The Math of a Merger
In 2006, four of Coventry's seven fire districts merged - with an eye toward pooling resources, streamlining operations and saving money. But taxpayers in the consolidated district want to know why the fire budget has increased nearly 60 percent in just 5 years. Jim Hummel talks this week with the district's fire chief - and a local businessman looking for accountability.
Click HERE to see extra video footage.
To see a copy of the 2009-2012 firefighters contract, click HERE.
To see a copy of the firefighters contract that runs through 2015, click HERE.
Taxpayer: ``Is that is? One and done?''
Chairman: ``I've asked you twice to stop sir.''
Leaders of the Central Coventry Fire District got an earful in April - at a special meeting that had to be called when the district suspended its annual meeting six months earlier - another raucous gathering where voters, faced with a tax increase, opted not to pass a new budget; instead going with last year's figures and mandating district officials to aggressively pursue nearly a million dollars in uncollected back taxes.
Shortly after that meeting, the Hummel Report requested the district's financial information for the past several years. We wanted to see what effect the merging of four districts - Harris, Washington, Tiogue and the original Central Coventry - has had on the new district's budget.
The fire district has its own taxing authority apart from the town and residents receive separate tax bills every year.
Here's what the district's own figures show: in 2006 the first year of the consolidation, the budget was $3.9 million. In 2009 it was $4.95 million, 2010 $5.95 million and last fall the district proposed a budget just shy of $6.5 million. That translates to a 65 percent increase in spending in just five years.
Hummel: ``The thought was, you put four departments together and you're going to save money.''
Assalone: ``Not true. Show me where it's been done. They can't show it.''
John Assalone is a local businessman who spoke at the April meeting, complaining about a lack of transparency.
Assalone: ``We believe they're totally over their head as to what's going on financially and they show it. We're dealing with people that can spend $6 million locally - take $6 million from local people and they can't provide a balance sheet. This is nuts.''
Seltzer: ``It is a more efficient operation. I cannot tell you how much more efficient it is when I go to a major incident and all of these firefighters and EMTs are on the same page of music.''
Robert Seltzer, the chief of the consolidated district, said merger talks go back more than 20 years. In 2004 Seltzer wrote a 40-page paper examining fire district mergers in other parts of the country. His conclusion: while there may not be savings in the short term, there would be in the long run.
In a wide-ranging interview last week we asked him about the huge spending increases.
Hummel: ``The bottom-line is - your budget has gone up 30 percent in two years and it's gone up 65 percent in the last five years.''
Seltzer: ``I'd have to double-check the numbers.
I don't have them in front of me.''
Hummel: ``Would you be surprised if I told you it was 65 percent?''
Seltzer: ``No. I wouldn't be surprised.''
Hummel: ``So when you're trying to... ""
Seltzer: `` I don't think the budget's gone up 65 percent. No, those numbers are not correct.''
Hummel: ``You started at $3.9 million in 2006."
Seltzer: ``No we didn't start at $3.9 million.''
Hummel: ``Chief, I'm just going on the figures you had given me.''
In fact, in a follow up email this week, the chief confirmed for us this week the budget approved five years ago was....$3.9 million.
Seltzer acknowledged that the lion's share of the budget and the increases goes to salaries and manpower. When the merger was complete Central Coventry moved to a system of all-paid union firefighters and no volunteers or call personnel. The Western Coventry district has two fulltime firefighters and the rest call, Hopkins Hill a combination of paid and call. Call firefighters get a stipend for each run they make.
In fact Central's contract mandated 39 full-time in 2009. That has increased to 46 this year - an 18 percent boost in manpower. And the contract says no one can be laid off if there is another merger.
Federal money known as a SAFER Grant funded a large portion of five new firefighters shortly after the merger. When that money ran out, the department received another grant that allowed the hiring of eight more new firefighters, again substantially boosting the budget. In fact, the budget increased a million dollars alone in one year.
Hummel: ``Some of the people you brought on came under a federal grant. Is that correct?''
Seltzer: ``Yes. ''
Hummel: ``And how long does that money last?''
Seltzer: ``Two years.''
Humme: ``And when does that run out?''
Seltzer: ``That runs out in 2012.''
Hummel: ``Alright, so then what?''
Seltzer: ``They going to stay on. Right now they're actually filling in for vacancies.''
