A financially troubled St. Tammany Parish fire district managed to wring an $800,000 loan from the Parish Council on Thursday, but not before angry council members blistered officials’ ears for nearly two hours and asked the district attorney’s and state legislative auditor’s offices to investigate the district for possible malfeasance.
Joe Mitternight, chairman of the Fire District 12 board, fielded a volley of questions from council members who were incredulous that the financial woes were not brought to their attention sooner.
The district, which serves unincorporated areas around Covington, Folsom and Abita Springs, levies 25 mills in property taxes. Its financial problems were first brought to light by WWL-TV last month.
Mitternight acknowledged that the district is struggling, partly because a new ambulance service it launched about a year ago has turned out to be a financial drain instead of a money-maker. He blamed slow payments by Medicare, Medicaid and private insurance companies and reduced reimbursements.
The district has seen no growth in property tax revenues and also is grappling with rising pension costs, he said. The budget shortfall is about $300,000, fire district officials told WWL.
Fire board members are considering several solutions, Mitternight said, including refinancing an existing loan to reduce payments, cutting pay, seeking a tax increase and discontinuing the ambulance service.
The board would rather not get rid of the ambulance service, he said, but council members were adamant that it should do exactly that.
Councilman Marty Dean said the district picked the wrong time to get into the ambulance business, with the onset of the Affordable Care Act, resulting in lower reimbursement rates. “Acadian (Ambulance Service) doesn’t put out fires,” he said.
Councilman Jerry Binder said Dean was right and the district made a mistake by getting into a “whole new business.” He urged the board to considering selling the equipment it bought for the ambulance service. Its uncollected bills are also an asset, he said.
What most concerned the council was the possibility of pay cuts.
Councilman Steve Stefancik said that even with the parish loan, employees might see pay cuts of as much as 17 percent.
About 70 people work for the fire district, which has a $7 million operating budget.
“The victims are the men and women who work for the Fire Department who will be hit in the pocketbook, right at Christmastime,” Councilman Marty Gould said.
Stefancik, who sits on a panel that works out the parish’s contract with Acadian Ambulance, said he had provided figures to Fire District 12 that should have made it clear what to expect in terms of revenue from an ambulance service.
But Mitternight said the district did its own due diligence study. Although it considered the numbers provided by the parish, it came up with its own numbers and settled on what he called a “median” amount.
The $800,000 sought by the board is a stopgap measure, and Mitternight said the district might not need that much to tide it over until property taxes come in. But the board wanted to make sure it doesn’t have to ask for more, he said.
“I know we have to give you the $800,000,” said Stefancik, but he also called for the board to be replaced. “Somebody needs to be held accountable,” he said.
Council members also were leery of the idea of restructuring a bond issue in a way that would extend payments from 2022 to 2029. The change would mean lower monthly payments, but it would add $345,000 in interest payments over the life of the loan.
“It’s like putting a second mortgage on your house and buying a big-screen TV, without being sure how you are going to pay for it,” said Councilman Reid Falconer, who cast the lone vote against loaning the district the $800,000.
Stefancik then offered a motion to request a District Attorney’s Office investigation into possible malfeasance, which the council amended to include a request for a probe by the Legislative Auditor’s Office as well. The measure passed unanimously.
Follow Sara Pagones on Twitter, @spagonesadvocat.