Spending Your Tax Dollars: Insurance, tradition spread fire coverage

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Fire coverage from Shelby County is a multimillion-dollar expense that requires investments in 10 separate fire districts plus the city of Shelbyville. But fire officials are cool to the idea of bringing together those resources into a single agency.

By Lisa King

Fire protection in Shelby County is a nearly $5 million proposition splintered into 11 agencies of varying sizes because of two untenable forces that dictate how public money is spent: insurance rankings and plain old tradition.

The city of Shelbyville spends $1,133,293 of its annual property tax pie for a full-time, professional fire department to protect within the city limits, but the rest of Shelby County is a web of connective taxing districts, operated by boards of dozens of individuals, in which property owners are taxed $4.8 million to be distributed almost entirely among volunteer forces, four of which aren’t even located in Shelby County.

The Shelby County Fire Department may be labeled as the agency for everyone, but it is no more formal a protective force than departments in Mount Eden, Waddy, Bagdad, Simpsonville or even the Long Run Fire District, which doesn’t even have a fire department. It simply covers more territory and has more resources.

That’s the way firefighting has been in Shelby County since at least the mid-1960s, when those taxing districts were created by state statute to pay for volunteer departments.

Residents of those taxing districts pay 10 cents per $100 assessed value for their property and motor vehicles – the highest allowed by state statue – for that fire coverage. For that amount, they receive:

  • A total of 408 firefighters,  342 of whom are volunteers.
  • Fourteen stations sprinkled throughout Shelby County, and services from three departments in Oldham County and another in Jefferson.
  • Dozens of trucks and other pieces of expensive equipment that are split among those 14 stations.

Fire departments in South Oldham, Ballardsville and Pewee Valley receive $171,974 from Shelby Countians. The Long Run district, which covers 5 miles along Long Run Road, collects $29,620 from residents in its district and sends it along to the Eastwood Fire Department, just a mile into Jefferson County.

You might think that Shelby County’s $4,697,439 in tax assessments could fund one consolidated department of cohesive, well-trained, well-equipped and economically sound firefighters. But because of tradition and the way insurers rate departments, virtually every fire department in Kentucky, other than Louisville or Lexington, is its own, taxed, volunteer entity.

Shelby County Judge-Executive Rob Rothenburger, who has a long history tied to the emergency services, and is even a former Shelbyville fire chief, said people don’t want that to change.

“Fire departments are very unique to each community,” he said. “There’s a lot of tradition within fire departments with members who have been with these departments for a long time, who have helped to build them up from nothing into what they are today. Those communities kind of claim those fire departments. With consolidation, you would lose that personal community identity.”

To merge them would be difficult.

“There is a lot more to it than just simply putting them all together,” said Shelby County Fire Chief Bobby Cowherd, whose department covers 180 of the county’s 400 square miles. “Other counties have tried it in the past, but it just wasn’t feasible.”

One significant obstacle is the rating system of the Insurance Service Organization, which ranks departments from 1 to 10, with 1 being the highest, based on a variety of factors, including dedicated resources to an area. That formula dictates how much property owners pay for insurance.

“The ISO rating determines what you [property owners] pay in insurance,” Cowherd  said.


The volunteer tradition

But foremost Cowherd, who since 1992 has been chief of the Shelby County Fire Department, by far the largest fire district in the county, agrees that tradition is a key element on the volunteer fire department..

“In small communities, traditionally, the fire department has always been the hub of the community,” he said.

That attachment to community is strong in Shelby County, Mount Eden Fire Chief Doug Herndon said.

“The people on the fire department play a big part in the community,” he said. “Everybody knows them, goes to church with them. There’s a connection there.”

Elmer Brown, Waddy’s fire chief in the 1980s and father of its current chief, Darryl Brown, recalled those days with fondness, including how people in the community looked up to firefighters.

“People would say, ‘He saved my life,’ or ‘He saved my house,’” he said.

Brown, who retired when he reached his 70th birthday, spoke of being able to protect the community, even with used equipment and very little training. “It’s something to be proud of,” he said.

Others cite firefighters’ commitment to community service in their areas, with one example being Saturday’s Swamp Tromp, a fundraiser for Shelby Prevention, in which firefighters participate each year, help with parades, school events and even providing relief for kids on hot days.

