Tag Archives: city budget

Municipal Fire Departments

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Introduction

Fire protection is the second largest general fund spending category for U.S. and Texas cities and towns. According to the Texas Municipal League, one-in-five city general fund dollars go to municipal fire and emergency life support services. It is one of the most visible services provided by local governments. Fire departments roles have changed over the years and the associated costs have increased, meaning every community has or will be wrestling with how to maintain the level of services their communities expect.

Fire Services Statistics

Firefighting has been considered a core municipal service since about the time of the U.S. Civil War. That conflict decimated many volunteer brigades. The growing, urbanizing U.S. population also began demanding better organized fire protection. Most large cities and towns began a long process of bringing their volunteer companies under city control. Today, volunteer firefighters outnumber career fire fighters by more than two-to-one. Volunteer companies mostly serve smaller towns and rural areas. Most Americans are protected by all-career fire departments.

According to the most recent survey by the National Fire Protection Association, there are almost 30,000 fire departments in the U.S. About half of these protect communities with fewer than 2,500 residents. Eight percent of these departments are all-career staffed and they cover most of the U.S. population. Most departments, about 61 percent, also provide either basic or advanced life support services (EMS). For several decades, the number of firefighters per 1,000 population nationally has been relatively constant at about 8.7. There are almost 1.7 career firefighters per 1,000 U.S. residents.

Fire Capital and Salaries

Fire protection is a capital-intensive line of business. There are 58,000 fire stations in the U.S. Local fire departments operate almost 160,000 vehicles including 70,000 pumper trucks and 7,000 aerial (ladder) trucks. At current rates, total replacement of just these signature fire trucks would cost over $50 billion nationally. Each fire fighter’s turn-out gear including breathing apparatus is over seven thousand dollars. Equipment maintenance and replacement is not only a key safety issue for local communities, it is an area that deserves attention from budget efficiency standpoint.

Turning again to Texas Municipal League data, median firefighter salary in Texas is about $30,000. Just as important are health expenses and retirement. Like police officers, firefighters often require specialized mental and physical health support due to the nature of their work. Ongoing training is also essential.

Spending Challenges and Changing Roles

Nationally, total government spending on local fire departments was $43 billion in 2013. This is up 170 percent since 1983. When adjusted for inflation, fire protection spending has more than doubled since 1983.

Several factors seem to be driving fire department budget increases above and beyond population and inflation growth. These include the need to increase staffing to deal with shorter work weeks. Application of Family Medical Leave Act coverage to city fire departments meant more positions to accommodate new leave requirements.

A second driver is the growing role of EMS / ambulance calls. Most dispatches of fire department personnel are for medical calls. In 1980 there were 10.8 million emergency calls – 3 million were fires. The most recent year’s data for 2013 revealed total calls almost tripled to 31.6 million. The number of fire calls fell by 60 percent to 1.2 million. Like all municipal services, fire departments also represent a growing health care and retirement expense burden.

Though fire departments are one of the most visible, well-liked and heroic of city services, they represent a growing strain on municipal finances. Just like our 19th Century predecessors, current citizens demand rapid, effective fire services. To meet this demand, local leaders will need to pay more attention to all facets of department operations. This includes reexamining response protocols, staffing, and fire station placement. There are also opportunities to lower long-term costs through better urban design. Fire services costs are one of the most sensitive to the built environment. Sprawling development requires more staff and assets than tighter development patterns. Better building codes and inspection processes are also a way to lower fire damages and operating costs.

Next Week

Next we will review some of our latest findings on municipal public finance and economic development practices. In the meantime, sign up for email updates and let us know how we can help. Check out some of the other information on our site.

Economic Diversity and Community Profile

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Introduction

This week we are introduce the Axianomics, LLC Community Economic and Fiscal Profile. The Profile summarizes over 100 economic indicators into easy-to-understand indexes that can guide local leaders in their planning, budgeting and economic development activities. This post will highlight the Business Health Index which is one of the cornerstone pieces of the Profile. Economic diversity is one of the local conditions this index captures.

