USER FEES AND THE FIRE SERVICE

By ROBERT NIELSEN, Fire Chief, Village of Oak Brook

A challenge facing today's Fire Service Administrator is how to make ends meet with what he is given to work with. A favorite place for municipal budget cuts has traditionally been the Fire Service. When this does happen, the progressive Administrator will have to turn to other sources for his required operating revenue. As we all are aware, these sources are relatively few, especially for the Fire Service. All agencies within municipal government are seeking out the same sources and competition is tough. A little used revenue source within the Fire Service is the "User Fee." It is little used, as many Administrators are unsure of its potential. It is also a very politically sensitive issue. In past years, it has been unheard of to charge for services provided by local governmental bodies, hence, taxing bodies. Today, however, progressive and knowledgeable Administrators, in all fields of public administration, look to sources such as this to fill the void left by budget cuts.

Just what does the term, "User Fee" connotate? Simply put, it is services and/or goods provided by local government which are financed by charging the individual user. These services and/or goods only benefit the user, hence the term "User Fee." The amount charged is typically related directly to the cost of providing the service. In theory, it may also be used to provide a profit to the provider. In the early 1970's, the percentages related to these fees began to rise, in some cases dramatically. As a source of revenue to municipal governments, it today averages approximately 20%. Of all of the reasons for the use of user fees, education and educational related services comprise the greatest use, approximately 22.8%. This is followed equally by hospital related services. Interestingly, a third major user fee is related to sewerage related activities. These three sources alone account for approximately 62% of all fees related to users. In a past study that was conducted by the International City Management Association, it was found that of 18,000 municipalities involved, approximately 16.8% of all their fees, averaged, comes from the "User Fee" source. The greatest user of this type of source is the municipality with a population range of 300,000 to 500,000. This group derives approximately 23% of all of its revenue from user fees.

User fees allow local governmental units to perform a resource allocation function, leaving income distribution to higher levels of government. Within local government, there are strong economic reasons for not charging the full cost for any service provided, if the service provides significant indirect or spilloff benefits to the community. Within a given municipality, this factor has to be considered when this source is looked at. To differentiate between the term "user fees" and "special district fees," is very important to this consideration. Special districts tax specifically for the service provided, i.e., Fire Protection Districts. One has to be very careful not to charge for a service already taxed for. This may itself be a source of political confrontation you may not wish to engage in.

When considering the user fee source of revenue, one must distinguish between those services which may be priced and/or marketed, and those that cannot. If a fee is imposed, it must be in line with the market for the service. In most cases, the municipality, as provider, has a probable monopoly on the service, either legally or otherwise. Also, the services to be provided must be capable of being broken down into units or some easily divisible aspect upon which charges may be imposed. Some services cannot be broken down into units, as they may be considered public or collective goods, which would be difficult to exclude residents from enjoying. An example of this woud be the imposition of the fee for fire suppression, when, in fact, your agency has been created for, and taxes for, the service. This example may also be hard to apply a unit charge to. Some fee programs may be designed to exclude those who may use a costly service frequently, as its provision is at no charge. User fees will cause this person to rely more heavily upon the private provider of the service, if available.

Municipal governmental bodies and the sub-agencies within them, look more frequently to the primary advantage of a user fee, those who make the most use of the service or facility pay the most for its support. Another primary advantage of the imposition of user fees is that the community's residents can express their true desires for the project or service by paying for it. Economically, fees for any undesired service will ultimately cause the demise of the service, if it is either too costly or unwanted. A distinct disadvantage of the use of user fees in any area of municipal government is that they often weigh more heavily on the budget of the poor than the rich. In the area of emergency services, it has been found that the poor are also the greater user. Complete reliance on user fees within the area of municipal government would in most cases not permit the poor to utilize the full range of services available. The challenge to the public official, i.e.. Fire Service Administrator, is to find the optimal balance between efficiency in the provision of public services and equity in the receipt of these services among all of the residents of his community.

