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Finance & Court Services Financial Services City of Eugene 100 W l0th Avenue, Suite 400 MEMORANDUM Eugene, Oregon 97401-2793 (541) 682-5021 (541) 682-5802 FAX Date: February 24, 2005 To: Mayor Piercy and City Council From: Larry Hill, 682-5722 Financial Analyst Subject: Preliminary Comparison of Cost of Delivery of Fire & Emergency Medical Services A question has been asked by Council as to whether urban-level fire and emergency medical services now provided by the City of Eugene to its citizens may be delivered more efficiently through a rural fire protection district (RFPD). This memo presents a preliminary comparison of costs of delivery of fire and emergency medical services by three cities and one rural fire protection district, using readily available budget data adjusted to achieve an 'apples to apples' comparison. In addition this memo reviews the processes of formation, annexation, governance and financial capabilities of a RFPD. Tax revenue compression resulting from increased general government taxation is also discussed. High quality urban-level fire and emergency medical services may be provided by cities or by rural fire protection districts in Oregon. With voter approval both cities and RFPDs may establish permanent tax rates and local option levies to generate revenue to fund fire and emergency medical service operations. Cities and RFPDs are subject to the same constitutional limit on general government taxation and are subject to tax revenue compression when this limit is exceeded. Factors affecting costs of delivering these services include the size and characteristics of the area served, the area's population and the level and quality of service delivered. Simple cost-of-service comparisons may act as a rough measure of relative efficiency for similar jurisdictions delivering similar services. Costs must be adjusted to achieve a reasonable comparison among jurisdictions. Review of FY05 adopted budgets shows that Salem, Eugene and Springfield fire and emergency medical services delivered within each city's limits cost about the same on a per capita basis, while Tualatin Valley Fire & Rescue RFPD has a higher cost per capita. The difference in per capita costs may be largely explained by the different characteristics of the areas served. This is only a simple initial analysis. A more in-depth analysis looking at detailed cost of services and using a range of performance measures would require a much greater investment of time but would provide more accurate information on relative efficiency of delivery of fire and emergency medical services under city or RFPD structures. In addition modeling of the tax compression effects of formation of a special district and resulting losses to the General Fund and local option levies should be done as part of any further analysis.