By Joseph Murray
As a fire chief who was appointed during the effects of the Great Recession, I can very clearly recall just how difficult it was for many fire departments throughout my area to replace aged or unreliable fire apparatus.
Many local communities struggled with reductions in federal and state funding levels, diminished property taxes, and losses of other revenue sources. While replacing expensive fire apparatus was challenging for most communities, the communities that lacked any type of fleet replacement capital improvement program were the ones that struggled the most.
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Following the COVID-19 Pandemic, many communities have been the fortunate recipients of American Rescue Plan Act (ARPA) federal dollars. This one-time cash infusion provided some much-needed relief to many fire departments that previously were challenged to make significant investments in their fleets as a result of the last recession or lost revenue related to the COVID-19 Pandemic. While the communities and fire departments that were fortunate to receive ARPA dollars to replace apparatus are undoubtedly grateful, it is important that fire chiefs recognize ARPA for what it is: a one-time cash infusion. It is imperative that fire chiefs who have previously struggled to fund apparatus use this moment as an opportunity to advocate for a longer-term solution to fleet replacement woes. The ability to use ARPA funds to replace existing apparatus has bought many communities some time to plan for and prepare for the purchase of their next apparatus. If your community hasn’t previously had a dedicated fleet replacement capital fund, now is a great time to begin those conversations with your elected officials.
In many communities around our nation, purchasing a pumper or a ladder truck is one of the most significant capital purchases they may make all year. This will be especially true over the next few years as we have seen the prices for apparatus skyrocket while taxable revenues in many municipalities have lagged behind because of state tax caps. When compared with other levels of government, local governments are the most challenged to make significant capital purchases. There are multiple reasons for this.
Capital purchases are generally generated through property taxes or assessments and because of their accessibility by the public, local government officials are far more scrutinized when proposing tax increases in comparison with their counterparts at the state and federal levels. The decision to raise local taxes could be a fatal decision for many local politicians throughout the United States. Complicating this situation even further is that many states now cap the taxable rates on properties, which makes recovery from poor economic times a long and drawn-out process. Finally, local governments have limited abilities to impact federal grant funding levels and state revenue sharing. This can make municipal budgeting at times unpredictable.
CAPITAL BUDGETS AND CAPITAL IMPROVEMENT PROGRAMS
While a community’s operating budget is dedicated to day-to-day activities, the purpose of a dedicated capital budget is to provide funding for nonrecurring expenditures such as replacing of fire apparatus, equipment, and infrastructure. Capital expenditures may span several years to completely fund equipment, apparatus, fire stations, or other infrastructure needs.
The capital improvement program (CIP) is a process or policy used by your community’s fiduciary. The CIP is used to provide a longer-range funding plan of action for a community’s more significant capital expenditures annually for a pre-determined length of time. The first year of any community’s CIP should be the upcoming budget year for capital budget allocations. Depending on the jurisdiction, the CIP could be specific to the fire department or could include all operating departments within a community. It is the responsibility of the jurisdiction’s budget officials to make sure the year-to-year cost estimates are within the financial capacity of the jurisdiction.
When set up properly, a CIP provides a systematic and responsible approach to financial planning so that the budget officials can determine the relative priority of various projects, build up funds for future major investments, or undertake multiyear projects. This planning may include increases in operating costs for a new fire station, acquiring property for a future training facility, contributions to an authority, special assessment projects, or planning for bond issuance.
A CIP’s development and implementation process will vary from jurisdiction to jurisdiction depending on your governmental setup. In general, the process starts with a responsible budget official who compiles all capital project requests. Once projects are compiled, the budget official then works with the chief executive to present a proposed CIP to the legislative body for final budget approval. Each year, the CIP should be updated to maintain a predetermined length of planning years and to review the funding levels in comparison with anticipated future costs. It is also imperative that communities consider how the funded capital projects contribute to overall strategic goals and the master plan.
A DEDICATED CIP FOR FLEET REPLACEMENT
Capital improvement programs are essential for the long-term financial well-being of the community. Throughout the United States, many local governments struggle to replace old fire apparatus in a timely manner. As fire chiefs, it is important for us to ensure our elected officials understand the impact the fire department’s fleet has on overall public safety. The inability to replace unreliable or unsafe apparatus when necessary is a significant problem that many communities struggle with because they do not have a dedicated funding mechanism. Far too often, communities are reactive with their fire apparatus replacement. Delaying fire apparatus purchases in the hopes of experiencing cost savings is often a false narrative when compared with the costs of maintenance and repairs, not to mention the negative impacts on service and reliability. Reactive purchases, especially in today’s environment with extended apparatus build times, can significantly hinder a fire department’s ability to fulfill its mission and, in some cases, can even force fire chiefs to purchase apparatus based only on what is immediately available and not necessarily on what is best suited for their communities’ needs.
During times of economic challenges, capital replacement is generally given a low priority if dedicated funding is not available. It may become far too easy for those in charge of the budget to pass on fire apparatus replacement when an existing fire apparatus is still physically present and responding to calls. Many times, fire apparatus funding is cut year after year until a total catastrophe takes place, and an emergency purchase must be made. Communities without appropriate fleet replacement funding plans put themselves at risk for a multitude of problems including extended downtimes, increased maintenance and repair costs, and lack of dependability. That being said, it is important that the replacement of fire apparatus be budgeted as a capital outlay, which should be funded separately from the regular operating budget of a fire department.
DEDICATED FLEET REPLACEMENT FUND
There are many advantages to having a dedicated vehicle replacement program and corresponding capital fund:
- Operationally, a dependable replacement schedule will allow the fire department to provide uninterrupted services to the public through a dependable fleet.
- A funded apparatus replacement schedule allows the fire department to anticipate and proactively design the next apparatus to best meet the needs of the community.
- The presence of a dedicated fleet replacement fund previously agreed on by elected officials greatly reduces the amount of political tension that at times arises with large expenditures.
- Proper fleet replacement reduces maintenance and repair costs, out-of-service time, and risk to employees from the continued use of apparatus past its expected service life.
- A fleet replacement fund reduces the need to make emergency purchases to replace apparatus, which may bring public scrutiny and concern.
A ready and reliable fire apparatus fleet is essential to the public’s overall safety. As such, it is important that fire chiefs engage their elected officials to advocate for a dedicated funding mechanism for fire apparatus replacement as they reach the end of their useful lives. While ARPA has provided a much-needed one-time cash infusion that many fire departments have been able to use to replace their existing aged fleets, it would be a mistake to not learn from past fleet funding challenges. As fire chiefs, we must continue to advocate for proper planning and funding mechanisms for fleet replacement. Developing a CIP is an important step in this process. While ARPA may have provided many fire departments with a little bit of breathing room, it is imperative that we continue to work with our elected officials to develop a dependable funding source for fleet replacement to ensure that vital services are maintained and uninterrupted.
JOSEPH MURRAY, Ph.D., is chief and emergency management coordinator for the Dearborn (MI) Fire Department.
