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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

AMBULANCE SERVICE -- Fees (imposition of to generate revenue in excess of cost)
CITIES -- Fees (for ambulance service)
FEES -- Rates (for ambulance service)

GENERAL MUNICIPAL LAW §122-b: A city may not set fees for the provision of emergency medical transport services in an amount designed to generate revenue in excess of the cost of providing such services.

You ask whether a city may set fees for the provision of “emergency medical transport” services by a paid city fire department, in an amount that is designed to generate revenue in excess of the projected cost of providing such services. You indicate that the city intends to use the excess revenue for general city purposes.

Section 122-b of the General Municipal Law authorizes cities, among other local governments, to provide emergency medical service, general ambulance service or a combination of such services within their boundaries (General Municipal Law §122-b[1]). It appears that the proposed emergency transport service falls within the authority of section 122-b.

Under section 122-b, cities may acquire, equip and supply motor vehicles suitable for such purposes, and may directly maintain and operate such vehicle with city personnel. Section 122-b also authorizes contracts with one or more organizations to supply, staff and equip emergency medical service or ambulance vehicles (General Municipal Law §122-b[1][c]). Additionally, cities may fix a schedule of fees or charges to be paid by persons requesting the use of the services (General Municipal Law §122-b[2]).

It is a well settled general principle that a municipal fee for a service must be reasonably related to the municipality's cost of providing the particular service (2001 Opns St Comp No. 2001-3, p 5; 1992 Opns St Comp No. 92-40, p 103 and citations therein; see also, e.g., ATM v Village of Freeport, 276 AD2d 573, 714 NYS2d 721; NY Tel. v City of Amsterdam, 200 AD2d 315, 613 NYS2d 993). When only an approximation of the actual cost to the users is possible, “‘[e]xact congruence between the cost of the services provided and the rates charged to particular customers is not required’…. [a]lthough a ‘rational underpinning for the charge’ must be found’” ( Hull v Town of Warrensburg, 207 AD2d 37, 39, 620 NYS2d 570, 571 quoting from Watergate II v Buffalo Sewer Authority, 46 NY2d 52, 412 NYS2d 821).

It has been further generally held that a fee imposed for the purpose of generating revenue to offset the cost of general governmental services constitutes a tax and may not be imposed by a municipality without express statutory authority (see, e.g., Opn No. 2001-3, supra; Opn No. 92-40, supra; ATM, supra; NY Tel., supra; Phillips v Town of Clifton Park Water Authority, 286 AD2d 834, 730 NYS2d 565; Giuliani v Hevesi, 228 AD2d 348, 644 NYS2d 265 affd and mod 90 NY2d 27, 659 NYS2d 159). Accordingly, in the absence of express statutory authority, a municipality may not impose a user fee designed to generate revenue in excess of the cost of providing a service for the purpose of offsetting the general cost of government.

In this regard, we note that article IX, §1(f) of the State Constitution provides that no local government may be prohibited by the State Legislature from making a "fair return" on the value of property used and useful in its operation of a gas, electric or water public utility service, or from using such "profits" for the payment of refunds to consumers or for "any other lawful purpose." General Municipal Law §94 provides affirmative authority to municipal corporations operating gas, electric or water utilities to earn from and out of such operation an amount equivalent to taxes that the service, if privately owned, would have paid to the municipal corporation, and a "fair return" on the value of property used and useful in such service, over and above costs of operation and necessary and proper reserves. Section 94 further provides that "profits" resulting from the operation of the water, gas or electric service may be used for refunds to consumers, or "for the payment or expenses and obligations incurred by [the] municipal corporation for municipal purposes." We have interpreted this provision as authorizing a village to use "profits" from village water rents to fund general village purposes (1991 Opns St Comp No. 91-28, p 84).

There is, however, no similar authority for a village to earn a "fair return" from the operation of a municipal ambulance service and use "profits" resulting therefrom for general municipal purposes. Further, we have expressed the opinion that the statutory scheme under which municipalities can charge fees for ambulance services is intended to pre-empt local laws in this area (1994 Opns St Comp No. 94-7, p11).

Accordingly, a city may not set fees for the provision of emergency medical transport services in an amount designed to generate revenue in excess of the cost of providing such services.¹

We note that, in the letter inquiry, it is suggested that that there may be an inconsistency between Opn No. 83-238, supra and Opn No. 94-7, supra. Both Opn No. 83-238, supra, and Opn No. 94-7, supra, discuss section 122-b of the General Municipal Law, as well as General Municipal Law §209-b(4). Section 209-b(4) provides that emergency and general ambulance service “authorized pursuant to this section” shall be furnished without cost to the persons served.