Faced with the previously discussed issues, what can the Fire Service Administrator of today do towards utilization of this principle? He can look for fair and equitable means of providing the services that are desired of HIS community. He can attempt to provide these services to all residents desirous of them. When faced with rising costs, as are most administrators today, he can study several factors as to a solution. Among these factors: a. Who receives the specific service; b. How much does this service cost, per unit of delivery; c. Is any revenue received covering all provision costs, direct and indirect; d. Would the implementation of a fee cause a better service provision; and, e. Would the potential recipient(s) be willing and/or able to pay the

September 1989 / Illinois Municipal Review / Page 9

imposed fees, or would they seek the service elsewhere?

What are topical fees to the Fire Service, and how are they being received by the public? Some are quite obvious and have been used for numerous years, yet, others may be innovative and worthy of consideration within your specific form of local fire service delivery. One of today's most prevalent "User Fee" within the Fire Service today, is the charge for ambulance usage. Initially, there may have been no such service provided, with reliance placed upon the private provider. In many cases, you may find that the primary users of this service are not residents of your community. A quick data search of ambulance response records will provide this data. These users may then be considered a non-paying user, in that they provide no tax revenue to your municipality. Once it has been decided to impose this fee, the determining factor in its amount is simply, "How much does it cost to provide the service?" Determination of this approximate cost has to include such items as: personnel and fringe benefits, vehicle(s), reoccurring training, equipment maintenance, etc. If this service is currently provided at a no charge basis, imposition of the fee may prove politically impossible. Each individual situation must be dealt with accordingly.

Many municipalities may provide police/fire personnel for duties involving their profession, to private users. This may be for fire watches, security, traffic control, C.P.R. training, and special events. Is it proper to pass the costs of these extracurricular activities to the general public? In most cases, it is not. Also, you must consider the potential legal problems of permitting your fire/police personnel to "moonlight" within their own community, in uniform. The general public does not know this man's status, on-duty or off-duty. It is a very wise practice to prohibit this practice. A solution is that the municipality contract for all provisions of these type of services. Again, the imposition of a user fee must be calculated to meet all direct and indirect expenses related to the service provision.

False fire and/or burglar alarms are the plague of many municipal governments today. We author codes that require supervised fire alarm systems, then we pay the price of false alarms. This is usually in the area of diluted manpower, added vehicle mileage, and, exposure to the response dangers for no true reason. Significant expense can be incurred by municipal governments, and it may be only fair to pass this cost on to the cause of it. In some communities, false fire alarm responses can exceed 75%. The progressive administrator will pass these added costs to the user. How, you may ask is this possible? False alarms are part of the cost of doing business, yet, significant numbers from a single alarm are not acceptable. Survey your costs and arrive at an approximate fee for this service. Build in some form of relief to legitimate causes, i.e., weather, utility failure, etc. Do all of these within the proper legal framework, and adopt a legitimate local ordinance covering the fees. A good administrator will find that a false alarm fees in the area of the amount of $100.00 to $200.00 each will barely meet his costs related to response. Again, in calculating the fee consider manpower, vehicles, etc.

Have you ever considered inspection and reinspection costs to your Fire Prevention and/or Building Department/Bureau? It can be assumed that either permits or taxes pay for initial inspections, yet, who is paying for the many subsequent inspections? From a legal point of view, inspections that do not meet your local standards must be cited. These citations must be followed up on to ascertain total compliance. Again, survey your local situation and determine the approximate costs of the service provision. Charging a fee for an inspection that you require to be provided may be a touchy situation. You can anticipate potential legal problems with this, but, imposition of fees for reinspections is different. Communities that have looked at fees for required Fire Prevention inspections have typically backed away from them. Of the many issues discussed relative to user fees, this issue may prove to be too sensitive, politically. Reinspections are needed, and someone must pay the costs. Fees for inspections required beyond the scope of your duties are acceptable.

What has been discussed herein are issues related to the imposition of "User Fees." Each situation is different and must be looked at accordingly. Your specific municipality may not be in need of this additional revenue source, but you may be a rare breed if this is true. Consider all of the options discussed, and formulate a decision. Discuss it with the proper political people, and make sure that your's is not an arbitrary decision. Document the facts and present them within the proper political forum. With the demonstrated need, backed up with data gathered in the proper format, these type of fees may be welcomed when their true purposes are outlined to both the political environment and the public sector. •

Page 10 / Illinois Municipal Review / September 1989