Fire Department budget questions

Hello Peter

Thank you for your patience while awaiting my response.

I’ve cut and pasted your questions into this email so I can answer them one by one, with my answers in blue. You should be aware that Fire Chief Carlson has requested some recent additions to the LIVFD budget so when the draft budget is brought to the next Committee of the Whole meeting some of the line items will be different from what you saw in the February draft, but the overall proposed budget remains generally the same with the same recommended requisition amount.

The LIVFD budget doesn't seem to be on the agenda for Thursday's board meeting.

The LIVFD budget is not on this week’s Board meeting agenda as the budgets are not adopted until the March meeting of the Board. The recent report, delivered to the Committee of the Whole on February 16th, regarding the fire department budgets was not seeking a Board resolution but rather looking to present the draft budgets to Committee for discussion and feedback to staff ahead of adoption in March.

**Why is there such a large increase in Property Value Tax requisition, from $48,560 to $106,548, a 119.42 increase? Is this related to the decrease (from $71,975) between 2015 and 2016? What additional expenses or expenditures are planned for 2017 and future years?

This service has been significantly underfunded for many years with the result being that there are now deficiencies in several aspects of the LIVFD that will need to be addressed. There is a need to significantly increase fire training as well as communications equipment. I am also recommending increasing contributions to reserve as you’ve noted in one of your questions further below.

**Please explain the meaning of Prior Year Surplus, line 61290. Was the $37,000 surplus under 2016 brought forward from 2015. because it wasn't spent in 2015? Is this part of the reason that the tax requisition in 2016 was so much lower? It looks like (unless PYS means something else) there was $14,036 unspent from 2016. If this was the case, why is there such a huge increase in PVT revenue for 2017?

You are correct - Prior Year Surplus is the amount unspent from the previous year. The recommended increase for 2017 is due to the needs mentioned in my previous answer.

**Budget and expenditure for Communication O&M $1500 budgeted and $549 spent for 2015, yet the budget was increased to $5000 (3 1/3 times as
much) for 2016. Actual expenditure was $771, and yet the budget for 2017 remains at $5,000 and will increase from there in future years. I'm wondering why. Is some large expense in the future being saved up for?
Is this Emergency Dispatch?

The intent for 2016 was for the LIVFD to purchase some radios and related equipment however most of these purchases did not occur. The intent for future years is to purchase appropriate pagers and radios for dispatch and communications.

**Who is being paid wages of $5,179 in 2017, and slightly more after that year?

That is a portion of my wages. Beginning this year my wages are being apportioned among the five services that I manage for the PRRD.

Why is the WCB expenditure going up so much, about 2 3/4 times, and staying at this greatly increased amount?

This WCB includes coverage for the LIVFD members as well as now for me.

I notice that Training Expense remains at $10,000 for 2017, but is due to decrease to $3,000 after this year, and I'm wondering why.

This number was set at $10,000 for the proposal put forth for the February 16th Committee of the Whole as I did not at that time have Fire Chief Carlson’s training budget request. The draft budget proposal to be presented for the March COTW will be significantly higher. The majority of this increase comes as the LIVFD must now begin formal firefighter training to meet the required competencies for the exterior fire operations service level.

Why has Vehicle Maintenance & Operation gone down to $3,000 from $11,000 in 2016, and forecast to stay there?

The 2016 budget identified some necessary mechanical repairs for the LIVFD fire apparatus. Currently we don’t have any plan for significant repairs for apparatus in 2017.

Why was there no expense for Vehicle - Gas & Oil in 2016?

The LIVFD purchases gas and oil by account at the False Bay Fuelling station. The account was paid toward the end of 2015 and we did not receive another request for payment again until just recently in early 2017.

Hall Maintenance budget fir 2015 was $3,500 and expenses were $401. For
2016 budget was $4,000, expenses $681. Why does budget for this remain at this level? Are we saving up?

The budgeted amount in this line is intended to address identified maintenance issues with the fire hall. For several years the main fire hall door has been identified as in need of repair so this was budgeted but the work did not get done. This has now been budgeted again for 2017 and I understand the work is now getting done.

What does line 61680 Insurance cover? What are we getting for $2,000 per year, on average?

This covers liability and property protection.

What does 61690 Administration cover? Why is it decreasing each year?

The administration cost is applied in every service budget at 8% of the subtotal O&M so it rises or falls in relation to the overall budget. This covers the costs of PRRD service administration.

Why is Contingency, having had no budget in 2015, budget of $6,659 but no expenditure, set at $2,000 in 2017, reducing to $1,500 for future years? Is there a percentage of the budget that is used for contingencies? How is the amount set each year?

The contingency amount is there to allow the service to address unpredicted issues. There is no firm rule for the amount put in contingency. I am recommending $2,000 for this year. The $1,500 for future years is merely a forecasted number. We use a process of “zero-based budgeting” whereby we build the budget every year by specifically reviewing each expense so the contingency will be reviewed again in 2018.

Professional Fees (budget $11,000 in 2015, no expenditures, budget
$5,170 in 2016, $500 expenditure) have been set at $3,970 for 2017, nothing for future years. What does this cover, and how is the amount set?

