Glenwood Springs Rural Fire Protection District may require tax increase
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS, Colorado ” A voter-approved property tax increase could be necessary to fix the city’s financially challenged rural fire protection district.
The city recently revised a funding formula in an agreement with the Glenwood Springs Rural Fire Protection District to shift more cost to the city. The amount for next year is around $83,717 and could grow over time.
But that will likely only address the district’s financial woes in the short term, according to the city and Fitch Ratings, an international credit risk rating agency.
Last month, Fitch Ratings downgraded its credit risk rating on $315,000 in bonds the fire district issued from “A+” to “A.” That could mean the district would have to pay more to borrow money in the future. However, the district has no plans to borrow more.
“It’s hard to say what the market will determine,” said Jessalyn Moro of Fitch Ratings. “In theory, higher rated credits pay lower interest rates. … This rating at A plus before we downgraded it was an average rating and now it’s slightly below average.”
Moro said Fitch Ratings may revise its rating sometime within the next two years. The highest rating is “AAA+.”
In 2007, the rural fire protection district’s general fund balance dropped to $170,420 from $304,000, marking the sixth consecutive year of decline, according to a Fitch Ratings news release.
The district’s funds have fallen in part due to rising fire protection costs incurred when the city’s fire department had to hire more staff to address concerns raised by its insurance company. The rural fire protection district (RFPD) also continued crediting property tax revenues over a statutory growth limit back to taxpayers, despite a voter-approved waiver of the limit, Fitch Ratings said.
RFPD board chairman Bill Livingston said the RFPD is investigating alternatives to raising property taxes, but he’s unsure what the result will be. He said the earliest property taxes could increase would be in 2010.
The district covers 64 square miles in areas surrounding Glenwood Springs. It’s an independent taxing authority operating under an agreement with Glenwood Springs. The city provides fire protection and ambulance service in return for a share of the district’s property tax revenues.
Livingston said Glenwood Springs is unusual because most cities have everyone paying property taxes for fire protection, but Glenwood Springs pays for it through sales tax in the city and with property taxes for the surrounding areas in the RFPD. That has people in the surrounding areas in effect paying for fire protection twice, he said.
The amount of a typical property tax bill going to pay for fire protection from one home in the RFPD could be around $178, he said.
Also last month, Fitch Ratings made positive comments about Glenwood Springs’ overall financial status. Fitch’s comments came while affirming its “A+” rating on $2.8 million in outstanding bonds the city issued in 2001. At the end of September, the city had a total of about $21.6 million in outstanding debt.
Fitch Ratings said the city has a “strong financial position” that is “reflected in conservative budgeting and growing reserves. The city has experienced solid economic growth over the last few years driven largely by its central location for year-round tourism activity and an expanding natural gas industry. While the city remains dependent upon sales tax revenues, which have started to show declines, overall financial flexibility is high.”
Contact Pete Fowler: 384-9121
Post Independent, Glenwood Springs Colorado CO .
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