With its line of credit in limbo, Hellsgate Fire Department is joining other county fire districts in feeling the pinch to keep its fire departments operational.
Fire Chief Gary Hatch said this week that he has already reduced his part-time staff for the fuels reduction program.
This also puts the nearly $1 million dollar grant program on hold until he knows if he will have the funds to keep it going.
Gila County Supervisor Tommie Martin has assured Arizona fire districts that the county will find the money to keep all vital services operational until tax receipts are collected and the fire districts have money in their own accounts on which to operate.
In a normal year, fire districts can get a line of credit from their bank equal to 45 percent of its estimated property tax receipts.
In this fiscal year, the Hellsgate Fire District has been given a $226,000 line of credit from Chase Bank, which is equal to 27 percent of the estimated taxes.
“This was fine when we had a very little payroll, but now that we have joined the two districts, we are strapped to keep operating on only 27 percent until mid-November,” Hatch said. “We run a $2.2 million budget, with only $838,803 coming from local property tax. The rest comes from contracts with the Town of Payson, fire district assistance tax, wildland firefighting around the country and federal grants.”
With the department’s monthly payroll running at nearly $86,000 during fire season, any shortfall makes it hard for the fire district to pay bills if the bank does not extend its line of credit.
“So we have no money coming in, but have to continue operating,” Hatch said. “We are taking money out of the capital reserves fund to keep our doors open.”
The real issue lies with the bank, Hatch believes. Under Arizona Revised Statute, the county receives a revolving line of credit from a bank, in this case Chase Bank.
Hellsgate uses that line of credit to pay claims and obligations until the treasurer receives money from property taxes and other nonrestricted revenues.
By law, the bank can only provide a revolving line of credit up to the 45 percent of last year’s tax receipts.
For Hellsgate, which had $792,000 in tax receipts last year, they could have been given a line of credit of $356,400 from the bank.
If they do not receive the line of credit, the county, by Arizona Revised Statute, must provide up to 90 percent of the difference until funds are received.
Most counties in the state are not fiscally able to provide this as required, but Gila County has been able to manage its funds for a hardship time, and they have indicated that they can help this year, Hatch said.
Although $226,000 seems like a small amount of money, when compared to Hellsgate’s total budget of $2.2 million, Hatch said it could have devastating effects on the department.
Hatch pointed out that Hellsgate has already carried over funds of $54,000 plus the capital reserve funds of $65,000.
That money is almost all gone, and tax receipts just went out for the year.
“It could be enough to close us down for a while if the county did not step up to the plate for us,” he said.
“Our payroll is large enough that we do not have the funds to cover wages and the taxes and benefits payments, which have to be paid every two weeks by state law.”
County supervisors have assured Hellsgate they will cover their line of credit for the time being.
“They (the county) have said we will somehow keep your doors open,” Hatch said.
Two years ago, Hatch said they had no problems getting their line of credit from Chase. He sees this year’s struggle as a byproduct of the recession.
Until the treasurer’s office gives him further notice, Hatch said he is waiting to see what happens and if further cuts are warranted.