Bagdad Fire Chief Rusty Newton said his department is extremely active in the community, doing everything from operating haunted houses to going door to door to check carbon monoxide levels.

“We go out into the community, we go to homes of the elderly to check their smoke detectors, to make sure they have batteries,” he said. “We just do anything needed to help out in the community.”


Insurance issues

But even putting aside the potential loss of a department’s personal relationship with its community, there is the purely financial issue of insurance and how that works.

Robert Andrews, spokesperson for the ISO, explained that his organization, the insurance industry’s leading supplier of statistical and underwriting claims data, evaluates departments according to key areas of fire protection, including 911 systems (10 percent), adequacy of equipment, staff and training (50 percent) and water supply (40 percent).

“ISO analyzes this information and assigns an advisory number from one to ten, and PPC [public protection classification] is assigned to communities based on the protection area of a fire department,” he said.

Consequently, fire departments have different ratings. Shelby County, for instance, recently went from a 9 to an 8 because of adding new stations on La Grange and Finchville roads, and in areas of more numerous hydrants, has a 4 rating. Purchasing new trucks and equipment in Simpsonville lowered that department to a rating of 6 in hydrant areas and 9 in other areas.
Ratings are updated when a department either adds equipment, fire stations or hydrants. They then inform ISO personnel to get re-evaluated.

 “What they [ISO] do tell us [all departments] is how much equipment we have to have and what kind of equipment has to be on a truck,” Cowherd said. “They tell us we have to have so many ladders and how many feet they have to be, and if you don’t, you can’t be in a certain category, that’s why there’s a scale from one to ten. The best is Shelbyville, a class three in the hydrant areas, and we have a class four.”

That applies to residences in the Shelby County district that are within 5 miles of a fire station and do not have a fire hydrant within 1,000 feet. Those that are within that 1,000 feet have a Class 4 rating.

Why is this rating so important to the insurance industry?

“A community’s investment in fire mitigation is a proven and reliable predictor of future fire losses,” Andrews said. “Therefore many insurance companies offer reduced premiums in communities with better fire protection.”

Rothenburger said if a county should seek to consolidate fire districts, the fact that they all have different ISO ratings would make it very difficult to establish a uniform rating for the entire county.

“Currently, Shelby County has a four rating, other places, like Simpsonville and Bagdad have six, nine and ten, so they’re all different,” he said.

Another argument against trying to consolidate, Rothenburger said, is that ISO requirements may be appropriate for one fire district and inappropriate for another, yet all within the county are lumped together.

“That’s been an argument for a long time,” he said. “ISO is just using a carte blanche criteria for the whole nation. Smaller departments might not need a million-dollar ladder truck. There’s been tremendous argument over that.”

But could it be done?

“Each taxing district is completely separate,” Rothenburger said. “You would have to dissolve all those districts and put a new county-wide district in place.”


How districts operate

Rothenburger said fire districts should be considered as geographic areas, not simply parts of a whole.

“The responsibility of their [fire districts’] boards is to set the tax rate and make sure the funds are used for fire suppression and protection, “ he said. “They can contract out with anyone whom they wish to provide that service. They [Long Run] contract out with Eastwood Fire Protection district to provide fire protection for that area.”

That means that the Long Run district, which encompasses 34 square miles – 5 of it in Shelby – sets  the tax rate, and then turns that money over to Eastwood.

Fire districts are also the only special taxing districts in which members are both appointed and elected. With boards of seven members, no matter what the size of the district, as set by state law, three members are appointed by the county judge-executive or mayor, two are appointed by board members and two are elected by people in the district.

Although fire district boards, like other special taxing districts, do not have to answer to any other governmental entities, their members do consult with the fiscal court about various matters, Cowherd said.

“We’re not accountable, no, but we do work hand-in-hand with them [fiscal court],” he said. “We’d be crazy not to do that.”

Newton said communication is always a good thing.

“The main thing is to keep the fiscal court abreast of the budgets and how they are using tax payers money,” he said. “Also, anytime there’s anything special come up, fire districts may make an announcement to the court about it to make them aware of it, but there hasn’t been anything like that come up for some time.”