Industry Economic Indicators

Every community has a unique economy. The federal government divides the national economy into over 1000 different industries. These industries are organized into a hierarchy with the North American Industrial Classification System (NAICS). Examples of the highest-level groupings of industries include Business and Professional Services, Retail Trade and Manufacturing. Dozens or hundreds of detailed industries make up these summary categories.

The reported industries are different sizes and grow at different rates. Some are highly cyclical and grow and shrink with the business cycle. Other industries are more stable. Some are growing while others are in decline. National economic performance is the sum result of the particular fortunes of all these industries.

For each of these industries we can track employment, wages and number of business establishments. We can use this data to help understand the fortunes of local communities and get an idea of how their economy is changing. These economic changes have a big impact on municipal revenues and budgets.

The Value of Economic Diversity

Economic research confirms that there are many benefits to having a diverse industry base. Diverse local economies tend to grow faster and suffer from less volatility. We can measure these benefits in both employment and wage growth. There are still benefits for a community to be a leader in particular industries, but too much concentration can put the community at risk. Changes in market trends and new technologies can devastate individual industries. Cities that have all their eggs in a declining industrial basket can find themselves in a long-term downward spiral that is difficult to reverse. More diverse communities can fall back on other industries if certain businesses hit hard times.

Community Economic Profile and Business Health Index

Axianomics, LLC created the Community Economic and Fiscal Profile to help local leaders track the overall health of their economies and discover how their revenue and budget performance is linked to that economy.

The Profile includes several performance indexes that summarize over 100 economic indicators. One of these indexes is the Business Health Index. This index includes a number of component measures. Industry diversity plays a big part in this index. We compare local industry diversity to the nation overall and the state. This lets local leaders immediately see how their economy stands relative to these benchmarks. In addition to the industry diversity measure, the Business Health Index also tracks small and big business performance, growth trends, employment, income and number of businesses.

The Profile goes beyond typical economic indicators. By building these custom indexes, we can make more valuable business and community development recommendations to local leaders. Since municipal revenues and budgets depend on the underlying tax base, the information in the Profile makes a valuable contribution to planning budgeting and economic development strategy.

To learn more about the Economic Profile, download our fact sheet. We would be happy to discuss how you can obtain a custom Profile for your community. Contact.

 

What’s Next

Next week, we will take a look at the economics of public libraries and how cities can position their libraries as powerful economic development platforms.

The Economics of Parks

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Introduction

Today we focus on parks for our monthly installment on the economics of major municipal services. Last month we started the series with police protection.

Parks are rich in economic content. They are a tiny share of municipal spending, but generate strong emotional support by many and skepticism by a few. The fiscal reality of parks is that, despite their growing reputation as tools of community and economic development, they don’t fare well in tough budget times. Local leaders and park enthusiasts can deliver better and more cost-effective parks by considering the economics more closely.

Spending Trends

First, some baseline facts about the nation’s local parks from the Census Bureau and the Trust for Public Lands:

  • Total annual local park and recreation spending: $30 billion
  • Largest source of funding: 75% from general funds
  • Typical acres per resident in large cities: 5 to 10 acres

Long-term park funding moves up and down with the business cycle. Communities increase spending in good times and dramatically cut it during recessions. According to the Census Bureau, during the last recession, national per-capita park spending fell 8.5%. In Texas, spending was cut by 9.3%.

Park Operating Costs

We can evaluate park costs by separating operating and capital needs. Estimating operating costs can be a challenge. When possible, local leaders should develop and use their historic spending and maintenance schedules. National benchmarks vary dramatically. They differ from place to place because of local conditions (climate, population density, etc.) and by size of park system. The National Recreation and Park Association, reports operating costs, by system, of between about $2,000 to over $27,000 per acre. The median operating cost was $7,666 in 2014.

A community’s standard of maintenance also influences potential costs. It may be reasonable for this to vary by type of park, but serious claims of unfairness can arise with inconsistent maintenance across a community.

Finally, in the enthusiasm over new park development, communities should be mindful that maintenance costs are perpetual and can increase as park assets age. This is especially true for showcase urban parks. The Trust for Public Lands reported Discovery Park in Houston and Bryant Park in New York City have per-acre costs of $229,000 and $433,000, respectively.

