training classes and meetings attended by board members.

Among the items cut out of the budget were a new public education officer position and replacement of a paramedic squad truck. The two cuts save the district $151,749.

The temporary fixes included completing the final eight weeks of training for 10 recruits enrolled in the area fire academy on shift in the stations, and using assistant and training chiefs to cover for battalion chiefs absent for two or more shifts.

, DataTimes

Wordcount: 632

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