Hummel: ``So you anticipate maybe in 201, it'll be....''
Seltzer: ``It'll balance out.''
Hummel: ``Do you think it's going to be a reduction, then in your manpower?''
Seltzer: ``It could be. The other thing is there are additional federal funds available to keep those people on, so there are other options out there as well.''
So what about the tax rate?
After the merger, Central set one rate for residential - and a rate double that for commercial property to generate more revenue.
Seltzer told us the huge spending increases have not translated to similarly higher tax bills - partly because of the federal grant money and partly because the district has been able to generate some other revenues like the reimbursements for rescue runs. Even so, some business in town have seen their tax bills double over the past 5 years.
Hummel: ``At the end of the day if your budget is significantly higher than it was before, how do pose that as the consolidation has been successful?''
Seltzer: ``Well I think that the success part is the taxes haven't gone up to reflect a 65 percent increase in budget: Our average tax increase over the past 5-6 years has been 3.3 percent. If I take the average of everything it's 3.3 percent.''
But that's not what our analysis shows - again based on figures provided by the district.
In 2006 the residential tax rate was $1.50 (per thousand assessed valuation). It had gone to $1.82 by 2010 - a 21 percent increase.
The proposed increase on the budget that was never passed last fall was another 6 percent.
That's 27 percent in five years, or about 5.5 percent yearly.
On the commercial side, the rate in 2006 was $3 (per $1,000 of assessed valuation).
Four years later it was $3.62, up 20 percent - or an average 5 percent yearly.
The district's board of directors has also been faced with not being able to collect its taxes.
Seltzer says the figure was as high as $1.6 million several years ago. Aggressive collection has gotten it down to about $300,000, which has helped offset spending increases. But that's a one-time infusion of cash.
Last summer, cash flow was bad enough that the district took out an $800,000 loan to pay its operating expenses - first at the Coventry Credit Union, then transferring it to Centerville Bank. Seltzer says he isn't sure when it will be paid off - while the district pays thousands of dollars in interest on the loan.
At the April meeting the chief proposed a mid-year budget that called for no tax increase. But at $6.2 million the budget represented a more than $300,000 increase in spending over last year's spending plan.
Chairman: ``Issue No. 4 is out of order. The catcall directed at the speaker is out of order.
If you're not addressing the amendments to the motion on the floor, you're out of order.''
The district's board chairman found himself on the defensive much of the night - and was quick to rule various people out of order.
One firefighter began to yell at people questioning the budget, eventually getting tossed out of the meeting.
Taxpayer: ``Every time you go to these meetings it's so aggressive. I don't know if I want these guys in my house.''
Assalone: ``But if you ask a question it's like you're challenging their manhood. And they have to accept these questions whether they like it or not. We're tired of this hero stuff. I'm a hero, you're a hero, let's support everybody. They tired of that. Are they heroes? That's their job.''
Hummel: ``You mean the firefighters?''
Assalone: ``Absolutely, are they good people? Absolute, but that doesn't mean you can just raise money when you want to raise it. Those days are over.''
Hummel: ``What I'm hearing from some of the people in town, apart from the politics, is that there's a bit of a thin skin.''
Seltzer: ``Well first of all, it's going on in every community right now. The fire service and law enforcement are not...we don't have the public support we had two or three years ago and it's been ever since the recession. And quite frankly one of the reasons is because we're working and people are out of work.''
And while the union, in the latest contract, agreed to no pay increase the first year, the district is faced with having to find new revenues to sustain a budget that is millions higher that it was just a few years ago.
Assalone: People really resent that. They don't want to hear anymore about this regionalization. It sounds good, regionalize the state, regionalize this. It's never worked.''
Hummel: ``Why do you think it's become personal for them?''
Assalone: ``It becomes personal because they're involved and now people are asking questions and that's never happened before.''
Hummel: ``Is that it, nobody's every questioned them? Up until now?''
Assalone: ``They've never been questioned. Would they do a job I normally wouldn't do? Absolutely. I give them all the credit - who wants to run into a building with a raging fire? It doesn't happen that often but they do it when they're called upon. People that go out and rescue other people, I don't think there's anything to a higher value other than that. But at what price is this?''
It's a question many taxpayers are starting to ask.
In Coventry, Jim Hummel for The Hummel Report.