Every fire chief has experienced the pain of these tough economic times or has read about cuts made to other fire departments. Firefighters have been laid-off, command staff positions remain vacant and in some communities stations have been closed. Cities across the country are finding ways to cut budgets and minimize the impact of lower property taxes. Declining property values stemming from the downturn have led to reduced tax revenue for cities, towns and villages. Tough times call for creative thinking about funding fire and emergency medical services.

Mayors, city managers and other elected officials do not see the fire department as a revenue source. Often, the fire department operates on close to 100% tax revenue. This tax drain has many drawbacks and carries some very negative connotations. Fire-prevention programs provided by the fire service are an opportunity to generate revenue — and in some cases, substantial revenue.

For a mid-sized city, it should be possible to generate close to $1 million in fire-prevention program revenues. When a department generates considerable revenue, it opens the door for the department to reap some rewards for finding an aggressive and creative approach to funding its services. With solid revenues, a department may fill or add positions, increase funding for supplies, increase training funds for fire-prevention staff and win favor from the mayor and elected officials.

Revenue Opens Doors

Aside from the training, supplies and positions, the additional revenue may bring some political advantages for the chief and the department. With other city departments talking about covering their agency costs with fees in order to minimize the financial impact on residents, the chief may have the opportunity to present a budget that does not completely rely on taxpayers. Fire-prevention funds allow the chief to demonstrate a commitment to alternative funding and decreasing the tax burden, a politically wise opportunity for any chief.

Moreover, while the local financial process may direct all revenue to the city's general fund, a department may be able to show the revenue it generates from fire-prevention programs and then budget against the income.

However, implementation of new fees can be challenging, especially in the tough economy of today. Success depends on the fire chief knowing the community and elected officials. Understanding community support of the chief and department is critical. Comprehension of the will of elected officials is a must. No fire chief wants to impose a new fee and burn bridges with those who have supported or even gone the extra mile to improve funding or opportunities for the department. New fees may be seen as an alternative form of taxation. New fees can turn friends into foes. Caution is required.

But fire-prevention service fees can pay for most, if not all, of the cost of providing inspection and plan-review services. Fees for community education services certainly can cover the costs of supplies and teaching aids. Finally, such fees can supplement general revenues to reduce the impact of fire services on the average taxpayer.

Administrative support is required to track fees, invoice fees, and pursue unpaid fees. Such support should be considered when determining the fee. Remember: at a minimum, revenue must cover costs. Do not dismiss clerical support when evaluating the organizational impact of a new fee or when deciding how much to charge.

What to Assess

Establishing the amount to assess is difficult. The charge must include all staff time, supplies and overhead. Setting a fee based on operating expenses only gets the organization to the next year, when the cost of services exceeds the fee. This approach requires an annual fee adjustment. New fees and adjustments should be based on an estimate of the cost of services at some point in the future, which allows expenses to catch up with fees and prevents the annual adjustments. With a couple of years of operating at a profit, the department may allow a year at a loss to avoid the work required to update the fee schedule.

Increasing existing fees is by far the easier task. While a 10% increase on fees at the lower end of the scale may have minimal effect, increasing higher fees by a just few percentage points may be enough to have a positive impact on the department's net budget.

Knowing who is paying the fee is critical to managing the community's perception of the increase. Raising fees for sprinkler-plan review by a couple of hundred dollars is more easily accepted than a $25 increase in the permit fee for winter- and summer-solstice bonfires sponsored by neighborhood associations. Fees assessed to individuals (as opposed to businesses) should be carefully evaluated. Writing a personal check is much more difficult than processing a business expense. The personal check is perceived as crossing the line to additional taxation.

The bottom line: if it's extra, charge for it. When property owners choose to place additional demands on the fire service, they should pay for those services. Further, owners who neglect to operate their businesses in accordance with codes and standards should be invoiced for all related services.

Let's examine some of the fees that might be imposed by department for its fire-prevention program.

