Officials seek solutions to VFSI funding issues

County Mayor Eugene Ray said that discussions about the future of Volunteer Fire Services Inc. are still preliminary at this stage, but the issue may be discussed at Tuesday night's meeting of Bedford County Financial Management Committee.

"We are just talking at this point," said Ray.

The problem is finding a legal way to fund the department, which primarily responds to calls outside the city limits of Shelbyville and which, despite its name, has both employees and volunteers.

The Times-Gazette has heard at least one report that the department's future is uncertain, but Ray said talks are still ongoing.

VFSI Chief Mark Thomas said he was not aware of any decisions having been made.

"They're just looking at all avenues," said Thomas.

The funding of rural fire services has been a bone of contention between city and rural residents for decades, and was part of a lawsuit against the county on behalf of city taxpayers in the early 1990s.

Some city residents claim it is unfair for county property taxes paid by city residents to be used to pay for services that operate primarily in rural areas. Rural residents sometimes counter that it is the city's choice to have a higher level of fire protection and that the city benefits from rejecting county fire coverage and operating its own fire department because its Insurance Services Office (ISO) fire protection rating leads to lower homeowners' insurance premiums.

As a result of the lawsuit, the county spun off the county-owned fire department into VFSI, an independent non-profit agency, but continued to fund it under a provision of state law which allowed the county to contribute to volunteer fire departments.

The county set up a special fund to contribute to services like VFSI out of tax revenues the county considered to be generated in rural areas, such as the "city share" of sales tax from businesses outside city limits. The term for such taxes is "situs-based."

At the time of the lawsuit, there were enough situs-based taxes to cover VFSI's operations. But changes in the tax base and in VFSI's budget over the years means that now the existing situs-based taxes don't even come close to funding VFSI.

Last summer, when discussing the issue at a meeting of Bedford County Financial Management Committee, commissioner Joe Tillett said that situs-based taxes were only expected to generate $641,806 in revenue in the 2008-09 fiscal year, compared to VFSI's projected budget of more than $1 million.

Thomas said the key is to find a way to keep VFSI at its present level of service and to protect the money the county has invested in it over the years.

One often-discussed solution to the problem would be to create a "fire tax district" composed of property outside city limits, and place a special fire tax on those properties to fund VFSI, either replacing the situs-based taxes altogether or supplementing them.

"We're just brainstorming at this point," said Ray. It's possible that any such solution might involve bringing VFSI back under the county's budget by turning it back into a county fire department.

Thomas said he had no strong preference either way on the issue of having VFSI as an independent agency or a county department. He said it would make no difference to those who benefit from VFSI's service, and the only real difference to employees would be that, as county employees, they would have access to the state's retirement program.

"I think it would be better if it would be under the county," said Ray.