The creation of the Regional Fire Authority, merging the fire agencies of Olympia and Tumwater, could reduce Olympia's expenses and address "bow wave" items in the budget, according to Finance Director Aaron BeMiller.
At the Finance Committee meeting held Wednesday, July 20, BeMiller discussed the impact of RFA on city expenses and potential property tax collections.
He said the Washington State statute allows Olympia to charge a maximum of $3.60 per 1,000 per assessed valuation for property tax.
The city's current levy rate is $2.21 per $1,000 assessed valuation. If voters approve, $1 per $1,000 of assessed valuation of property tax would be moved to the RFA.
"If approved, there would be a shift – and we want to mention the word shift because there would be no change in the property tax paid by the property owner. It would just be a shift of where those tax monies go to," BeMiller said.
BeMiller added that the impact of the property tax shift would be a reduction of about $9 million in property tax revenues. But the creation of RFA means the elimination of the fire department expenses.
Olympia's net expense for the fire department – based on the 2022 budget – is $13.3 million. "[$13.3 million] is the amount the general fund expense would be reduced. Then we discussed the almost $9 million drop in the property tax shift,” Explained BeMiller.
BeMiller said the city would have a positive variance of $4.3 million.
Property tax options
Olympia city manager Jay Burney presented two options to the city council regarding $4.3 million, which he called an excess.
Burney said one option could be to reduce the property tax beyond $1 further by the amount of the excess so they could lower the property tax collections.
"While it would enhance the fiscal appearance of the RFA to the community, it would put a strain on the city's general fund in terms of other services that we provide mainly in the areas of public safety," he said.
Burney offered another option to retain $4.3 million to address general fund "bow wave" items.
In May, BeMiller reported to the same committee that the "bow wave" is expected to hit the Olympia budget next year because of ongoing programs with no resources. BeMiller added the city used the one-time American Rescue Plan Act (ARPA) to fund programs such as Mitigation Site Operations and Crisis Response Unit Expansion, which would be ongoing operations.
Burney said the money could address critical areas of public safety needs "that the community has expressed to us that they want us to focus time and energy on."
Burney added the city has an ongoing obligation to body camera equipment and in-car video systems for the police department. It would cost the city $800,000.
In terms of homeless response, Olympia has to fund Mitigation Site and support position staffing for $1.4 million.
According to Burney, the city has no funding source for Crisis Response Unit. "We have expanded significantly and moved that services to 24 hours a day." He said the program needs $1 million.
Burney said the city needs an estimated $500,000 to contract RFA services for inspections and emergency management assistance.
To support Olympia's climate work and plan, it needs $500,000, Burney added. "We are understaffed and under-resource to move that work forward."
Burney and BeMiller recommended the second option.
"It would help offset these ongoing costs that have strained our general fund resources over the past few years. And I've been a response to a lot of emergent community requests for us to address these items specifically," Burney told the Finance committee members.
Public safety bow wave items:
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