Pinching pennies, pay cuts, draw down in reserves in store for SJ EMS

The 2015 EMS budget calls for cost-cutting, including salary reductions for administrative staff, and tapping reserves to shore up revenue, but change in "zero-balance" billing policy for district residents.

Pinching pennies, pay cuts and a dip into cash reserves highlight the financial plan of attack for the remainder of this year, and for the next, at San Juan EMS.

Two weeks after a would-be property tax increase failed at the ballot box—the 15-cent increase would have provided as much as $400,000 in new revenue for operations of San Juan Island hospital district’s emergency medical services—district commissioners approved without dissent a revised budget for 2014 and a revenue and spending plan for 2015.

Together, the two feature pay reductions for the agency chief, at 17 percent, and for another four administrative positions as well, at 8.5 percent. The salary reductions are a continuation of a cost-cutting move, marked by unpaid furloughs, implemented earlier this year and intended to help the agency keep a tight lid on expenses.

The 2015 budget calls for a draw down of roughly $300,000 in reserves, as well, to help keep the agency’s balance sheet from sliding into the red.

The drawn down of reserves is expected to keep EMS on firm financial ground but will leave only the agency with only about  $269,000 cash-on hand by the end of 2015, hospital district chairman Dr. J. Michael Edwards said.

“It’ll be tough, but we think it’s doable,” Edwards said.

Chief Jim Cole, whose salary is slated to be lowered by 17 percent, from $123,000 to $109,000, said that the budget calls for little if any in the way of capital improvements (such as replacement of a 22-year-old ambulance) and that it is also built around maintaining the long-standing policy of “zero-based billing” for emergency ground and air transportation for district residents.

Under zero-based billing, district residents are not charged for the balance of transportation expenses not paid for by insurance, or, as EMS officials term it, “no out-of-pocket expenses.” District boundaries encompass the entirety of San Juan Island, as well as Brown, Pearl, Henry, Spieden, Stuart, Johns islands.

The 2015 EMS budget approved by the commission Nov. 19 forecasts $3.4 million in revenue and $3.2 million in expenses. In 2013, the agency’s yearly expenses total roughly $3.2 million and its income totaled $3.4 million.

In the campaign in support of a 15-cent property tax increase, hospital district and EMS officials noted that the combination of drop in district property values reductions in federal medical reimbursements have recently chipped away at the agency’s two primary sources of revenue.

Critics countered that the EMS budget has nearly doubled in both income and expenses since 2010, the last year of the agency’s previous six-year levy. They also noted approval of across-the-board pay increases in 2012 for administrative staff, including the EMS chief (salaries which will now be scaled back), as well as a 5 percent drop in emergency calls in each of the last two years, did not match up with claims that EMS was in need of additional property tax revenue.

The EMS property tax levy historically has generated about one-third of the agency’s yearly income.

The defeat at the polls Nov. 4 is the second time in less than a year district voters have rejected a proposed increase in the EMS property tax levy. The measure generated only a 50 percent approval mark at the polls, 1,988 “Yes” votes compared to 1,989 “No” votes (under state law, change in a emergency medical services property tax levy requires a 60 percent or better margin of approval), generating less support than a similar proposal brought before district voters in February.

EMS anticipates its levy will generate $970,000 in 2015, or roughly $25,000 less than it produced in 2013. Its latest six-year levy, approved in 2010, is slated to expire in 2016 unless renewed by voters. The district will need to find a financial formula that voters will accept by then, Edwards said.

“2016 will be the do or die time for us,” he said.