O.C. Fire Authority Has Emergency of Its Own

With a hefty budget deficit and an uncertain financial future, the agency that provides fire and ambulance service for more than a million Orange County residents is struggling to find money and defending itself against critics who say the organization needs to tighten its belt.

The Orange County Fire Authority has a $4-million deficit--4% of its annual budget--and officials said Wednesday that the deficit could double if the state succeeds in its effort to shift a portion of the agency’s property tax income to local schools.

But the agency’s moves to generate more money--such as dropping private ambulance firms and using fire personnel to take people to the hospital--has brought howls of protest and calls that the agency instead slash its own expenses.

“This is a critical year for us,” acknowledged Capt. Scott Brown. “We are 2 years old and experiencing some growing pains. We have to resolve them for the long-term survival of the authority and, ultimately, to maintain our service to the public.”

These growing pains are focusing new scrutiny on the agency:

* Some of the 19 cities that contract with the Fire Authority are grumbling that their residents contribute more tax dollars into the fire system than they receive in services. The complaints have prompted the agency to begin an “equity” study to consider ways of possibly redistributing resources. Other cities fear the study will result in reduced services for their residents and are mulling possibly leaving the system next year.

* The Fire Authority in March voted to increase dozens of service fees--from building plan checks to false alarm calls--generating more than $1.5 million in additional revenue. Though the increase covers only the costs of providing the service, some complain that the charges could hurt small businesses.

* The Fire Authority also wants to drop private ambulance firms and use its own personnel to transport patients to hospitals. The move would bring the Fire Authority more than $4 million a year. But ambulance companies are vigorously fighting the plan, and a panel of city managers on Wednesday also raised questions about it.

“We are concerned that more attention is being given to raising new money to pay for existing operations than cutting the costs of those operations,” the city managers said in a report.

The group also urged the Fire Authority to have a third party examine the ambulance issue and look at the finance and accounting support staff as an area for possible cutbacks.

Created after the county’s epic bankruptcy, the Orange County Fire Authority took over service to 19 cities and all county unincorporated areas that previously were served by the Orange County Fire Department, a branch of county government.

City leaders pushed the formation of the Fire Authority as a way of giving municipalities more control over fire services and breaking it free from the grasps of the county bureaucracy.

The agency is now run by a 21-member panel made up of city council members and county supervisors, which quickly realized their top priority was balancing revenue with expenses.

Up to now, the $4-million gap has been covered by using Fire Authority reserves. But Sherri Butterfield, chairwoman of the authority’s board of directors, said the reserves are not a long-term solution and that the agency must find other ways to cover the shortfall.

However, the financial uncertainty could grow far worse if the state decides to divert $4 million a year in Fire Authority revenue to school districts. Fire officials originally believe they would be exempted from the diversion, but the state recently informed them that they might lose the funds and have to pay $12 million in back taxes. The Fire Authority is still awaiting final word from the state.

To boost revenue, the fire board in March approved fee hikes totaling $1.6 million on a variety of fire prevention services, including building plan checks, fire marshal inspections, false alarm calls and sprinkler checks.

Butterfield said that the new fee schedule only reflects the cost of providing the services and that the authority is not gaining extra revenue off the increases. She noted that while 177 fees increased, 25 fees decreased.

“The whole goal of this was to tie fees to the actual costs of performing the service,” she said.

Nonetheless, some businesses and city officials have complained about the fee hikes, saying they place an added burden on small businesses.

Even more contentious is the authority’s effort to take over ambulance service, which is now provided by eight private ambulance companies. By having Fire Authority personnel transport patients, the agency would collect the $296-per-trip fee now received by the ambulance companies.

Officials said the conversion would reduce ambulance response times and provide the Fire Authority with more than $4 million in additional revenue that now goes to the ambulance firms.

But the private ambulance companies said the proposed change would worsen service and force big increases in the transportation charges paid by patients.

“They’re desperate to keep revenues coming in,” said Brian Ranger, director of government relations for AMR Ambulance Co., adding that the agency should instead trim its own budget.

Some city officials agree that the Fire Authority can do more to reduce its own expenses.

“We have a $100-million budget. You can always find 4% in a budget to cut,” Irvine Councilman Mike Ward said.

Irvine City Manager Paul Brady agreed, saying many cities have been able to close similar-sized budget shortfalls through work-force reductions that didn’t harm public services.

“I think you have to look at middle management, the administrative analysts--all the positions from assistant chief on down,” Brady said. “You can consolidate and restructure the organization without hitting the firefighters on the front lines.”

Brown and Butterfield said the Fire Authority’s strategy has been to both raise revenue and cut costs by contracting out some functions and reducing the number of sworn firefighters with desk jobs. But they said more belt-tightening could be considered in the future.

While officials struggle to close the budget shortfall, they also must address concerns from Irvine and several other South County cities that contend their residents pay more in property taxes than they receive in services.

Irvine officials estimate that the city’s residents pay at least $7 million more in taxes than they get in services. Other South County cities face similar situations, while some smaller cities in the central county might be receiving more services than their tax dollars cover.

The Fire Authority has hired a consultant to study the issue and report back next year.

Ward, Brady and other Irvine officials said they don’t expect to receive 100% equity but believe “donor” cities could receive some enhanced fire services. They also said it would be a mistake for other cities to pull out and lose the economies of scale and backup support that the Fire Authority offers.

“It would be a rotten idea to leave,” Ward said. “We formed only two years ago, so what we are doing is setting new ground. I think this thing can work out. We are improving every day.”