AUGUSTA – The State Fire Marshal’s Office is running out of money.

Revenues to support the agency are not keeping pace with rising operating costs, a trend that could result in cutting positions and curtailing services, according to state officials.

“We are facing a budget shortfall with a crisis looming,” said Michael Kelly, commissioner of the Department of Public Safety, during a recent interview.

State Fire Marshal John Dean estimates that the agency’s budget shortfall will be $128,000 by June 30. The shortfall could grow to more than $735,000 next year, he said.

Without a financial remedy, the Fire Marshal’s Office could be forced to reduce its already small, overworked investigation staff of 10 along with other important services the agency provides, according to Dean.

“It is going to have a tremendous impact,” said Dean. “It would have a significant impact on our ability to investigate fires across the state and would create a greater backlog. We should be adding people not cutting them. It is much too big a state to operate with so few investigators.” He said it is not uncommon for investigators to have several fire investigations going on at the same time in different parts of the state.

Dean said he hopes a new commission and state lawmakers will come up with a long-term funding solution, or at least something to keep the agency going another year.

One of the issues the Maine Fire Protection Services Commission has been grappling with since it was created by lawmakers a year ago is finding a permanent solution for funding of the State Fire Marshal’s Office.

The commission, made up oflawmakers, state officials, fire officials and an insurance representative, is expected to complete its study and present a report to the governor and members of the Legislature’s Criminal Justice Committee in a few weeks.

Many duties

The State Fire Marshal’s Office employs 39 people in two divisions – fire investigations and licensing and inspections. Ten inspectors are responsible for inspecting all public and private facilities licensed through the Department of Human Services such as hospitals, nursing homes, day care facilities, boarding homes and mental health agencies. They also review and issue permits for construction and renovations of public buildings. They inspect handicapped accessibility, fire sprinkler systems, aboveground fuel tanks, amusement rides and self-service gas stations.

Ten fire investigators are now responsible for conducting investigations of all fatal, serious personal injury and large-loss fires. They often assist local fire departments in determining the cause of fires. They conduct about 500 fire investigations a year, make arrests, write summonses, interview suspects and witnesses, collect and process evidence, and work closely with district attorneys and the Attorney General’s Office.

The other 19 employees are in administration and support positions.

“People see us processing a fire scene and think it’s all done when we drive away, but that is not the case,” said Dean. “It is very rare that you have an arson fire that is just a fire. It almost always is connected with fraud, embezzlement, all the way up to homicide. They are complicated cases that take a lot of investigative time.”

The number of fire investigators has not increased since the mid-1980s, yet the number and complexity of criminal cases have nearly doubled, according to veteran investigators.

Independent studies of the agency dating back to the early 1990s, including one conducted by the University of Maine’s Margaret Chase Smith Center for Public Policy, indicated the staff was too small and that there was an “immediate need” to recruit and hire more investigators, inspectors and clerical support.

Dean, who has been the state fire marshal for four years, said he isn’t sure why additional staff was not hired, but suspects money was the issue.

“In a time when I should be asking for additional resources to keep up with the work we have now, I find myself asking for just enough resources to keep us in business,” he said.

Funding sources

No state general fund revenues are used to fund the State Fire Marshal’s Office. Its primary source of funding comes from fees assessed against the fire portion of property insurance policies, including homeowners, commercial business and auto. It is called the fire investigation and prevention tax. Other revenue sources include fees collected for public building inspections, public building plan reviews and some funds from the tobacco settlement.

Randy Keep, a vice president of Maine Mutual Insurance Co. and the only member of the commission representing the insurance industry, said average homeowners pay between $1 and $2 a year in their policies to fund the fire prevention tax. For example, out of a $250 homeowners policy, $1.48 goes to fund the State Fire Marshal’s Office.

The fire investigation and prevention tax represents 1.4 percent of the cost of fire insurance, which officials estimate will generate $2.1 million in revenues this fiscal year. The State Fire Marshal’s Office receives 75.7 percent of the revenues. Maine Fire Training and Education, a department of the Maine Technical College System that provides training and education to about 12,000 firefighters in nearly 500 departments across the state, receives 24.3 percent of the prevention tax revenues.

This year’s budget shortfall of about $128,000 would have been much higher – more than $600,000 – if not for lawmakers approving a one-time, four-tenths of 1 percent special assessment to insurance companies to keep the State Fire Marshal’s Office from running out of money. The special assessment runs out June 30.

Operating expenses for the State Fire Marshal’s Office are about $3.2 million for next year, yet the agency’s total estimated revenues, including nearly $1.6 million from the fire prevention tax, are $2.5 million, leaving a $735,000 shortfall for the next fiscal year beginning July 1.

Dean said part of the funding problem is that revenues from the fire prevention tax have remained relatively flat since 1995.

Some members of the Maine Fire Protection Services Commission said they don’t understand why fire prevention tax revenues aren’t going up proportionally with the rising property values and rising insurance rates.

“The amount of the tax should be based on the amount of growth going on in the state,” said Darrell Fournier of Freeport, vice chairman of the commission. He and other officials said state property values have increased substantially, from more than $68.47 billion in 1990 to $88.36 billion in 2000.

Keep said fire prevention tax revenues had remained relatively flat because claims for the liability portion of insurance policies have been increasing, resulting in more of the insurance money going to pay for the liability portion of the policy than the fire portion.

Fournier and other commission members said they wonder whether the state is properly tracking the fire prevention tax revenues so the Fire Marshal’s Office and Maine Fire Training are actually receiving all of the revenues being paid into the state by insurance companies.

Dick Johnson of the Maine Bureau of Insurance told commission members last year that the state was doing all it could to collect the required tax revenues. Mark Landry of the Maine Revenue Service said his office plans to be more aggressive in auditing insurance companies.

Commission members also have discussed the issue of self-insured groups and risk pools not paying the fire investigation and prevention tax.Such self-insured groups are exempt from the tax.

“My argument is the self-insurers do receive a benefit not only from the State Fire Marshal’s Office, but also from the training of fire departments through Maine Fire Training and Education,” said Fournier. “They get a direct benefit yet they aren’t supporting these agencies. That could be a source of increased revenues.”

One example officials point to was last year’s fire at Verizon in Kennebunk, which cost the Fire Marshal’s Office thousands of dollars and consumed hundreds of man-hours. The telephone company is self-insured.

Sen. William O’Gara, D-Westbrook, chairman of the commission, said the situation needs immediate attention. “We hope to have a long-term solution that can solve the problem, but we also need to be sure we have something in place to make sure the SFMO continues to operate after June 30.”

Sen. Michael J. McAlevey, R-Waterboro, the Senate chairman of the Criminal Justice Committee, said the issue needs to be resolved once and for all. “We can’t keep revisiting this issue every year. They are going to run out of money in June.”

Rep. Edward Povich, D-Ellsworth, the House chairman of the Criminal Justice Committee, said there is a definite willingness for the committee to work with the Fire Marshal’s Office.