This budget line is for paying for professional services, for example for architects or for legal surveys. In 2016 the $500 paid the LIVFD portion for the fire service consultants for their work to produce the Recruitment and Retention Review. In 2017 I am proposing $3,970 to cover the costs of a GIS professional for mapping for the LIVFD assets.

**Transfer to Reserve was $20,000 last year, and set to increase to
$68,000 this year. Why? What's being saved up for?

The reserve fund is for saving up for anticipated future capital costs. While there is currently no immediate plan to build a new fire hall or buy new fire apparatus it is my recommendation that the service prepare for these eventualities. The LIVFD has an ageing fire hall with significant shortcomings. The LIVFD also has the oldest apparatus fleet of all the PRRD’s fire services. The LIVFD will also need to invest in SCBA and other firefighting equipment in order to comply with current firefighter safety requirements. None of these items are actually proposed in the current 2017 budget but they are all foreseeable expenditures.

**$5,000 is being budgeted for Transfer to Capital for 2017, and $4,000 forecast for 2018. What's this for?

Capital items in 2017 will be a new fire hall door and installation of a water tank at the south fire hall. The 2018 and any LIVFD future years capital is a forecasted amount but the amount will be revisited in that budget year. In the other fire services we have developed capital asset replacement plans, whereby we have identified the anticipated year for replacing fire apparatus or fire halls or other significant capital item so that we can better prepare for these future capital costs. There is no capital replacement plan for the LIVFD so I do not have confidence in any forecasted capital amounts.

**Total Operating Expenditures says, I believe incorrectly, that the increase of the 2017 budget over 2016 is $34,542, or 28.76%. By my arithmetic is actually a $52,451 increase, which is slightly less
than 51.37% increase. It appears that the increase has been mistakenly
copied from the revenues section, and does not apply to the expenditures.

The increase is measured by the difference between the 2016 budget and the 2017 budget (and not the 2016 Actual). The 2016 budgeted total operating expenditures was $120,030 and the proposed 2017 total operating expenditures are budgeted at $158,554 which makes an increase of $38,524.

**Capital budget: 2018 proposal is to transfer from Reserve $50,000, and $4,000 from Operating. I assume that Borrowing Proceeds means that
$361,961 is to be borrowed. This seems like it is to be matching funds for a Grant of $784,039 for a total capital revenue of $1.2million, which is to be invested in buildings.

We are always watching for and researching opportunities for grant funding. Unfortunately there is currently only very minimal grant opportunities for fire department capital expenses.

I can only assume that this is the proposed new fire hall for Lasqueti.
The community has said pretty strongly and clearly that there is not support for a new fire hall at this point. This might change, but it seems like the Regional Board is proceeding on their plan to replace our fire hall, and make us pay for it, without asking us or listening to us.

On November 24, 2016, the Board adopted its Asset Management Policy 3.14. This policy states that “The Powell River Regional District believes that proper and complete asset management improves the Powell River Regional District’s (PRRD) ability to serve its communities.” And “Well planned, managed and maintained assets are essential to maintaining the services and sustainability of the PRRD”

Building up the reserves is a common asset management practice. By building reserves we are preparing the LIVFD service for the eventual renewal of its capital assets and by increasing the reserves we will be able to reduce the borrowing costs when the asset is rebuilt, upgraded, or replaced. I believe my recommendation to build the LIVFD reserves in consistent the Board’s Asset Management policy and is in the best interest of the sustainability of the LIVFD.

If nothing else, I strongly advise that community discussion begin immediately on this topic, before this budget is adopted by the board.

The proposed budget will be before the Committee of the Whole again in March, and will come before the Board at its meeting scheduled for March 23rd.

It looks to me like the huge budget increase for 2017, over 2016, and especially the $69,166 to be transferred to Reserves, is an attempt to obtain a new Lasqueti fire hall without having to involve citizens in either the decision to go ahead with this plan, or to have opportunity to discuss the need for or merits of a new hall, or to have any voice on how our taxes are set, collected and spent.

My recommendation to transfer funds to the reserve is my application of the guidance set forth in Policy 3.14, as well as my recommendation to best prepare the LIVFD for its future capital needs, including fire hall replacement. Given that the reserves are currently well short of the anticipated costs of any future fire hall the PRRD will need to borrow the majority of that cost whenever that happens. It will therefore not be possible for the PRRD to proceed with constructing a new fire hall without the involvement of the Lasqueti public since long term borrowing requires elector consent.

If you have any further questions please give me a call.

sincerely

Ryan Thoms
Manager of Emergency Services

Hi Peter. Here again are my answers in blue below each of your questions:

Despite all the detail I've asked for and you have given me, I don't understand the intent and goal for the Lasqueti Island Volunteer Fire Department.

The intent of my recommendations are for the LIVFD to begin working in a sustainable fashion toward its service compliance requirements.

I also have no idea how much money there is in the reserve accounts for LIVFD. This year, $69,166 is budgeted to be transferred to reserves, plus $5,000 to Capital (I assume reserves).

