Harry Scull Jr./Buffalo News The Harris Hill Volunteer Fire Company, which boasts seven vehicle bays, is one of the area’s wealthiest.

Updated: 11/09/08 08:30 AM
Practice of accumulating savings questioned, defended
Volunteer fire companies sitting on fat cash cushions
By Fred O. Williams
News Staff Reporter

When Big Tree Volunteer Fire Company spent $315,000 on land for a possible new fire hall, Ford Beckwith was outraged.

As a Hamburg taxpayer in Big Tree’s district, he questioned why the spending wasn’t discussed beforehand.

“It seems we’re giving increasing thousands of dollars to these fire companies without any oversight,” he told the Town Board.

But the situation in Hamburg isn’t unique. Many nonprofit fire companies in Erie County have large cushions of cash, saved up from payments made by town governments.

Five volunteer companies have socked away more than $1 million with which to buy property or equipment. In fact, some fire companies have nearly as much money in the bank as they have invested in buildings and firefighting gear, their reports to the IRS show.

Firefighters defend the surpluses. Saving up for major purchases is cheaper than borrowing, they say. And it ensures that there will be money to replace worn-out equipment.

Otherwise, “you’ve got to show up at the municipality’s door with a huge bill,” said Thomas LaBelle, executive director of the New York State Association of Fire Chiefs.

But critics say that the save-now, pay-later approach helps perpetuate a bloated firefighting infrastructure in suburban Erie County that fights relatively few fires.

There are 97 fire companies around the county, with 94 main stations and 26 substations, including municipal fire departments, according to Erie County Department of Emergency Services. The halls are stocked with 92 fire engines, 17 pumpers, 12 ladder trucks, 27 heavy rescues and 21 ambulances.

Departments faced an average of 35 fires apiece in 2007, according to the state Office of Fire Prevention and Control. There were 3,380 reported fires in the county, only about half of them involving buildings, the agency said. The rest were fires involving the likes of vehicles, Dumpsters, brush fires and barbecue pits, the agency said.

“It’s an absurdity,” Clarence Town Councilman Joe Weiss said. “These fire districts were put together during the horse-and-buggy days; you’ve got fire halls a stone’s throw from each other.”

He cited the Harris Hill Fire Company in Clarence and Amherst’s Main & Transit fire station, about 1 1/2 miles away.

“Some people might look at it as overkill,” Erie County Fire Coordinator James McCullough responded. “But you need to be prepared for the worst.”

Problem in Hamburg

Local governments pay for fire protection in two ways.

Fire districts, which levy taxes, are independent public corporations with elected boards and commissioners.

The second type of organization, Fire Protection Districts, are units of the municipal government that contract with fire companies, or with nearby districts, for fire protection.

In fire districts, having open budgeting doesn’t eliminate controversy over spending. Orchard Park Fire District raised eyebrows last summer when it spent nearly $250,000 for heated sidewalks to clear snow.

The 31 fire districts in Erie County spent $5.6 million on equipment and capital outlays in 2006, according to reports filed with the state comptroller, the most recent year on record.

State reforms recently took aim at firefighting costs and heightened oversight. Under the measure, fire districts are to hold public budget hearings, while volunteer fire companies are to submit independent audits of their spending to the town board, starting with the 2007 fiscal year.

In Hamburg, which buys fire protection from eight volunteer companies, the oversight has been slow to catch on. The board on Monday issued a reminder to fire companies to file the audit reports and to notify the board before making big purchases.

“The Town Board should be aware of spending of the fire companies, in case we have questions,” Councilman Kevin Smardz said.

The admonition came as the board approved a 1.77 percent increase in fire protection contracts for next year, for a total of $2.51 million.

Facing declining membership, Big Tree thought it might consolidate its two stations by building a new station in the center of its five-square-mile district, officials of the fire company have said. Now, however, there is no plan to build a hall anytime soon, said Smardz, the board’s liaison to fire companies.

Clarence saves a lot

For area homeowners struggling with some of the nation’s highest property taxes, fire companies that put millions of dollars in the bank seem out of tune with fiscal reality.

In Clarence, where fire protection is the town’s second biggest expense, “these people have quite a bit of money just sitting around,” Weiss said. Three of the fire companies with the largest reserves are in Clarence, with a combined total of $5.9 million, financial reports state.

In Hamburg, Big Tree reported savings of $1.3 million in its 2006 report to the IRS, the most recent on file. The value of its land, buildings and equipment was only slightly more, at $1.36 million.

“If they have [that much] in investments, why are we giving them more money?” Beckwith said. “We should be taking it back.”

Others, however, supported fire companies’ budgeting.

Joseph Kilian, organizer of a Hamburg taxpayers’ group, said that fire and emergency protection is a top priority.

“When your house is burning, you want them to come with everything — the latest and greatest,” he said.

Depreciation factor

How do the nonprofit companies store up big cash reserves?

Nonprofits are allowed to put money aside for equipment through the accounting technique of depreciation, said Patricia Johnson, a Canisius accounting professor and expert in nonprofit accounting. Depreciation is an estimate of the annual decline in the value of long-lived assets.

“To get that [replacement cost] out of one year’s budget would be very difficult,” she said.

At most fire companies, depreciation is by far the largest expense.

Getzville Fire Company received $948,320 for fire protection from the Town of Amherst and banked $258,000 as depreciation, its fiscal 2006 IRS statement said. Big Tree received $383,000 for fire protection and reported $197,000 in depreciation.

James Goss, president of Getzville Fire Company, said the organization’s $2.46 million in cash at the end of fiscal 2006 — the largest total in the county — reflected the pending purchase of three pumpers, for $1.3 million.

“All that was capital funds,” he said. “We do not run any surplus.”

Fire companies generally depreciate trucks over 15 to 20 years and buildings over 40 years. Across the state, depreciating buildings and equipment is common practice, LaBelle said.

Flap tied to economy

The sort of flap that Big Tree’s land purchase caused is being played out in other communities, LaBelle said, as attention focuses on fire company reserves.

“When times get tough financially, things get asked that were never asked before,” he said. “When times are good, no one cares.”

But a depreciation schedule doesn’t mean a building is actually useless after 40 years. In the City of Buffalo, only five of the Fire Department’s 19 active fire halls were built in the past 40 years, the department’s records show. Most are much older — in fact, five are over 100 years old, with the oldest dating back to 1888.

Volunteer fire companies do generally spend more on halls and equipment than paid companies, LaBelle said. That is the trade-off that taxpayers face, he added.

In return for working without pay, volunteer firefighters expect to have newer equipment, which usually provides better safety and efficiency, he said. And modern, well-appointed fire halls with amenities such as gyms help attract volunteers at a time when membership is shrinking, he said. Similarly, many volunteer companies have an annual dinner for members.

The alternative is much more costly, LaBelle said, when you consider the union wages and benefits that municipal fire departments face.

“There’s a great tendency to take for granted the financial savings of volunteerism,” he said.