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What’s in the Bargain

August 24, 2009

In late June, the conservative think-tank The Heritage Foundation announced the results of an analysis of the economic efficiency of Department of Homeland Security grants to local fire departments, known popularly by their acronyms as AFG, AFSCG, FP&S and SAFER.  The announcement concludes these grants have had no discernible effect on fire casualties, and should therefore be eliminated from future federal budgets.

Earlier this year, the department and the Obama Administration announced changes in grant authorization requests as part of the FY2010 budget submission to Congress.  The budget requests a doubling in SAFER grants to fund new and retained firefighter positions and recruitment programs for volunteers, but also recommends deep cuts in the AFG and FP&S programs that fund investments in firefighting equipment and fire prevention programs.  The Station Construction Grant program received a boost in funds as part of the recent stimulus package (aka American Recovery and Reinvestment Act of 2009).  All-in-all, the net effect of these proposals was a current year increase in federal support for local fire departments.

Firefighting groups, including the union representing most career firefighters and the association representing fire chiefs, responded quickly to contest both the proposed budget and The Heritage Foundation’s call to eliminate these federal programs entirely.  They argue passionately that the grants make a difference, but have not presented a comprehensive case for this position, relying instead on anecdotal evidence from individual grant beneficiaries.

Who’s right?  It’s quite possible, if not likely, that both sides are right in their assessments.

Fire department budgets, like those for all municipal services, have come under increasing strain as both the costs of municipal services and demands upon these services rise while the public’s willingness to pay more for these same services decreases.  The increases in cost reflect the fact that the government provides services where the competitive pressure of the market to keep prices down does not operate efficiently, if at all.  Most of these services are energy and labor-intensive, which has resulted in steep increases in costs well beyond that experienced in consumer and wage markets as a whole.  At the same time, efforts to keep salaries for public employees low have resulted in generous benefits, most notably retirement and health care insurance, the premiums for which have risen sharply in recent years.

Federal subsidies for local fire and emergency services have a short history.  When fire service groups began concerted lobbying for such assistance in the mid-1990s, their argument hinged on equity: “The feds fund the cops at a rate of about $11 billion annually.  Where’s our share?  We should get at least a billion dollars a year for our trouble.”

This argument missed the point that criminals often don’t respect state boundaries much less local ones, and therefore a reasonable federal nexus exists for subsidizing efforts to combat interstate crime.  Fires on the other hand rarely threaten to cross state lines, and even if they do, the federal government is often already involved as the landowner since these big fires often start in parks and forest lands under their control.

After 9/11, firefighters had the argument they needed not only to maintain the federal subsidies begun before the attacks, but gained added evidence in support for their argument that firefighters are the nation’s “domestic defenders”.  The fact 343 firefighters and EMTs lost their lives when the World Trade Center towers collapsed added emotional impact to their their argument that they stand at the front lines when terrorism strikes America’s homeland.  Under this argument, money to bolster the capabilities of local fire departments for routine emergencies is simply a positive externality of investing in capabilities that will aid communities when terror strikes.

Sadly, The Heritage Foundation has failed to assess the validity of this argument, focusing instead on the fact that these grants produce little tangible benefit in terms of reduced fire risk for individuals.  Although firefighters largely ignore this evidence, the fact remains essentially self-evident to anyone willing to pay attention to the determinants of fire risk in the community.

We need fire departments to protect us from our neighbors, not from ourselves.  And they need very little added assistance from the federal government to achieve this.  When firefighters make a difference in the lives of those experiencing a loss first-hand, we should see this as another positive externality of investing in their community-wide mission rather than a necessity in or of itself.  In most cases, the added services provided by fire and emergency services were not authorized beforehand by local citizens, who, once they became available “for free,” became accustomed to and in some cases dependent upon their ongoing availability and continued funding even if they were still unprepared to pay for them.

So what should we do about the grants?  First, we should clearly decide what we want them to achieve, and that means deciding clearly what role the federal government should play in funding the delivery of an essentially local service.  Second, we should condition grant awards not only on local contributions and cursory program evaluations, but also on greater innovation and collaboration to reduce costs.  No fire department should receive a grant unless it can prove that its programs are cost effective and have a solid and verifiable mandate from their communities.  Ideally, fire departments should be required to form interagency and public-private partnerships with direct citizen oversight to ensure they leverage every federal dollar as a condition for receiving grant awards.

To be fair, some of these conditions already exist in some grant programs.  But the scale and scope of compliance and the effect of such measures remains largely unexamined and therefore unknown.

Before we make any more changes in the current grant programs, we should figure out whether we are getting what we bargained for.  The Heritage Foundation study does not answer this important question.

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