Monday, October 5, 2009

Joel Miller's Flawed Proposals for Funding Fire Districts

New York State Assemblyman Joel Miller's latest attempt to alleviate the burdens of property taxpayers in high-tax fire districts comprises three legislative proposals:
  1. Allow fire districts to bill insurance companies.
  2. Subsidize fire districts through county sales tax.
  3. Subsidize fire districts by introducing a college student safety fee, whose cost would be passed through to New York State.
These proposals, documented in Miller's letter to New York State Assembly Minority Leader Brian Kolb, with cover letter to Mark Bendel, Vice President of the Fairview firefighters' union, are fundamentally flawed. Miller's proposals do not address the basic problem with fire and emergency services, which is that these services cost more than they need to. New York State's current system of fire districts and fire protection districts is inefficient and wasteful. At the same time, evolution of this system since its origin nearly a century ago has resulted in great disparities among districts in both costs to taxpayers and levels of service, with costs and service levels often not related.

Consolidation Provides Efficiency and Fairness

Many government officials and thoughtful observers have come to recognize that levels of service can be increased, total costs can be reduced, and costs can be distributed more equitably by consolidating small fire districts into larger ones. In today's economy, larger enterprises have substantial advantages over smaller ones. The businesses of fire protection and emergency service can benefit greatly from economies of scale. By consolidating fire districts, the region as a whole wins with better and more consistent levels of service, and more equitable funding of fire protection and emergency services. Property taxpayers also win with lower fire taxes on average, because the total cost of these services is less.

Although consolidation of fire districts has great public benefit, restrictive New York State laws have made consolidation an impractical option — until now. As part of an initiative to reform local governments by Attorney General Andrew Cuomo, revisions to New York State laws were put in place a few months ago, so that it is now feasible for local governments such as fire districts to consolidate. It has never been easier for fire districts to consolidate than it is now.

Miller's Proposals Simply Shift Costs

None of Miller's proposals reduce the actual cost of providing fire and emergency services, but simply shift current costs away from property taxpayers to other parties. But who are these “other parties”? With Miller's proposals, it is insurance companies, county governments, and New York State. Where do all these other parties get their money? From us, homeowners (insurance), consumers (sales tax), and wage earners (state income tax). So if Miller's proposals shift costs to these other parties, we will pay for them, one way or another, even if we see our fire tax rates decrease.

Miller's Proposals Add Costs

Not only do Miller's proposals not reduce costs for fire and emergency services, but they add costs for other parties. The administrative costs of billing insurance companies for health care is already a significant (and, many say, needless) drain on patient resources. If fire districts billed insurance companies as Miller proposes, another layer of unneeded complexity and extra expense is introduced. The same holds for Miller's safety fee proposal. Saying that the insurance companies and the State pay these extra costs is just saying that we're paying them indirectly.

County-Wide Consolidation

Regarding Miller's proposal to subsidize fire districts from the county sales tax, it's worth considering the logical extreme of this policy: Suppose that Dutchess County didn't just subsidize its fire districts, but instead paid the full amount of all fire taxes for all 30 fire districts in the county! In such case, the County would be wise to conclude that since it was paying for everything in the fire districts, it should control everything in the fire districts. (“Where money goes, power flows.”) That way, the County could make changes which would reduce costs and improve levels of service at the same time. In effect, we would have one county-wide system for fire and emergency services under the county executive.

But there's no need for a new law to achieve a county-wide system for fire and emergency services. Under current law, it would be feasible — and much preferable — to simply consolidate all 30 fire districts of Dutchess County into a single county-wide fire district under a set of fire commissioners.

Miller Should Facilitate Consolidation

Consolidation of all 30 fire districts — or even consolidation of a few fire districts — will take time and effort. But the end result will be reduction of waste, improvement of service, and alleviation of inequitable fire taxes. Instead of working to prop up the current byzantine system of fire districts by making it even more convoluted, Miller should use his influence to facilitate consolidation.

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