An election this April could impose the biggest increase ever in property tax bills for people in these two cities
Olympia and Tumwater voters will decide in a special election this April whether to merge their fire departments into a new Regional Fire Authority (RFA, Authority). Proposition 1 requires approval by 60% of the Olympia and Tumwater voters who cast a ballot in the April election.
If approved, the RFA will bring increases in costs for everyone who pays a property tax bill, with very large increases for rental apartments–which landlords will likely pass on to renters. All fire stations, fire engines, other equipment and personnel currently belonging to the two cities would transfer to the new Fire Authority.
Public involvement was lacking
Officials from the two cities created a committee of Councilmembers, fire chiefs, and firefighter union members (the RFA Committee) two years ago. Members reviewed a proposal from staff and approved a final RFA Plan in December. Despite an emphasis on public participation contained in authorizing legislation, only two public hearings were scheduled with no special notice. The result was attendance by just five members of the public questioning the proposal plus two firefighters supporting it.
The rationale for creating this independent taxing authority is 1) it is needed to provide additional funding for fire services, and 2) that merging the Olympia and Tumwater fire departments will produce economies of scale.
The RFA would be funded by shifting much of the property tax now going to the two cities to the Authority, and giving it the power to impose an additional “Fire Benefit Charge” (FBC, Benefit Charge) on everyone who pays property taxes. The FBC is calculated using a formula based on the “square root of the square-feet” of all properties subject to property tax. It is technically a fee, not a tax, so it is not subject to restrictions that otherwise limit property tax increases.
The combined City/RFA property tax doesn’t change the amount of property tax a property owner will pay. The Benefit Charge imposes a new, additional fee to be collected via the property tax bill, on top of property taxes.
If the RFA is created, each city would see a reduction in expenses beyond the amount of property tax transferred to the Authority. Council members in each jurisdiction would be free to spend this “RFA dividend” as they wished. Property taxes do not go down. The Benefit Charge is a new source of revenue to be collected for the RFA in addition to the existing property tax .
How will the new Fire Benefit Charge affect property tax bills?
The initial FBC in the Plan to be put before voters would collect $10.5 million per year from property owners. It would amount to the largest increase on property tax bills in the history of either city.
The design of the FBC raises concerns both in terms of equity and how the amount to be charged can be increased. In terms of equity, single-family homes will pay about $.09/sq.ft., but apartments will pay $.24/sq.ft. An 800 square foot apartment ($195) will pay more than a 2,000 square foot house ($189). When landlords pass this through in rent, the biggest impacts will fall on some of the people least able to afford an increase in the cost of housing.
The Regional Fire Authority, if approved by voters in April, will have the power to raise the Benefit Charge another $15 million/year in addition to the initial $10.5 million from the public for a total of $25 million without another public vote. Someone paying a $400 Benefit Charge fee the first year, could pay as much as $1,000 per year after that.
After six years, the Authority is required to seek voter re-approval for continuation of the Benefit Charge beyond 2030.
Here is a closer look at claims put forth in support of the Fire Authority:
- Is there a funding emergency for fire response? No. Both the Olympia and Tumwater Fire Department budgets have risen faster than the combination of inflation and population. They are more than keeping up.
- Will fire response times get worse without an RFA? The Plan that voters will vote on does not add firefighters, fire engines or fire stations beyond those not already committed by the cities. Without additional people, equipment, or facilities, fire response will not improve. And if populations grow, calls for assistance go up and staffing during the 7-year plan isn’t increased, response times may get worse with the RFA.
- Is the FBC based on fire risk? The Plan now calls for the fees supporting the charge to be set based on the square footage of a building, regardless of any associated hazard: a welding shop pays the same as an ice cream shop. An early draft did impose higher fees on specific types of buildings with high fire risk, but that has been removed.
- Where does the new $10.5 million go? A portion goes for existing operating expenses not covered by the property tax transfer from the cities. A portion goes to paying employees more money. The balance pays for $2 million in new, duplicative administrative costs for things like human resources, public relations staff and attorneys, and for paying back, over time, a $10 million start-up loan from the cities.
- Will the RFA improve emergency medical response? There are no new emergency responders funded in the Plan. Improvements are already underway. This will happen whether or not the RFA passes. Olympia is adding 18 new firefighter/EMTs plus 2 support staff who would not be paid from the FBC charges but from reimbursements from insurers and the federal government. If the RFA is created, these new positions would transfer to the RFA. Otherwise, they will remain Olympia Fire Department employees.
Creation of the new Regional Fire Authority would have additional important yet little noted consequences
Emergency response costs will be left to the cities. Currently, if an earthquake, flood, or other non-fire disaster strikes, the two city fire departments respond, together with the public works and police departments. Under the RFA Plan, the cost for the “emergency response” function remains with the cities, but much of the personnel and equipment would be transferred to the RFA.
Loss of local control. The RFA will be controlled by a separate board, not the two City Councils. Experience with the Port of Olympia and other “special purpose” government agencies shows that special purpose government agencies tend to be captured by those with a vested interest in the outcome of such little-watched elections.
Higher costs for current firefighters. The state “binding arbitration” process uses “comparable” fire agency pay. Bigger departments pay higher wages. Instead of being compared to smaller cities like Kelso and Bremerton, wages in the combined RFA will be compared to larger and more urbanized cities with higher costs of living like Auburn.
The table above shows examples of the 2024 compensation schedule as contained in the work papers presented to the RFA Committee. It represents about a 20% increase above 2022 compensation levels (a little more for Tumwater firefighters, currently paid less than Olympia firefighters).
Olympia and Tumwater have other funding alternatives
Currently, if these two cities need more money for fire or EMS services, they have many funding options. A voter-approved “levy lid lift” could raise property taxes which are based on property value. Cities also have many tax options they can use to support fire and medical response. They can issue bonds to pay for fire engines and new fire stations.
A YES vote in April will approve the formation of the Regional Fire Authority including the imposition of the new Fire Benefit Charge.
A NO vote in April will reject the formation of the RFA, leaving the Tumwater and Olympia Fire Departments intact, as part of the annual budgeting process carried out by the two City Councils.
Jim Lazar is an economist and former Thurston Co. Public Utility District Commissioner. Larry Dzieza is a local advocate for good government. For more information. go to Save Our Fire Departments.
What’s in it for the City of Olympia?
The answer is millions of dollars in savings and costs off-loaded to the RFA – if it’s voted in.
At a Jan. 23 meeting on annexing an area around Indian Summer Wilderness, an EcoNorthwest consultant told Olympia Councilmembers that revenue even with the new tax base would fall short of costs by $69 million over 20 years – IF no RFA is formed and the Olympia Fire Department serves the new population. Regardless of impact fees, growth will not pay for growth.
On the other hand, if the RFA is approved, it will supply the new area and the City of Olympia will gain $11 million in net revenue over the period.
To supply the new area, the RFA can increase its Fire Benefit Charge fee to taxpayers in both Olympia and Tumwater, with no requirement for a vote. For the City of Olympia to pursue a levy lift for the funds, would require a vote and a discussion of how this benefits current residents.