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May 27, 2012

Fire Department: Current model outdated

Providing fire protection in a cost-effective manner is a 21st century challenge in Michigan municipal finance.

Local governments face problems created by long-gone legislators, pension administrators and commissions, then creatively craft solutions. These are not problems solved by sound-bite politics, such as "Save our Firemen" or "No more Taxes."

First is our outdated fire department service model. Dating to the early 20th century, we have multiple trained firefighters initially needed on a frequent basis to battle the commercial and residential fires that marked communities of wood-framed structures.

The last 50 years saw a massive increase in fire-retardant materials, sprinkler systems, fire codes and inspections.

Fortunately, fires are far less common that in the past. Traverse City has only a handful a year, as reflected in the city's 2009 Citizens Operations and Finance Analysis Committee report.

Municipalities and firefighters recognized and gradually changed the service product, firefighting, to a model of emergency medical treatment service. At a meeting of the Michigan Municipal League, I was told that "we don't have fire departments any more, we have ambulance attendants who occasionally fight fires." But while the product has changed, the service model has not.

Here arises the second impediment to efficient workforce use.

Long-dead legislators in the depth of the Great Depression passed a law known as the "Fireman's Hours Act."

Presumably responding to the frequency of actual fires in that era, it precludes firemen from returning to work for 24 hours after leaving a shift.

Thus we have employees prevented from having regular work shifts as do other public or private employees.

This evolved into a system enshrined in subsequent contracts where "firemen" attend 24 hour shifts, but work only eight or nine of those shifts in a 30-day period.

This clearly prevents effective scheduling management, causing yet another problem.

Now, 95 percent of the activity assigned firemen is emergency medical response. But because our EMTs carry a job title of "firemen," they continue to have work/sleep/exercise hours involving eight or nine 24-hour shifts per month.

We are left with skilled employees that municipalities cannot schedule for best citizen protection.

The next not-of-our-making problem is financial capacity, itself multi-faceted. While Traverse City property values fared better than most in the Great Recession, property tax revenues are flat, while other revenues decreased, and costs based on prior commitments climb steeply.

Statutory revenue sharing was decreased by the state. Now under consideration is elimination of the personal property tax. Possible good long-range policy, in Traverse City it means several hundred thousand dollars in reduced revenue.

But loss of available revenue is not limited to the income stream.

Local governments are slowly awakening to the actual cost of promises made long ago in creating unsustainable pension plans.

Defined benefit pensions guarantee recipients future fixed income. They do not make a similar guarantee that sufficient money will be available to cities to make those payments.

Shortfalls must be paid, per the Michigan Constitution, by the cities (taxpayers).

The private sector recognized the flaw and largely switched to defined contribution pensions ... the public sector has not.In fact, the same pension administrators who led us down this path with overly-optimistic assumptions of investment returns now bully communities by threatening to double annual premiums if we dare switch to a rational pension system.

Applied to Traverse City, between 2001 and 2011, pension payments increased from $900,000-plus to $2,900,000-plus, leaving city management with $2 million less annually to provide services. Worse yet, these huge payments understate our liabilities to the pension plans.

Late last year we estimated a $26 million unfunded liability, an issue our 2012/13 budget does not even address.

Meanwhile, we have an obligation to provide public safety to our families.

But we can't address services in isolation from our overarching financial issues.

We must consider whether a more economic service model exists. All options belong on the table.

Other Michigan cities face the same issue. Some (Bay City, Jackson) have recently adopted a mix of full-time and on-call firefighters model. Some have gone to a combined fire/police public safety model. Grand Traverse County's Metro Fire indicates a willingness to provide fire protection inside the City. Whether that is viable requires we at least ask for a bid.

While most of the problems originate outside our city (inflexible labor rules, pension costs, reduced state aid), we are left to solve those problems ourselves. Simply engaging in an annual battle over laying off more firemen each year, versus maintenance of an increasingly unaffordable status quo, is not the answer. Structural change is needed if we are to continue to protect our homes and citizens, affordably, going forward into the 21st century.

Michael J. Gillman is a Traverse City Commissioner.

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