The Pontiac Fire Department unnecessarily operates its own advanced emergency services. Private providers can and do provide identical services under contract. To its credit, Pontiac contracts with Star EMS to provide basic patient transport.
If Pontiac will not address
its significant economic challenges with a bold reorganization of its structural
spending, the state appointment of an emergency financial manager may be
inevitable. An EFM with proper powers can take Pontiac where other
municipalities have feared to tread — such as contracting for certain public
safety services.
The Pontiac Fire Department is staffed with 119 personnel and
operates on a budget of $14.1 million according to the City Council Adopted
Budget for fiscal 2007. All positions are funded from the general fund account
of the city. Police and fire together account for more than 52 percent of
general fund spending in Pontiac. The general fund is the account from which
council members have the most spending discretion. Only the police (149) and
public/utilities (153) departments have larger staffs than the fire department,
which provides fire suppression and advanced emergency medical services as well.
The question is, should it?
Outside-the-box policy thinking is becoming the rule across Michigan municipalities
Outside-the-box policy thinking is becoming the rule across
Michigan municipalities as each community grapples with increasing health
care-related employment costs and decreasing tax revenue resulting from a
less-than-robust economy. Pontiac cannot afford to be an exception.
One difficult but potentially lucrative area of city reform
involves fire suppression and emergency medical services privatization. Pontiac
should explore some combination of privatized public safety services to save
money and possibly improve services, too. There is nothing special about fire
suppression or emergency medical service that mandates government-employee-only
provision. Both are provided privately, to some degree, elsewhere in the nation.
Consider a few possibilities.
Contract out.
Pontiac should investigate contracting for services with a private fire company.
Three big players in fire fighting and other public safety operations include
Wackenhut Services Inc., of Florida, Rural/Metro Corporation of Arizona and
Pro-Tec Fire Services of Wisconsin.
At the outset, it should be noted that awarding a contract to
any of these companies would put all parties to the transaction in fairly new
territory. None of these companies currently provides fire services in any
community previously operated entirely by government firefighting employees.
Companies such as Rural/Metro provide subscription fire services to communities
that have not yet incorporated as a government entity. That does not mean that
at least one of them couldn’t be persuaded to do so.
Rural/Metro is a 50-year-old company that currently provides
fire protection for 25 communities and other public safety services, such as
ambulance operations, to more than 350 communities nationwide, according to the
company’s Web site. While it is an unlikely candidate to take over an existing
municipal fire department, it represents evidence that a private firm can
provide large-scale fire protection to people and businesses alike and do so
cost effectively.
Wackenhut Services, Inc. also provides public safety related
services, including fire suppression and emergency medical services. WSI has
started and operated 25 fire departments and has 700 U.S. employees at military
installations throughout Iraq, which may make Pontiac, or any American
municipality, a comparatively easy place to do business.
If the city were to contract with one of these firms for all the
services it currently provides and save a conservative five percent, Pontiac
could cut its fire department costs by almost $706,000. In addition, the city
could either sell its equipment and buildings to the winning bidder or come to
some lease arrangement which would require payment equal to the "imputed" rent
for use of city assets — that is, an estimate of what comparative equipment and
buildings would cost to rent in the marketplace.
Employ volunteers.
A second option for Pontiac would be the volunteer model employed by the Oakland
County city of Troy, which employs only 14 full-time firefighters and as many as
180 authorized volunteers. Troy is comprised of 33.6 square miles and has the
second largest State Equalized Value in Michigan at more than $6.6 billion. By
contrast, the city of Pontiac employs 119 personnel to protect just 20 square
miles, and has an SEV of $1.9 billion. The SEV is equal to half the market value
of property and is calculated by governments for taxing purposes.
Municipalities and fire departments often express the cost of
providing fire and other emergency services in per-unit terms to help put
expenditures in perspective. For example, Pontiac’s fire department would be
expressed as a dollar amount per $1,000 of SEV. That is, in Pontiac the city
spends $7.43 per $1,000 of SEV on fire protection and related services ($14.1
million/($1.9 billion/$1,000)). By contrast, Troy spends only $1.57 per $1,000
in SEV.
This does not mean that converting Pontiac to a volunteer force
overnight would yield a 78 percent drop in costs. Transitioning to a volunteer
service would no doubt result in vociferous union opposition that would likely
hike the cost. Moreover, Pontiac may simply have a different tradition of
volunteerism. Unpaid firefighters may be difficult to recruit. In addition, it
would be expensive (and logistically difficult) to hire and train a cadre of
100-plus volunteers all at once.
It should also be noted that comparing Pontiac and Troy cannot
be done perfectly. For instance, the Troy fire department does not operate
EMS-type services while Pontiac does. If Pontiac spun this service off, its
total costs would drop.
Pontiac’s fire department does not need to be in the ambulance
business. Such services are provided privately on a routine basis. Fire
departments across the country have been encroaching on emergency medical
service territory to help protect firefighter jobs. (The Mackinac Center has
written about this mission creep in an article entitled "Ambulance Wars." Even if Pontiac refused
private fire provision, it might consider ending its advanced EMS function in
favor of contracted services.
That said, there is virtually no service being provided by the
Pontiac fire department that isn’t being provided somewhere in the country on a
private, for-profit basis. Critics might roll their eyes at the very notion of
some of these proposals. But the fact that such ideas may seem implausible today
does not mean that they lack credibility. Indeed, less than a generation ago
school choice, Social Security (pension) privatization, and ending welfare as an
entitlement were deemed beyond the pale of discussion. Today such ideas are
mainstream.
Pontiac’s problems are such that they will very likely require
an emergency financial manager to solve them. Only an EFM with the ability to
set aside union contracts and make other changes could remake the city as
dramatically as suggested here.
Using competitive contracting, volunteers or entirely private
contractors (or some combination) would give Pontiac an opportunity to
creatively save money and stay solvent while providing the same or better
services.
Michael LaFaive is director of the Morey Fiscal Policy
Initiative.