Currently the LIVFD has $93,354 in reserves.

In 2016 $20,000 was transferred to reserve. For 2017 it is to be $69,166; and for 2018 $45,090; 2019 $47,310; then in 2010 and 2021 it goes down a very small amount. Why the huge increase for this year, and then reduced amounts in the next few years? What is the thinking around these amounts? Who has been involved in the discussion and decision-making? Have Lasqueti firefighters and taxpayers been consulted?

I am guided by policy in my actions. The Board adopted an asset management policy and therefore my recommendation is to put money into reserves when possible to best meet the goals of this policy. My job is to recommend to the Board but the Board is the final decision maker so if you have further questions about public engagement on any matters please direct those questions to Director Anderson or Alternate Director Fisher or members of the Board.

As is usual, your answers have made some of my questions more specific?

When was the decision made to take part of your salary from each fire department? What was the rationale behind this decision? How were the portions allocated? Is your new classification as a fire department staff person (rather than an administrator) responsible for all, or most, or some of the large increase in WCB costs beginning in 2017?

The Board is bound by the Local Government Act. Participants in one service are not expected to subsidize, and are not permitted to be subsidized by, participants of other services. This allocation was based on the recognition that each service should pay for its costs, meaning the time that I devote to matters pertaining to the LIVFD should be compensated through the LIVFD budget. The same holds true for my time with Malaspina, Northside, and Savary Volunteer Fire Departments. The actual budgeted amount was determined as a result of a time in motion study performed in 2016.

Budget amounts for contingency seem to be all over the map, without any obvious pattern or plan. There should be some policy or rationale for this.

Contingency amounts are meant for unanticipated costs and tend to be a relatively small amount to ensure there is something in the budget for unplanned costs. The contingencies are crucial because of the legislation that mandates regional districts to have separate, discrete funds for different services. The cross subsidy rule as mentioned above applies. If you are concerned that this requires a policy then again I recommend you direct this concern to Director Anderson or Alternate Director Fisher or members of the Board.

Looking at the budgeted amounts for each year, both in total operating revenues and total operating expenses, they have been increasing from

$110,551 (2015 - $73,597 spent), $120,030 (2016 - $102,103 spent), and a big jump to $154,554 for 2017, then back to $139,548 for 2018 and future years. If there was any reasonable incremental growth, we would expect the 2017 operating budget to be very close to $130,000 (and likely only about $110,000 actually would be spent). What is the need for, or rationale for, the huge increase in taxes and budget for 2017?

The recommended budget is the result of the LIVFD need for improvements in training, equipment, and for asset management planning.

I also notice that debt payments of $21,800 are to begin in 2018 and carry on for an unknown number of years. What is the debt being incurred for? Will the taxpayers be consulted about this? Will they be able to say yes or no to whatever debt is being proposed?

This projection is based on the forecasted debt payments associated with a new fire hall whenever that is built. The PRRD will need to borrow the majority of that cost whenever that happens. It will therefore not be possible for the PRRD to proceed with constructing a new fire hall without the involvement of the Lasqueti public since long term borrowing requires elector consent. If you have further questions about public engagement please direct those questions to Director Anderson or Alternate Director Fisher or members of the Board.

When I asked about why the training budget is reduced to $3.000 after 2017, you let me know that it will be significantly higher than $10,000 for 2017. Will that significantly higher expense continue for future years, or will it actually, as indicated, be reduced to $3,000 per year?

The LIVFD must now begin budgeting for formal firefighter training and this training will need to be ongoing. This is new for the LIVFD so it is a little early to be able to accurately forecast future training costs but I anticipate that the LIVFD will need to maintain a generally higher budgeted amount in future years in order to maintain firefighter and first responder training.

I understand that the fire hall doors have been replaced. I expect that this was fairly costly. $3,500 and $4,000 had been budgeted for it in the last two years, and again for 2017 (when it actually has been done).

Do you anticipate that $4,000, slowly increasing, will be needed each year in future, especially as the last two years only a few hundred dollars have been needed each year?

Chief Carlson confirmed that the door is complete as of February 2017 so that will be paid from this year’s budget. Now that the door is complete it will not recur in future years’ budgets.

Insurance - I understand liability. Is the property protection fire insurance for the fire hall?

Yes

Administration - I understand the concept, but it seems that none of the numbers come to 8% of the subtotal O&M. Since part of your salary (and WCB benefits) starting in 2017 come from this budget, should not the administration levy be reduced fairly significantly?

The 8% is calculated based on the operating costs.

Professional fees - why budget $3,970 for GIS professional to map PRRD assets? Do the property line surveys not accurately enough let you know where these assets are? What's the need for spending $4,000 to locate them on an electronic database? Don't you know accurately enough where they are?

This detailed mapping is intended to support our asset management planning; an evolution of the mandated Public Sector Accounting Board (PSAB) accounting practices. The property line mapping is not sufficiently accurate nor does it capture other asset details.

Sincerely,

Ryan Thoms
Manager of Emergency Services