Opinion 96 - 24


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FIRE DISTRICTS -- Appropriations and Expenditures (appropriations to capital reserve fund)

MUNICIPAL FUNDS -- Capital Reserve Fund (referendum requirements in fire districts); (payment into of amount provided by appropriation)

GENERAL MUNICIPAL LAW, §6-g: A fire district board of commissioners may determine to include in the annual fire district budget an amount to be paid into a capital reserve fund established for the purchase of equipment. The board may fix such amount each year at approximately the same amount previously paid annually for principal on obligations issued to finance a fire truck. The establishment of a capital reserve fund for the acquisition of a specific item of equipment, or expenditures from a capital reserve fund established for a type of equipment, would be subject to permissive referendum requirements.

This is in response to your letter concerning a fire district which has recently made the final debt service payment on a bond issue for the purchase of a fire-fighting vehicle. You ask whether the fire district may include in future years' budgets an amount approximately equal to the previous annual principal payment on the bond issue. The moneys would be accumulated for a future purchase of a replacement vehicle. If so, you ask whether voter approval is required.

A capital reserve fund is the mechanism by which a fire district may accumulate moneys for certain capital purposes. General Municipal Law, §6-g governs capital reserve funds in fire districts. Subdivision 2 of section 6-g authorizes a board of fire commissioners to establish a capital reserve fund to finance all or part of the cost of, among other things, the acquisition of a type, or specific item, of "equipment". Fire fighting vehicles constitute "equipment" for this purpose (see, e.g. 1987 Opns St Comp No. 87-16, p 28; 1986 Opns St Comp No. 86-67, p 105; 23 Opns St Comp, 1967, p 625; 12 Opns St Comp, 1956, p 107; 4 Opns St Comp, 1948, p 557; see also Kelly v Chester Fire District, 116 Misc 2d 334, 455 NYS2d 312 rev on other grnds 95 AD2d 799, 463 NYS2d 518 affd 60 NY2d 660, 467 NYS2d 832).

Section 6-g(5) provides, in pertinent part, that:

There may be paid into any such capital reserve fund:

a. Such an amount as may be provided therefor by budgetary appropriation or raised by tax therefor**** 

Thus, pursuant to section 6-g(5), a board of fire commissioners may determine to include in its annual budget an amount to be paid into a capital reserve fund established for the purchase of equipment. In its discretion, the board could fix such amount each year at approximately the same amount as previously paid annually for principal on obligations issued to finance a fire truck(1).

As to referendum requirements, a resolution for the establishment of a capital reserve fund to finance the acquisition of a specific item of equipment, such as a particular sort of firefighting vehicle (e.g., pumper truck), must set forth the estimated cost thereof and is subject to permissive referendum requirements (General Municipal Law, §6-g[3]; see Local Finance Law, §38.00[a]). Expenditures from such a fund would not be subject to referendum requirements (General Municipal Law, §6-g[7]). On the other hand, there are no referendum requirements for the establishment of a capital reserve fund for a "type" of equipment, that is, a kind or class of firefighting equipment (e.g., "fire fighting vehicles"; see Opn No. 87-16, supra). Expenditures from such a fund, however, would be subject to permissive referendum requirements (General Municipal Law, §6-g[7]).

Accordingly, a fire district board of commissioners may determine to include in the annual fire district budget an amount to be paid into a capital reserve fund established for the purchase of equipment. The board may fix such amount each year at approximately the same amount previously paid annually for principal on obligations issued to finance a fire truck. The establishment of a capital reserve fund for the acquisition of a specific item of equipment, or expenditures from a capital reserve fund established for a type of equipment, would be subject to permissive referendum requirements.

December 31, 1996
Patrick Shields, Secretary-Treasurer
Leonardsville Fire District

1. We note that the appropriations to and expenditures from capital reserve funds are not subject to the fire district's spending limitation (Town Law, §176[18], third unnumbered paragraph).