Our private ambulance company is shutting down. The city and county want to step in and either run ambulance service themselves or pay a private operator to keep it going. We did not budget for this in our 1968 budget. Can we pay the bill out of the County Poor Relief Fund? Can we set up a special levy to raise the money? Do we have to take competitive bids if we contract with a private operator?
Plain-English summary
In the spring of 1968, a private ambulance company serving "City A" was about to terminate its service effective June 1, 1968. The AG's opinion took judicial notice of a broader trend driven by federal Medicare reimbursement rules: private ambulance services were disappearing across the United States because the reimbursement structure made the business unprofitable. South Dakota cities and counties were among the public entities being forced to step in.
The 1968 South Dakota legislature had anticipated this. Chapter 24 of the 1968 Session Laws (amending Chapter 23 of the 1967 Session Laws) expressly authorized counties and municipalities to provide ambulance service within their boundaries and within a 50-mile radius, to contract with other governmental subdivisions or private operators for the service, to appropriate funds for the purpose, and to license and regulate ambulance providers.
But the practical problem was that the affected city and county had not budgeted for ambulance service in their 1968 budgets. They had thought the private operator would keep serving them. Now they had to find a funding source mid-year, and they asked the AG to evaluate three options.
Option 1: County Poor Relief Fund. The city wanted to know whether the county could pay ambulance claims out of the Poor Relief Fund. The AG said no, with a clear reason: Poor Relief Funds were appropriated to aid the poor of the county, not the general public. If the proposed ambulance service was limited to indigent patients, the Poor Relief Fund could fund that limited service. But the city and county here were planning to provide service to "all" inhabitants, and a use of Poor Relief Funds for that purpose was unjustified.
Option 2: Special levy. The city or county wanted to establish a special property tax levy for ambulance service. The AG said no, because the legislature had not authorized one. Special levies are creatures of statute (municipalities and counties have no inherent authority to impose them), and Chapter 24 of the 1968 Session Laws did not include a special-levy authority. The health department special levy in SDC 1960 Supp. 27.18A was specific to full-time health departments and did not extend to ambulance service.
Option 3: Competitive bidding. If the city and county contracted with a private operator for a multi-year flat subsidy that might exceed $13,200, did they have to take competitive bids? The AG said no, because ambulance service was a "personal services" contract and competitive bidding statutes did not apply to personal services contracts. The opinion encouraged the entities to consider competitive bidding on their own initiative if real competition existed, but said they were not legally required to do so.
The AG also volunteered an answer to a question the city had not asked: where should the money come from, if not Poor Relief and not a special levy? The general funds of the county and the city. And because the loss of private ambulance service was presumably unforeseen at the time the 1968 budgets were adopted, the entities could adopt an emergency budget amendment to fund the ambulance service for the rest of fiscal 1968.
Currency note
This opinion was issued in 1968. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. South Dakota's public ambulance authority has been substantially expanded since 1968. Modern provisions on EMS, ambulance districts, and emergency medical service taxing authority live in current SDCL chapters 34-11 (Emergency Medical Services) and related provisions. Cities and counties planning ambulance service funding today should consult current SDCL, the Department of Health's EMS rules, and bond/levy counsel.
What the opinion meant at the time
For county commissioners and city councils facing the loss of private ambulance service, the opinion offered a clear path: fund the service from the general fund, use the emergency budget process if the need was unforeseen, contract with a private operator if that was the operational model the entities preferred, and skip the competitive bidding step (though use it if it would help).
For county welfare officers managing the Poor Relief Fund, the opinion confirmed that the fund had strict purpose-restrictions. Even when a county faced a real emergency, Poor Relief money could not be repurposed for general public services. The fund was for the poor, and that meant the poor.
For property owners concerned about new taxes, the opinion was helpful in the short run: no special levy could be imposed for ambulance service in 1968. The funding had to come from existing general revenues, which limited the immediate fiscal impact. Subsequent legislative sessions could have added special-levy authority, but the 1968 statute did not.
For private ambulance operators (the few that remained), the opinion meant that public contracts were on the table without competitive bidding. Operators could negotiate directly with cities and counties for flat-subsidy or per-claim contracts, with the contract terms set by mutual agreement rather than dictated by a bid process. The opinion did note that the entities could choose to bid the contract if they thought competition existed.
