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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
FIRE DISTRICTS -- Appropriations and Expenditures (authority to make cash refunds of unexpended monies in a capital reserve fund) -- Powers and Duties (authority to make cash refunds of unexpended monies in a capital reserve fund)
MUNICIPAL FUNDS -- Capital Reserve Fund (authority of a fire district to make cash refunds of unexpended monies in a capital reserve fund)
GENERAL MUNICIPAL LAW § 6-g: Absent a special act of the State Legislature, a fire district may not make cash refunds to its taxpayers of unexpended monies in a capital reserve fund that the board of fire commissioners has determined are no longer needed for capital purposes.
You state that a fire district created a capital reserve fund in 1973 and annually has placed sums into the fund. The fire district has expended monies from the fund only once, for the acquisition of a parcel of real property. The fire district currently contracts for fire protection with a village and there are no capital projects contemplated for either the long or short term "to which the money [in the fund] may be prudently [expended]." You ask whether, absent a special act of the State Legislature, the fire district may "return" monies in the reserve fund to taxpayers by making cash "refund" payments to taxpayers, either in a lump sum or over a period of years.
General Municipal Law § 6-g governs capital reserve funds in fire districts. Subdivision 2 of General Municipal Law § 6-g authorizes a board of fire commissioners, by resolution, to establish a capital reserve fund to finance all or part of the cost of the acquisition of a type, or specific item or items, of equipment, or the construction, reconstruction or acquisition of a type of, or specific, capital improvement. 1
General Municipal Law § 6-g (7) provides that an expenditure from a capital reserve fund may be made only for a capital improvement or an item or items of equipment. 2 If a board of fire commissioners determines that the unexpended balance in a capital reserve fund is no longer needed for the purpose or purposes originally intended, the board of fire commissioners may transfer the unexpended balance to certain other reserve funds. Specifically, the remaining monies may be transferred to: (1) another capital reserve fund, subject, in certain instances, to permissive referendum requirements (General Municipal Law § 6-g [8] [a], [b]); (2) an insurance reserve fund, subject to permissive referendum requirements (General Municipal Law § 6-n [3] [b]); (3) an employee benefit accrued liability reserve fund, subject to permissive referendum requirements (General Municipal Law § 6-p [3][b]); and (4) a retirement contribution reserve fund, subject to public hearing requirements (General Municipal Law § 6-r [3] [d]).
Fire districts only have those powers expressly granted by statute or necessarily implied therefrom (Town Law § 176 [21]; see e.g. , 2003 Ops St Comp No. 2003-4, at 10; cf. Wells v Town of Salina, 119 NY 280). Except as outlined above with respect to transfers to certain other reserve funds, there is no express or implied authority for a fire district to otherwise dispose of the unexpended balance of a capital reserve fund that the fire district has determined is no longer needed for capital purposes ( see Town of Evans v Catalino, 103 Misc 2d 261, 425 NYS2d 918, mod on other grnds 88 AD2d 780, 451 NYS2d 523, app dsmd 58 NY2d 601, 458 NYS2d 1025, app dsmd 58 NY2d 687, 458 NYS2d 543, rearg den 58 NY2d 824, 459 NYS2d 1030; 1996 Ops St Comp No. 96-10, at 26 [unexpended balance of a fire district capital reserve fund may not be transferred into the fire district's general fund]). Moreover, there is no general authority for a fire district to make cash refunds to taxpayers of monies determined by the board of fire commissioners to be in excess of the fire district's current needs, irrespective of the source of the monies ( see e.g. 1970 Ops St Comp No. 70-174; compare General Municipal Law § 94 [authorizing municipal corporations to make a cash refund to consumers of a municipal utility service using "profits" resulting from the operation of such a public utility]; Town Law § 198 [12][e] [providing for refunds to owners of tax exempt properties in the event of certain sales of all the property and facilities of a town special improvement district]; RPTL § 467-e [authorizing the City of New York to adopt local laws to grant cash rebates of real property taxes under certain circumstances]).
Accordingly, absent a special act of the State Legislature, a fire district may not make cash refunds to its taxpayers of unexpended monies in a capital reserve fund that the board of fire commissioners has determined are no longer needed for capital purposes. 3
September 3, 2008
Charles S. Kovit, Esq., Attorney at Law
Bay Park Fire District
1 Effective January 1, 2007, a resolution of the board of fire commissioners to establish a capital reserve fund may not take effect unless approved by the affirmative vote of a majority of the electors of the fire district, qualified to vote at an annual election of fire district officers, voting on the proposition (General Municipal Law § 6-g [4]). The proposition must contain an abstract of the resolution concisely stating the purposes and effect thereof ( id .). The abstract must be prepared by the fire district secretary on advice of the attorney for the fire district, if there is one ( id .). Prior to January 1, 2007, the establishment of a fire district capital reserve fund for the acquisition of a specific item or specific items of equipment, or a specific capital improvement, was subject to permissive referendum requirements, but the establishment of a fire district capital reserve fund for a type of equipment or type of capital improvement was not subject to referendum requirements.
2 Expenditures from a capital reserve fund established for a type of equipment or type of capital improvement are subject to permissive referendum requirements (General Municipal Law § 6-g [7]).
3 Our reference to a special act is not intended as a recommendation in that regard.