NAPPANEE — Nappanee is currently looking into the idea of establishing a fire district to serve its outlying townships.

The city says a budget shortfall is on the horizon due to the loss of property tax revenue. It wants to find a way to share fire protection costs across the board.

For years, the Nappanee Fire Department has protected four neighboring townships. For that, those townships have been paying a small fee.

"We have always provided the emergency services for the townships for little or no costs and we're glad to provide that,” said Nappanee Mayor Larry Thompson. “They're good neighbors."

But that fee is no longer enough.

"We can not continue to fund our fire department budget based on what we are now taking in,” Thompson explained. “We have to come up with some other formula on how to distribute the cost of this."

That's why the city is looking at establishing a fire district with Jefferson, Scott, Locke and Union townships. Each would pay a more equal share of providing fire coverage.

The Works and Safety Board has signed off on a proposal to have a Plymouth firm conduct a feasibility study to weigh the financial pros and cons of going with a fire district.

"It’s going to look at a total cost picture overall, that's definitely going to be one thing, and also it will be area coverage we have to look at,” said Tom Lehman with the Works and Safety Board.

"Just see if there's a better and more fair way to, maybe more equitable across the board, to share those costs,” Thompson said. “We can no longer continue just to pay the bill and be the good neighbor."

Nappanee expects to lose up to $380,000 in revenues in 2010 because of a cap on property taxes, and says it will need more township funds to make up a project deficit for the fire department budget.