We expressed the opinion in Opn No. 82-238, supra, that cities may provide services under General Municipal Law §122-b through, among other departments, their police or paid fire departments, and impose fees for such services. In Opn No. 94-7, supra, we concluded that a village was prohibited by General Municipal Law §209-b(4) from imposing fees upon users of emergency or general ambulance services provided by a village fire department pursuant to section 209-b. We believe the opinions are not inconsistent.

Section 209-b(2) of the General Municipal Law authorizes cities, among other entities, that have in their fire departments an emergency rescue and first aid squad comprised mainly of volunteer firefighters to furnish general ambulance service. In Opn No. 83-238, supra, we reasoned that general ambulance service provided by a paid city fire department, in contrast to services of an emergency rescue and first aid squad composed mainly of volunteer firefighters, would not be an ambulance service “authorized by” section 209-b and, therefore, would not be subject to the fee prohibition in section 209-b(4). Instead, we concluded that, absent a contrary city charter provision, such services by a paid city fire department could be provided by, and fees charged pursuant to, section 122-b. On the other hand, although not expressly stated on the face of the opinion, the facts presented in Opn No. 94-7, supra, indicate that the village fire department in question was a volunteer department. Since the ambulance services in that instance were being provided pursuant to section 209-b, the fee prohibition in subdivision 4 of section 209-b was applicable.

We recognize that subdivision one of section 209-b, relative to the provision of services by emergency rescue and first squads in the case of emergencies, does not contain the same express limiting language as subdivision two with respect to the provision of general ambulance service by squads comprised mainly of volunteer firefighters. The Legislative histories of General Municipal Law §§122-b and 209-b, however, indicate that subdivision one of section 209-b was never intended to be the sole grant of authority for the provision of emergency or general ambulance services by a paid city fire department.

As originally enacted in 1939, the predecessor of subdivision one of section 209-b was expressly limited in its application to, and was intended to be an affirmative grant of authority for, only volunteer fire companies and departments (Bill Jacket, L 1939, ch 580, Memorandum of Nathaniel R. Sobol, Counsel to the Governor, 5/23/39). Indeed, there seemed to have been a presumption that fully paid fire departments could already provide this service (see id.). In 1956, section 209-b was amended to delete the reference to volunteer fire companies. This change, however, was made because of concern with respect to fire departments or companies that initially were volunteer organizations, but began to employ one or more paid members. The amendment was intended to avoid any question that these entities could organize squads and provide services in emergencies (Bill Jacket, L 1956, ch 438, Memorandum of Joint Legislative Committee on Fire Laws). There is no indication that the deletion of the reference to volunteer organizations was deemed necessary in order to give fully paid fire departments authority to provide emergency ambulance services.

Similarly, in 1957, section 122-b was amended to repeal language that had authorized contracts under that section with volunteer fire companies because there was a concern that “ volunteer fire corporations [should] not provide municipal ambulance service under” section 122-b (Bill Jacket, L 1957, ch 849, Memorandum of the Joint Legislative Committee on Fire Law, emphasis added). When section 122-b was amended in 1977 to add express authority for the provision of emergency medical service under section 122-b, there again was concern expressed that the amendment would “provide the power to contract with volunteer fire companies” (see, e.g., Bill Jacket, L 1977, ch 811, Letters of the Association of Fire Districts, July 14 and 20, 1977, urging an amendment to section 122-b, emphasis added). Subsequently, subparagraph (1)(e) was added to section 122-b by L1980, ch 303, to expressly prohibit contracts pursuant to section 122-b for the services of an emergency rescue and first aid squad of a fire department or fire company that is subject to the provisions of section 209-b. It is apparent that this provision was added because of the concern expressed in 1977 that section 122-b would be construed to authorize contracts with volunteer fire companies without regard to the requirements of section 209-b. There is no indication of any intent to limit the provision of services by paid fire departments pursuant to section 122-b.

Therefore, we believe that the Legislative histories of both sections 122-b and 209-b demonstrate that section 209-b is not intended to be the sole grant of authority for a paid city fire department to render emergency ambulance services.

November 18, 2005

Robert N. Going, Esq., Corporation Counsel
City of Amsterdam

¹ In considering costs that are reasonably related to providing the ambulance service, we believe that the city may consider both direct and indirect costs, as well as current and future capital needs, in connection with the provision of the service (see, e.g., Watergate II, supra; cf. Giuliani, supra).