Park Capital Costs

By comparison, capital costs are easier to evaluate. Start with acquisition and construction costs and consider how they impact city debt limits and annual debt service costs. Siting the park can be guided by service indicators and using geographic information systems to compare the pros and cons of different potential sites.

When it comes to new park development, local leaders should also consider the real estate opportunity cost of building a new park. Parks can have a positive impact on nearby commercial and residential land values. Yet, a community should also consider what the tax base tradeoff might be if proposed park land were to be become private development. A careful analysis need not be the only basis for the decision, but there is a community interest in knowing what they are giving up and what they are getting from park developments.

Economic Benefits of Parks

More attention is being paid to documenting the economic benefits of parks. A convening of experts in Philadelphia produced case studies of major types of measurable benefits. These included improvements to nearby property values, sales tax increases from tourism to destination parks, and health and environmental benefits. This data can be collected through real estate records and surveys. There are costs to gathering this information, but it can be worth the effort to inform park planning and local budgeting.

Park planning that is informed by the economics of costs and benefits will lead to more sustainable park systems. More transparent balancing of park costs and benefits should help reduce the up and down pattern of park budgets. The community will this information can build a consensus on just how much their parks are worth to them. Local leaders will have the opportunity to include these projections in strategic planning and annual budget cycles. This should reduce the volatility of park budgets. Of course aesthetics and sentiment are naturally good reasons for supporting parks. To date, they just haven’t been adequate to building park systems that are resilient in the face of natural economic cycles.

What’s Next

Next week, we will take a look at the latest U.S. metro area Gross Domestic Product. This is the most detailed report of local area economic output and an important indicator for local leaders to understand and use in their fiscal and economic development work. In the meantime, let us know how we can help you make more confident economic and fiscal choices for your community. Contact Us

Development is more than economics

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Welcome

Axianomics helps local leaders make tough fiscal and economic development calls with confidence. We are glad you found our blog. Here, we will track municipal budget and revenue trends, highlight effective development and capital investment practices and update you on the economic indicators that matter. We use this first post to introduce our perspective on public finance and economic development. We also discuss Axianomics’ services that will help you maximize your return on development investment.

Our Perspective

All politics are local, because the economic consequences are felt locally. Governments make choices that impact the economy. Then, the health of the economy sets the practical limits on government action. When policy recognizes the economic and political dimensions of development, the choices governments make can strengthen the economy. More private investment can be levered to complement public spending to achieve the community’s goals. Economic strategy and implementation must be inclusive to reduce political obstacles and make the most of public and private resources.

People we Help

If you take responsibility for your community’s fiscal and economic health, we are here for you. We define local leadership broadly. You may be a City Manager, CFO, budget or economic development director. You may be an elected official or a business or community advocate. Regardless of your title, if you are vested in your community making more effective and efficient development choices, we can help. We ground our research, forecasting and impact analysis in your local context. You don’t make choices in a vacuum. Your political and economic reality probably includes some or all of the following:

  • Competition, near and far, for talent and investment,
  • Shifting industry and workforce fortunes,
  • Citizens who want more efficient, transparent and responsive government,
  • Organizations with outdated worldviews, models and processes, and
  • Legacies of good and bad choices from the past

Our Capabilities

We bring the best analysis and most effective perspectives. We can do this because we focus on the ways research and analysis makes the biggest impact at just a few points in the policy process. We work where it helps most during: Discovery, Strategy and Validation. We offer:

  1. Discovery tools that show the current health of your community, benchmarked against state and national trends. These include community economic profiles and asset maps.
  2. Strategy tools that help you set goals and identify options. These include economic development strategies, scenarios and economic forecasting.
  3. Validation tools that help you evaluate the costs and benefits of projects, and track progress. These include fiscal and economic impact analysis and custom community indicators.

See our Services page for more information.

What’s Next

Axianomics means the law of value. We define value broadly, because you and your stakeholders value more than just economic efficiency. A little analysis at the right time can make all the difference in the world.

Come back next week where we will review our research into changing state economic performance, and discuss what it means at the local level. In the meantime, sign up for email updates and let us know how we can help.