Wall Street Targets Volunteer Fire Departments for Profit

It seems Wall Street has found a new avenue for profit—local volunteer fire departments.

According to a report from the New York Times, private equity firms have laid out their strategies to capitalize on the public safety sector, which primarily relies on tax revenues. Notably, around 85% of the nearly 30,000 fire departments across the United States are volunteer-based.

A firm called ESO Solutions, which is supported by Vista Equity Partners, is one of the key players. As noted by the New York Times, ESO is among several companies aggressively investing in public safety systems that depend on taxpayer funding. The company serves about 20,000 of these fire departments. Two other significant software providers, ImageTrend and First Due, are also reportedly backed by private equity funds.

Many of these firms have begun to dominate the supply chain, according to the Times. They supply essential items, such as fire engines, emergency radios, and flame retardants, and many agencies are raising concerns over the soaring prices.

For instance, the Norfolk, Connecticut, Volunteer Fire Department, which operates on an annual budget of $132,000, faced substantial costs for vital software to manage incidents. Their previous software cost around $800 annually, but ESO had plans to acquire and shut down that platform. When Norfolk sought cheaper options, ESO swiftly acquired a competitor, further complicating the situation.

Similarly, Greg Whited, chief of the mostly volunteer Mesilla Fire Department in New Mexico, found himself paying higher prices for software from another private equity-backed company, causing his department’s expenses to jump from $4,000 to $12,000 a year. He likened his dealings with ESO to being in an abusive relationship, expressing feelings of unfair treatment.

“I’m not going back with sunglasses to hide my black eye,” he stated. “You took advantage of my department. I will not use you as a vendor unless you are the last option available.”

This trend within private equity, particularly in public safety and volunteer fire departments, can be viewed as exploitative. Turning these essential community services into profit-making entities is, frankly, troubling and suggests a kind of rent-seeking behavior that undermines the very fabric of public safety.

The rise in costs for software, fire engines, radios, and flame retardants will inevitably burden fire department budgets, likely leading to calls for higher taxes. State and local governments might then need to increase tax revenues, perhaps through property taxes, to maintain these critical services.

So who comes out ahead here? It’s not the small rural communities facing higher taxes and reduced quality in emergency services.

Volunteer firefighters, who play a crucial role in communities, shouldn’t be at the mercy of private equity’s profit motives. It raises a question that even Adam Smith might contemplate: Is this truly the way forward for our public safety?