Consolidation is tougher than it sounds

Forming a regional fire protection service authority to consolidate Bremerton’s fire department and South Kitsap’s fire district may seem like an obviously good thing to people who believe consolidations result in greater efficiency, but there would be hard problems to solve.

The efforts over the past few years to figure out how to consolidate began with a consultants’ report which pointed out a problem that has to be overcome.

As the consultants noted, “increasing taxes significantly in any community” could be a “fatal flaw” in any plan.

Absent a clear and desirable gain in services, seeking higher taxes to fund a regional authority would make it hard to persuade voters to approve the plan.

The consultants also noted the problem caused by Bremerton’s relatively low property values compared to the neighboring fire districts — Central Kitsap Fire and Rescue and South Kitsap Fire and Rescue.

A big part of the city’s costs would be shifted to taxpayers in either fire district upon consolidation unless the regional authority’s financing plan provides a way to avoid this result.

The consultants finished their report in mid-2007, and the problem remains to be solved.

Bremerton’s total assessed property valuation increased less than assessed valuation in SKFR since 2001, so it seems that the gap is likely to widen, not close with the passage of time.

So long as this gap remains, property taxes to fund a regional authority would cause a significant tax increase for people now living within SKFR — about $1.5 million to $2 million, depending on the amount of cuts that can be made in the city’s fire department expenditures.

To put this in perspective, SKFR voters approved a “lid lift” in 2006 and a higher emergency medical services levy in 2009 to provide funding to staff two additional fire stations — a total of roughly $2 million in additional yearly taxes.

Without a funding solution that avoids a cost shift upon forming a regional authority, a similar increase in property taxes would occur in South Kitsap to pay a part of Bremerton’s fire protection and EMS costs.

And this isn’t the end of the potential “fatal flaw,” since Bremerton residents would face higher taxes too.

City residents would begin paying a regional authority for services now funded by their city taxes, and would still have to pay city taxes.

The city council might promise to reduce the city’s property tax levy in return for voter approval of a regional authority, but nothing in state law can hold the council members or their successors in office to such a promise.

Assuming the city council offers to lower the city levy to reduce this impact, and assuming city voters believe the promise would be kept for the indefinite future, one tax increase could be mitigated — but the increase for SKFR residents would be harder to ignore.

One possible way to solve this property tax problem is to fund a substantial part of the regional authority’s costs with a “benefit charge.”

Since benefit charges can be based on factors other than property value, it is conceivable that such charges could avoid forcing residents in SKFR to pay up to $2 million of the city’s costs.

This is where the problem gets tougher, since including benefit charges in the plan raises the threshold needed for voter approval from a simple majority to a supermajority of 60 percent.

In essence, any plan put on the ballot that shows how the problem would be solved requires approval by 60 percent of voters, while a plan that leaves the hardest problem for later needs only 50 percent plus one vote.

If voters are willing to authorize formation of a regional authority and leave the question of how to fund it until a subsequent election, things might work out just fine.

But if voters aren’t willing to buy a pig in a poke, all the details will have to be laid out in the plan that voters are asked to approve.

The potential for greater efficiency is attractive, but weighing the benefits against the costs requires knowing both.

Bob Meadows is a Port Orchard resident.