The tables below provide an overview of the District’s 2014 budget. The beginning fund balance (or “operational reserve”) serves several purposes, providing the resources to meet expenses during the first months of the fiscal year until property taxes begin arriving at the end of April. The fund also provides a “rainy day” reserve and includes designated capital improvement monies. Decreasing property values continued to impact the District’s revenue stream in these budget years, and leaders did what they could to adapt to these pressures. In 2013 and 2014, the beginning fund balance began to suffer from the on-going effects of declining revenues and rising costs.
Personnel costs comprise the vast majority of the District’s expense budget, as shown in the 2014 graph below. Employees, for the fifth year in a row, did their part to hold down increases by foregoing industry-standard raises. Training and supplies budgets remained tight, and leaders continue to pursue a wide range of cooperative efforts with the goal of reducing expenses by sharing costs with other agencies. During the downturn in the economy, the District tried to limit as many costs as possible. As a result, the district deferred most major maintenance and improvements on its stations.
Fire protection districts receive no on-going federal, state or county funding. In 2014, 82% of NKF&R’s operating revenue came from property taxes. User fees for ambulance transports and contracts for service are examples of the District’s limited non-tax revenue sources.
Under Chapter 52 of the Revised Code of Washington, fire protection districts are authorized to collect property taxes of up to $1.50 per $1,000 of assessed valuation. With more than 60% voter approval, agencies are allowed to levy property taxes of up to $0.50 per $1,000 of assessed valuation to provide emergency medical services (EMS). Voters last reauthorized NKF&R’s EMS levy in November 2013 for collection over six years, beginning in 2014. The amount collected from each of these levies cannot exceed 101% of the previous year’s total.
In 1999, voters approved a bond issue to replace and reposition the District’s facilities. Annual lump sum payments of about $450,000 against the $5.5 million, 20-year bonds are split across the assessed valuation of the District with the exception of those areas formerly served by Kitsap County Fire District #14 (Hansville/Eglon). Although now served by NKF&R, these areas weren’t a part of the District when the bond issue was approved.
Standing timber is exempt from the property tax, but the timber excise tax must be paid at the time of harvest. In 2014, this tax brought approximately $7,750 to NKF&R’s budget.
Under normal economic conditions, the total assessed valuation of the District rises annually. Levy rates are adjusted downward to keep the collections on existing properties within the 101% limitation. In the first year that a newly-built property comes on to the tax rolls, it is referred to as “new construction.” New construction isn’t subject to the 101% limitation and is assessed separately at the previous year’s rate. The economic downturn caused property values to plummet, and the amount of new construction dropped dramatically. As the District’s assessed valuation fell, levy rates increased to provide 101% of the previous year’s tax revenue in an effort to meet rising expenses. However, prolonged decreases in home values kept the District’s EMS levy at its statutory lid of $0.50 per $1,000 of assessed valuation since its 2007 voter reauthorization. The fire levy also hit its statutory cap of $1.50 per $1,000 of assessed valuation in 2012. With levy rates at their caps, property values decreasing and very little new construction, the District was experiencing an annual reduction in tax revenues. By 2013, NKF&R’s total assessed property valuation was $805 million less than it was in 2009 and the District’s budget was $1.6 million less than it would have been with stable property values.
Despite recent signs of economic recovery, statutory limitations prevent the District from regaining sufficient lost revenue without voter approval. So, in an effort to maintain levels of service after successive years of declining revenues and rising costs, the District proposed a special levy to voters in November of 2014. The maintenance and operations levy, costing an estimated additional $0.25 per $1,000 of assessed property valuation and adding an annual $600,000 to the District’s budget from 2015 – 2018, was approved at 67%.