Wisconsin Department of Commerce Newsletter
December 2004
Fire Dues Program Further Refined

Based on Wisconsin statutes, the Division of Safety & Buildings under the Department of Commerce protects public health, safety, and welfare by promulgating rules for and administering fire inspection and prevention programs. Those programs include a Fire Dues program which is funded by fees from insurance companies, and which provides annual funding to cities, villages, and towns for performing fire inspection and prevention services.

Under the statutes, as established in 2003 Wisconsin Act 219, the Department is required to promulgate rules that define "administrative expenses" for the purposes of fire prevention and Fire Dues administration. The Department is also required to promulgate rules that define "substantial compliance" for the purpose of determining whether a municipality is eligible for funding from the Fire Dues program.

On September 10, 2004, the Division of Safety & Buildings added a germane modification to the previous submittal of Comm 14, Fire Prevention Code, revisions to the legislature. The modifications deal with definitions of expenditures for funds administered by the division, including the Two Percent Fire Dues Fund. The Department of Commerce has submitted a germane modification relating to definitions of "administrative expenses" and "substantial compliance" in the Fire Dues Program.

The four adjacent states of Michigan, Illinois, Iowa, and Minnesota each have some form of statewide funding for fire prevention. None of these states have a substantial compliance requirement as contained in this proposal.

Michigan collects two percent (2%) of fire insurance premiums and deposits that money into their general fund. Funding for fire prevention education comes from that general fund. Illinois has a one percent (1%) tax on all property, which funds the State Fire Marshall's office, and receives an average of $22-23 million per year from this source. The State Fire Marshall uses approximately $15 million to administratively run their office. Approximately $2 million goes to the Illinois Fire Service Institute to fund training, and approximately $1.5 million goes to the Chicago Fire Department for the training they provide to other departments.

In Iowa, two percent (2%) is withheld from insurance premiums. The two percent funds go into the general fund, and the State Fire Marshall's office is funded from the general fund. The Minnesota Department of Revenue handles a two percent program that is derived from the tax base. The funds are distributed to municipalities that have a fire department or contract with an independent, nonprofit fire-fighting corporation.

Based on a summary of factual data and analytical methodologies, these rules are not expected to result in significant impacts on small business or the private sector in general. They simply provide more flexibility in determining whether corresponding statutory duties of municipalities have been met, so as to establish eligibility for funding from the Fire Dues program.

The proposed rules would codify the two definitions as required above, and would modify the current rule text to provide consistent references to the definition of substantial compliance. These proposed rules would not reduce the current duty of municipalities to annually inspect 100 percent (100%) of public buildings and places of employment, but would provide more flexibility in determining whether that duty has been met, so as to establish eligibility for Fire Dues funding.

The current proposed rule changes identify "substantial compliance" as an ample amount of the required activity was performed through a concerted effort aimed at total compliance. A determination of substantial compliance is obtained through a common-sense approach to evaluating whether enough effort was made to comply with the applicable statute or code requirements. Substantial compliance is not a specific number or percent of compliance. A determination of substantial compliance in any one-year or regulatory standard does not mean that the same amount of compliance or effort in the following year or in another area of the code automatically equals substantial compliance.

Under State of Wisconsin statutes, the Department may not pay fire department dues to a city, village, town or fire department, unless the Department determines that the city, village, town or fire department is in substantial compliance with the statutes.

The second term defined under the Fire Dues Program is "administrative expenses". Under the Fire Dues Program "administrative expenses" will mean expenditures for the direct costs and indirect costs of administering rules promulgated based on state statutes 101.14, 101.141 and 101.573. "Direct costs" will mean the cost of salaries, limited term employees, fringe benefits and supplies. "Indirect costs" will mean the cost, determined on a pro rata basis, of management and administrative services provided. "Supplies" will mean equipment, memberships, postage, printing, rent, subscriptions, telecommunications, travel, utilities and similar outfitting and services, directly related to administering of rules promulgated based on state statutes 101.14, 101.141 and 101.573.

Interested parties may contact Joe Hertel, Fire Prevention Program Manager, jhertel@commerce.state.wi.us, 608-266-5649.

-- Henry Kosarzycki, A.I.A.

The newsletter is issued electronically every other month.

Please send comments or questions to Barbro McGinn, editor.

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