Inspection fees. Fees for inspections can generate substantial revenue. Code enforcement requires inspections — many inspections — thus, revenue. A modest inspection fee can bring in big dollars. However, inspection fees may be the toughest to impose because some people are likely to view the fee as "big government" and an alternative form of taxation. On the other hand, fees for inspections that occur when violations are noted are perceived as a choice of the property owner. In other words, if the owner wants to avoid the fee, all he has to do is maintain a fire-safe facility. An inspection fee for tax-exempt property — such as churches, non-profit ownership and other government-owned properties — should be considered. Such properties do not pay for inspection services through taxation, so perhaps they should pay fees for services. This suggestion certainly needs to pass the "smell test" before introducing an ordinance proposal, as skeptics are likely to question the legitimacy of the fee.

Re-inspection fees. Re-inspection fees are easier to justify. Repeat inspections should not be considered "business as usual" or routine services. Fees can be assessed for the first re-inspection. Some view an inspection and re-inspection as components of the code-enforcement process, which may justify the fee upon the second re-inspection. Whether assessed for the first or second re-inspection, fees for additional inspections should be part of any department's fee structure. A progressive fee structure for multiple inspections has the added bonus of serving as a compliance incentive.

Plan-review fees. Plan-review fees for fire-protection system reviews, code-compliance reviews and code-mandated approvals can be the foundation for fire-prevention revenues. Many departments have implemented plan-review fees. Any work performed by the fire service which is associated with property development and construction should be a "pay-as-you-go" service. Plan-review fees should minimally generate $100,000 annually, with much higher revenue in better economic times.

Permit fees. The model codes include language requiring permits for special hazards and hazardous occupancies. The codes make it easy to apply a local fee structure to the permits required by model code. The ICC and NFPA have set a framework for municipalities to generate revenue. A wide variety of permits may generate substantial funds. When considering all of the assembly occupancies, welding operations, high-piled storage and other permitted occupancies and hazards, permit fees will bring in at least $50,000 annually.

Fees for capacity-control inspections. Communities with a popular bar scene or evening entertainment district often perform capacity inspections or checks. Such activities are outside of the scope of routine or day-to-day inspections; thus, a fee is quite easy to justify and implement. A review of the number of authorized annual inspection hours divided by the number establishments checked each year could be a starting point for setting an inspection fee for each establishment.

Special-event inspection fees. All communities have events that require extra staffing to make sure the event and associated activities are carried out in compliance with the fire code. Most community events occur outside of normal business hours. The event organizer should pay for the related inspection. Outdoor concerts, beer gardens, sporting events in large-capacity venues, Fourth of July celebrations, art fairs and similar events can bring fire-safety concerns such as capacity control, safe use of propane for cooking, tents and other fire-code considerations.

Fees for safety-education services. Community-education activities or fire-safety presentations often are viewed as services provided to schools, senior groups and non-profit organizations. However, a comprehensive safety-education program delivers services to for-profit businesses, apartment owners' associations and professional trade associations — all of which have resources to pay for all or a portion of the fire-safety program. If your department provides services to for-profit organizations, you must at least consider fees to cover the cost of supplies. Often, such costs do not exceed $25 to $50. If the property owner wants an additional service, such as fire-extinguisher training or first-aid training, it is a reasonable expectation that they should pay for supplies. Often a facilities manager or safety director will ask if a charge will be assessed for safety-education services. This question may be seen as an acknowledgement of the willingness to pay for the services.

Fines as a revenue source. Penalties for failure to comply with codes and standards are another widely accepted and utilized revenue stream. Citations and court proceedings with associated costs are a matter of routine for cities with municipal court systems. While court fees and legal actions generate some revenue, they should not be looked upon as a method to recover costs.

Court -directed forfeitures for fire-investigation services. Reciprocity for fire investigations must be considered. While recovery of investigation costs is almost impossible, assessing criminal offenders for investigation services is a good idea. Of course, such assessment requires local, county and state legal language authorizing reciprocity.

Fees for services should be considered by all fire departments. Fire-prevention fees are easy to justify. Make it happen and reap the benefits.

Ed Ruckriegel is the fire marshal for the Madison (Wis.) Fire Department. He previously served as the city's fire-protection engineer. Ruckriegel has a bachelor's degree in fire and safety engineering technology.