Opinion 2000 - 6


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FOREIGN FIRE INSURANCE TAXES -- Particular Uses (funding length of service award program)

VOLUNTEER FIREFIGHTERS -- Service Award Program (use of foreign fire insurance taxes to fund)

GENERAL MUNICIPAL LAW 218, 219, 219-a; INSURANCE LAW 9104, 9105: Foreign fire insurance tax monies received pursuant to Insurance Law 9104 and 9105 may not be used to fund a length of service award program established by a village for members of the village fire department.

You ask whether foreign fire insurance tax monies received by a village treasurer may be used to fund a length of service award program for volunteer firefighters of the village fire department.

Article 11-A of the General Municipal Law (214 et seq.) contains provisions relating to service award programs for volunteer firefighters. A service award program for the volunteer firefighters of a village fire department may be established pursuant to General Municipal Law 216(1). Establishment of the program pursuant to subdivision 1 of section 216 requires an affirmative vote by at least sixty percent of the village board of trustees and is subject to a mandatory referendum of the eligible voters within the village.

Where a service award program is established for the volunteer firefighters of a village fire department, the village board of trustees is required to appropriate annually the amount needed to fund the program (see General Municipal Law 219[d], 219-a[2][a]). Thus, the statutory responsibility for funding a service award program for a village fire department rests with the village (see also 1990 Opns St Comp No. 90-57, p 131).

The distribution and use of foreign fire insurance tax monies is governed by sections 9104 and 9105 of the Insurance Law, unless a special law enacted by the State Legislature provides otherwise.1 In general, these sections of the Insurance Law provide that foreign fire insurance tax monies must be paid to the treasurer or other fiscal officer of the fire department, or if the fire department does not have a treasurer or other fiscal officer, to the fiscal officer of the authority having jurisdiction and control of the fire department which, in the case of a village fire department, will generally be the village treasurer (Insurance Law 9104[a][1]-[3]; 9105[d][2][B]-[D]; Not-For-Profit Corporations Law 1402[e]; Village Law, article 10; Village Law 4-408). In a multi-company fire department, the initial recipient of the foreign fire insurance tax monies is required, in turn, to distribute the amount received to the fire companies constituting the fire department (Insurance Law 9104[a][4]; 9105[d][2],[E]; see also 1989 Opns St Comp No. 89-53, p 120).

Sections 9104 and 9105 provide that the foreign fire insurance tax monies of a fire department or fire company must be used for the benefit of the department or company as determined by the members thereof (Insurance Law 9104[f]; 9105[d][3]).2 This Office has expressed the opinion that, except as otherwise provided by special act, foreign fire insurance tax monies may be expended for any purpose, other than an illegal purpose or a purpose contrary to public policy, that the members of the fire department or company, as the case may be, determine to be for the use and benefit of the department or company (see, e.g., 1989 Opns St Comp No. 89-16, p 34; 1987 Opns St Comp No. 87-88, p 130; 1982 Opns St Comp No. 82-10, p 12; 1981 Opns St Comp No. 81-49, p 51; 1981 Opns St Comp No. 81-146, p 151; 1979 Opns St Comp No. 79-627, p 120). We have also concluded that the treasurer having custody of foreign fire insurance tax monies should not permit such monies to be expended for a purpose which the treasurer, in good faith, believes to be illegal or improper, even if the expenditure has been approved by a majority of the membership because the treasurer could be held liable for the expenditure of such monies for an illegal improper purpose (see, e.g., 1997 Opns St Comp No.97-20, p 38). Inasmuch as it has been held that tax monies under sections 9104 and 9105 may not be made available for the personal use of individual firefighters (Wilcox v Schenck, 52 AD2d 349, 383 NYS2d 918; but see  MacIsaac v City of Poughkeepsie, 158 AD2d 140, 558 NYS2d 667, appeal denied 76 NY2d 714, 564 NYS2d 717, appeal dismissed 80 NY2d 891, 587 NYS2d 901),3 we have concluded that it would be improper to use these monies to make direct cash payments to firefighters (1987 Opns St Comp No. 87-88, p 130; 1982 Opns St Comp No. 82-10, p 12).

