This letter is in response to a letter from Leslie Brennan
Dear Mrs. Brennan;
Is the current year budget balanced?
YES, this year’s budget is balanced after cutting $350,000 from spending, at the cost of unpaid furloughs, cuts to pay and benefit for all staff, and expenditure reductions to the minimum necessary for safe and effective operations.
While the budget is balanced, we expect to carry over into next year a cash position of about $400,000, from the sale of the old EMS building.
Tax revenues generally are paid twice yearly, with the first payment in late spring. Insurance payments vary seasonally, with the lowest reimbursements during winter and spring. We assume that insurance payments will continue to decrease because of insurance changes, sequestration, and planned cuts by Medicare.
If this occurs, the $400,000 operating cash carried over from 2014 could well be exhausted in early 2015. Is the current 2014 budget in line with 2010 actual expenditures, given the knowledge there was a real estate downturn that began in 2008?
Each year we adjust our income and expenditures to meet current operational needs and to stay within budgetary income constraints. No one expected such a sharp downturn of property values as happened three years after the bubble. While other junior districts were able to take their levies plus an annual 1% increase, plus any new tax revenue from new development of property, our levy continued to drop because it was a six year levy and not a permanent levy as all other San Juan County public safety agencies have.
Additionally since 2010, we began operating Island Air Ambulance in compliance with strict, national certification standards. This resulted in increased costs just when tax revenue decreased. Insurance reimbursements entirely fund Island Air Ambulance.
Our amazing EMTs do receive a fixed stipend and some benefits, paid by tax revenues, including employer paid Medicare, Federal Insurance Contributions Act (FICA) and Labor and Industries (L&I), life insurance, EMS education, and volunteer appreciation. All of this exceeds $350,000 a year.
Did the number of EMS responses increase in proportion to the increase in expenditures?
YES. Overall, patient responses and transports have increased with only a 5% decrease over last year and about the same this year. This is well within normal ebb and flow for responses over the years. Is the alliance with Island Air Ambulance (IAA) a financial drain on the SJIEMS system?
First, Island Air Ambulance is not an alliance but a service provided by San Juan Island EMS in partnership with Island Air, Inc. who through contract, provides the pilots, planes, and mechanics in a fee for service model, not unlike other medevac services.
Second, the cost of Island Air Ambulance operations was much greater, but so were the insurance payments. IAA operates solely on the billing from its services.
Does SJIEMS need the increase in tax revenue to buy a new ambulance or building?
The issue is not that simple. The EMS building was sold this year, and part of those funds was used for operations. The remaining $400,000 will roll into the 2015 as available operational cash. There is a difference between a budget (which guides spending) and cash on hand (the actual amount of available funds to pay bills).
Proceeds from the sale of the EMS Building and the old Medical Center were intended to pay off the existing mortgage on the new EMS Building. Because only one building sold and the other continues to be on the market, we were unable to pay off the new building’s mortgage. We budget about $100,000 per year for mortgage expense.
EMS now receives only $93,971 more than before the current levy was passed in late 2010. In other words, much of the existing EMS levy revenue has been lost due to property value decreases. Therefore we have lost the vast majority of the current levy due to the unprecedented fall in the real estate market.
Moreover, our insurance reimbursements have decreased. Using the Assessor’s calculation of loss plus our known insurance loss in the past two years, EMS is currently $1,390,125 short of our expected incomes to date. By either estimate, EMS has been shorted significantly over the past four years. This deficit will deepen through the current levy’s remaining term.
Our recent cost cutting has helped, but the only remedy for this budget shortfall is for voters to pass the new levy before the current levy expires. How does SJIEMS annual budgeted tax revenue and expenditures compare with Orcas Island Fire & Rescue budget for 2014?
Agency missions and district sizes are different. Also, EMS is funded mostly through insurance billing with less than 30% coming from tax support. Fair comparisons must not be apples to oranges.
Because of unprecedented revenue losses, this is the FIRST TIME EVER that EMS is asking for a “top levy.” This “top” amount is commensurate with the 35 cents asked for in 2010. We are asking only for the ability to restore public funding to 2011 levels if needed. Any carry over cash will lessen the need for revenue next year.
Twice in the past ten years, EMS DECREASED the tax levy amount because it was not needed for the following year. The levy asks for funding TO BE RESTORED back to previous levels as there is need.
We realize that issues of budget, taxes, tax rates, operational reserves, and the like can be confusing and easily misunderstood. We hope that these posts have been helpful in answering some questions and correcting some misunderstanding regarding this levy, our EMS budget, and operations.
J. Michael Edwards
San Juan County Public Hospital District #1, Commissioner
San Juan Island EMS, Director of Critical Care
San Juan Island EMS, Chief