Finance committee weighs reassigning legacy fire pension levy, reallocating impact fees and pursuing EMS "soft billing" to close capital shortfall

Delaware City’s Finance Committee on Jan. 21, 2025 discussed several revenue options to reduce a growing capital and road-maintenance shortfall, including an ordinance to reallocate a legacy property tax levy that previously funded historic police and fire pensions; possible redistribution of fire impact fees to other capital impact funds; and pursuing EMS “soft billing” to insurance companies rather than balance-billing patients.

The committee’s review focused on how each option would affect capital budgets, the fire fund and ongoing operations, and how quickly any change could be implemented. No binding policy change was adopted at the meeting; staff were asked to return with more precise financial estimates and implementation details for council consideration.

Rob (staff member) summarized the first option: redirecting the portion of a longstanding property tax levy that originally paid police and fire pensions into the city’s general fund now that the pension liabilities have been paid off. “About half a $1,000,000,” Rob said when asked how much that reallocation would generate annually; staff described the expected benefit as roughly $400,000–$500,000 per year beginning in tax collections for 2025 (available to spend in 2026). The item will be introduced to full council as an ordinance on the Jan. 27 agenda, staff said, and committee members signaled they could recommend council act on that item now for an effective date of 2026.

The committee discussed legal and timing limits on capturing tax collections sooner. Staff said capturing 2024 collections would require litigation in the Common Pleas Court; otherwise, the change would affect collections with tax year 2025 and be available to spend in 2026.

A second option examined was reallocating the fire impact fee revenue to other capital impact-fee funds (police, parks and transportation). Staff explained the impact fees are restricted to capital uses only. “Only capital. Only capital. Only capital,” Rob said during discussion, underscoring that impact-fee proceeds cannot be used for ongoing operations or routine maintenance. Committee members raised concerns about legal defensibility: one member noted the city recently settled litigation over capacity/cost studies for other fees and cautioned that reallocating fees must remain “rationally related” to the impacts being charged.

The committee also reviewed EMS soft billing—billing insurance companies for ambulance transports while not balance-billing patients—as a possible revenue source. Rob described soft billing as accepting what an insurer will pay rather than pursuing full cost recovery, and he said implementation would require an outside billing vendor and several months to put in place. Staff noted a past Chief Donahue analysis based on 2018 runs estimated potential gross revenues up to about $900,000, while administrative or vendor costs could be on the order of roughly $200,000; both figures were presented as estimates not yet validated for current run volumes or payor mix.

Council member Corey urged a cautious approach on patient billing: “I don't think it is prudent to bill the individuals themselves,” Corey said, arguing the committee should target insurance companies rather than patients to avoid creating barriers to calling emergency services. Multiple members expressed support for pursuing insurance-only billing while asking staff to gather vendor examples and talk with peer communities that have implemented similar programs.

Committee members placed the EMS-levy (0.7%) restructuring and reducing the statutory credit for firefighters’ pensions—changes that would require voter approval—largely off the table for immediate action because of political risk and operational impacts discussed at length. Several members warned that attempting to reduce or reassign the current fire levy could prompt voter rejection and leave the city worse off.

Committee members and staff repeatedly returned to the broader capital picture: the committee’s capital improvement budget started the year roughly $1.7 million in the red, and staff said the city would need roughly $1.9–$2.0 million annually to sustain a basic local-street maintenance program and be competitive for matching grants. Members also noted a recently discussed Fire Station 305 project with an estimated cost in the $15 million–$18 million range and that some apparatus debt currently funded by impact fees will need coverage as impact-fee balances decline.

The committee asked staff to: (1) place the ordinance to reallocate the legacy pension-related levy on the full council agenda (the item was scheduled for Jan. 27), (2) obtain more detailed estimates and vendor information for EMS soft-billing scenarios and present examples from peer jurisdictions, and (3) have the finance committee reconvene in spring after April revenue results to refine levy and credit timing and to finalize recommendations for any ballot measures. Members emphasized the need for more granular cost estimates before recommending other levy or fee changes.

The committee approved the finance committee motion summary from Dec. 3, 2024 at the start of the meeting by roll call; council members Hoffman, Haynes and Chair Schaffer voted yes. The meeting adjourned after the committee signaled consensus to bring the property-tax reallocation to council and to continue studying the other options.