Based on the foregoing, since, pursuant to sections 9104 and 9105, it is the members of the fire department or company who determine, in the first instance, whether a particular proposed expenditure of foreign fire insurance tax monies is for the benefit of the fire department or company, it is our opinion that the village may not compel the members of the fire department or company to use these monies to defray ordinary operating expenses of the village fire department (Opn No. 87-88, supra; 1979 Opns St Comp No. 79-680, p 138; see MacIsaac v City of Poughkeepsie, supra; Watertown Firemen's Benevolent Association, 134 NYS2d 465). Thus, the village may not compel the use of foreign fire insurance tax monies to fund the village's cost of operating a service award program. Moreover, since the purpose of a service award program is to provide direct cash payments to firefighters who are entitled to benefits under the program (General Municipal Law 218, 219), it is also our opinion that it would be improper to use foreign fire insurance tax monies to fund a village service award program, even if the members of the fire department or company consented to such use of the monies.

Accordingly, foreign fire insurance tax monies received pursuant to Insurance Law 9104 and 9105 may not be used to fund a length of service award program established by a village for members of the village fire department.

May 5, 2000
Herbert A. Kline, Esq., Attorney at Law
Village of Port Dickinson

1 Typically, such special laws incorporate an exempt volunteer firefighters' benevolent association and authorize that association to receive and expend foreign fire insurance tax monies. For purposes of this opinion, we assume no special act is applicable here.

2 This requirement, however, does not preclude a company from paying all or a portion of the tax to the fire department of which it is part.

3 In MacIsaac v City of Poughkeepsie, supra, the court held unconstitutional a local law authorizing the chief fiscal officer of a city to expend foreign fire insurance tax monies for, inter alia, the acquisition, construction and maintenance of firehouses and the purchase and care of firefighting vehicles and apparatus. The court invalidated the local law, stating that foreign fire insurance tax monies "are intended for the personal use and benefit of municipal fire department members and cannot be used for general purposes that are normally considered municipal charges..." (158 AD2d 140, 143, 558 NYS2d 667, 669 [emphasis supplied]). The court further noted that "the legislation is clear that the tax proceeds generated by the applicable provisions of the Insurance Law [9104 and 9105] must be expended solely for the personal benefit of the fire department members, so that the local law's contrary provision for using the proceeds for general municipal purposes constitutes an unconstitutional exercise of power." (id. [emphasis supplied]).

In reaching this conclusion, the court in  MacIsaac relied, in part, on the earlier case of Wilcox v Schenck, supra. In Wilcox, however, the Appellate Division quoted with approval a passage from the decision of the court below which stated that "[t]he funds [foreign fire insurance tax monies] as such are not available for the personal use of either paid or volunteer fireman [sic]" (52 AD2d 349, 351, 383 NYS2d 918, 919 [emphasis supplied]). Thus, while the court in  Wilcox clearly indicated that foreign fire insurance tax monies are not available for the personal use of firefighters, the court in MacIsaac appears to suggest the contrary.

The court in MacIsaac  also relied on 1979 Opns St Comp No 79-680, p 138 for the proposition that "the municipality may not require that tax proceeds generated by Insurance Law 9104 and 9105 be used to purchase equipment since such purchases for ordinary operating equipment are the responsibility of the municipality" (52 AD2d 349, 351, 383 NYS2d 918, 919). In Opn No. 79-680, supra, we concluded that a municipality may not expend, or compel the expenditure of, foreign fire insurance tax monies to purchase equipment because, as a general rule, foreign fire insurance tax monies may not be expended for such ordinary operating expenses of the fire department. We also concluded, however, that the members of the fire department may voluntarily determine that the purchase of equipment is for the use and benefit of the department and expend foreign fire insurance tax monies for that purpose. Further, we did not suggest the monies could be expended for the personal use of individual firefighters, as opposed to for the benefit of the fire company or fire department.

Accordingly, in view of the foregoing and the express language of sections 9104 and 9105 providing for use of foreign fire insurance tax monies for the benefit of the "fire company" or "fire department," we believe the decision in MacIsaac should be read narrowly as holding that a municipality generally lacks authority to direct or limit the use of foreign fire insurance tax monies to the purchase of equipment or payment of other ordinary operating expenses that are the responsibility of the municipality or fire district. Moreover, because there is nothing in the decision which suggests an intent to overturn longstanding views regarding the purposes for which the monies may be expended, we do not believe that the decision should be read as construing sections 9104 and 9105 as either authorizing foreign fire insurance tax monies to be made available for the personal use of individual firefighters or as prohibiting the members of a fire department from voluntarily using the monies to purchase equipment or pay other ordinary operating expenses of the fire department.