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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FOREIGN FIRE INSURANCE TAXES--Recipients (basis for allocation between or among fire companies in a multi-company fire department)

INSURANCE LAW, §§9104, 9105: Where foreign fire insurance tax moneys are distributed in accordance with Insurance Law, §§9104 and 9105, the moneys must be allocated between or among the volunteer fire companies of a multi-company fire department in proportion to the active membership of each company. 1979 Opns St Comp No. 79-102, p 19 superseded to the extent inconsistent.

You ask how foreign fire insurance tax moneys should be allocated to each volunteer fire company of a multi-company fire district fire department.

Sections 9104 and 9105 of the Insurance Law, as amended by chapter 293 of the Laws of 1988, govern the distribution and use of foreign fire insurance tax moneys unless otherwise provided by a special law enacted by the State Legislature. In general, these sections of the Insurance Law provide that foreign fire insurance tax moneys must be paid to the treasurer or other fiscal officer of the fire department or, if the fire department does not have a treasurer or other fiscal officer, to the fiscal officer of the authority having jurisdiction and control of the fire department (Insurance Law, §§9104[a][1]-[3]; 9105[d][2][B]-[D]). In a multi-company fire department, the initial recipient of the foreign fire insurance tax moneys is required, in turn, to distribute the amount received to the fire companies constituting the fire department (Insurance Law, §§9104[a][4]; 9105[D][2],[E]). Each fire department or company receiving foreign fire insurance tax moneys generally must use them for the benefit of the department or company, as determined by the members of the department or company, although a fire company in a multi-company fire department is not precluded from paying all or a part of the tax moneys to the fire department of which it is part (Insurance Law, §9104[f][1]; 9105[d][3][A]). Insurance Law, §§9104 and 9105, however, do not specify the basis on which the initial recipient of foreign fire insurance tax moneys is to allocate those moneys between or among the fire companies of a multi-company fire department.

Prior to the enactment of chapter 293 of the Laws of 1988, Insurance Law, §9104 generally required the treasurer receiving foreign fire insurance tax moneys collected pursuant to that section to apportion and pay those moneys to the fire company or companies which had the obligation to provide fire protection within the jurisdiction for the use and benefit of the fire department and the company or companies comprising the same. Section 9105 generally required the treasurer receiving moneys collected pursuant to its provisions to hold those moneys for the use and benefit of the fire department. In 1979 Opns St Comp No. 79-102, p 19, we concluded that the apportionment and payment of foreign fire insurance tax moneys to the company or companies comprising a fire department was mandatory under the predecessor statute of section 9104 (former Insurance Law, §553) and permissive under the predecessor statute of section 9105 (former Insurance Law, §554), but that in either case the apportionment by the treasurer of a multi-company fire department could be made in any equitable manner, including, but not necessarily limited to, on the basis of membership in each company.

Subsequent to the issuance of Opn 79-102, supra, but prior to the enactment of chapter 293 of the Laws of 1988, two court cases addressed the question of how foreign fire insurance tax proceeds should be allocated within a fire department. In Renn v Kimbark, 51 NY2d 189, 433 NYS2d 71 (1980), the Court of Appeals resolved a dispute between a city's paid and volunteer firemen, holding that paid firemen are entitled to a pro rata share of the proceeds of the foreign fire insurance tax because "... in the absence of an express legislative enactment precluding the paid firemen of a particular city from sharing in the insurance premium tax, all firemen in the locality were entitled to share ratably in the funds collected pursuant to the Insurance Law" (51 NY2d at 195, 196, 433 NYS2d at 74). Similarly, in subsequent litigation between these same parties, Renn v Kimbark, 115 AD2d 112, 494 NYS2d 918 (1985), lv denied, 68 NY2d 663, 505 NYS2d 78 (1986), the Appellate Division upheld a determination requiring the distribution of foreign fire insurance tax moneys between the paid and volunteer firemen to be made "strictly on a pro rata basis from their active membership rosters" (115 AD2d at 113, 494 NYS2d at 919; see also 1986 Opns St Comp No. 86-16, p 27). In so doing, the court rejected the contention of the paid firefighters that their allocation should be based on their greater firefighting responsibilities. The court reached its conclusion because pursuant to Insurance Law, §§9104 and 9105, foreign fire insurance tax moneys are paid to a "unitary fire department" composed of both paid and volunteer firefighters and previous cases "... explicitly held that all members of each single [fire] department are to share in the funds on a pro rata basis..." (115 AD2d at 113, 114, 494 NYS2d at 920).

After the Renn decisions were rendered, chapter 293 of the Laws of 1988 amended sections 9104 and 9105 to, inter alia, conform many of the provisions of the two sections. The amendments, however, do not affect the applicability of the Renn decisions because sections 9104 and 9105 continue to provide that foreign fire insurance tax moneys are paid to the appropriate officer of the fire department or the authority having jurisdiction and control of the department for the use and benefit of the department or the companies comprising the department. Further, while the Renn decisions concerned the allocation of foreign fire insurance tax moneys between paid and volunteer firefighters, we believe the reasoning in these decisions is equally applicable to the allocation of foreign fire insurance tax moneys between or among the volunteer fire companies of a multi-company fire district fire department pursuant to current sections 9104 and 9105.

Therefore, consistent with the Renn decisions, we conclude that where foreign fire insurance tax moneys are allocated in accordance with Insurance Law, §§9104 and 9105, the moneys must be distributed between or among the volunteer fire companies of a multi-company fire department in proportion to the active membership of each company. Opn No. 79-102, supra, is hereby superseded to the extent it is inconsistent with this conclusion.

December 26, 1989
Kenneth N. Alico, Treasurer
Orchard Park Fire District