For the public, the opinion supported the policy that ambulance service was a community responsibility funded equitably from general revenues rather than charged to a single class of taxpayers via special levy or limited to indigent patients via Poor Relief. The downside was that without a dedicated funding stream, ambulance service would compete with all other general-fund priorities each budget cycle.
Common questions
Q: What was the federal Medicare connection the AG mentioned?
A: The AG took judicial notice that federal Medicare legislation was making private ambulance service unprofitable. Medicare paid ambulance providers below their cost of service for a substantial share of patients (the elderly), and the volume of Medicare patients was rising. Private operators were exiting the market because they could not make the business work. The opinion did not specify which Medicare provisions, but the broader pattern of public takeover of ambulance service began in this era for that reason.
Q: Could the city and county have funded ambulance service from the highway or road fund?
A: No. Highway and road funds were statutorily restricted to road purposes. The opinion did not address that source, but the same logic that excluded Poor Relief from general ambulance service would have excluded restricted-purpose funds generally.
Q: What was an "emergency budget"?
A: An emergency budget was an amendment to the regular budget adopted mid-year to address an unforeseen need. The legal authority for emergency budgets existed elsewhere in South Dakota's municipal and county finance laws; the AG mentioned it as the appropriate procedural tool but did not cite the specific statute.
Q: Could the city and county have charged user fees to recover the cost?
A: The opinion did not address user fees. Chapter 24 of the 1968 Session Laws authorized appropriations and contracts but did not explicitly authorize user fees for ambulance transports. Public entities running ambulance service typically did charge for transports (insurance billing, Medicare billing), but the legal authority for that charging would have come from separate statutes or from the inherent authority to charge for services rendered.
Q: What was the practical effect of the no-competitive-bidding ruling for service contracts?
A: The city and county could enter into a direct contract with a chosen private operator without going through formal bid procedures. That made it possible to keep ambulance service running through the transition period without delay. The opinion explicitly encouraged the entities to call for bids voluntarily if they thought competition existed, suggesting that bidding was a best practice even if not a legal requirement.
Q: What was the 50-mile radius about?
A: Chapter 24 authorized counties and municipalities to provide ambulance service "within their boundaries and within a radius of 50 miles thereof." That let urban entities serve surrounding rural areas without having to incorporate or contract with each individual rural jurisdiction. Many South Dakota counties used this authority to fund ambulance service for the county seat plus a wide rural service area.
Background and statutory framework
The 1968 South Dakota legislature passed Chapter 24 of the 1968 Session Laws in response to the well-documented collapse of private ambulance service across the country. Chapter 24 amended Chapter 23 of the 1967 Session Laws, which had been an earlier attempt to authorize public ambulance service. By 1968, the statute had developed into a relatively complete framework:
- Counties and municipalities could provide ambulance service themselves
- They could provide service within their boundaries and within a 50-mile radius
- They could enter into agreements with other governmental subdivisions for the service
- They could enter into agreements with private persons (operators) for the service
- They could appropriate funds for the service
- They could pay claims on an audited basis
- They could license and regulate ambulance providers
What the statute did not include was a special-levy authority. The AG read that omission as legislative judgment: ambulance service was a general municipal/county responsibility, funded from general revenues, and the legislature had not opened the door to dedicated property tax levies for the service. Counties and municipalities that wanted that option would have had to wait for a future legislative session.
The County Poor Relief Fund was a separate creature, with its own purpose-restriction limiting it to aid for the poor. The AG's reading was strict: even when a different fund needed money and the Poor Relief Fund had it, the legal restriction held.
The competitive bidding analysis turned on the well-established distinction between contracts for goods/works (subject to bidding requirements) and contracts for personal services (not subject to bidding). Ambulance service was treated as a personal service because it depended on the qualifications, training, and judgment of the providers rather than the supply of an interchangeable commodity.
Citations and references
Statutes:
- Chapter 24 of the Session Laws of 1968 (amending Chapter 23 of the Session Laws of 1967) (county and municipal ambulance service authority; 50-mile radius; contracting authority; appropriation authority)
- SDC 1960 Supp. 27.18A (health department special levy; not applicable to ambulance service)
Source
Original opinion text
Counties. Ambulance service furnished by county and municipalities by joint effort.
You have submitted the following questions in regard to Chapter 24 of the Session Laws of 1968 which amended the substance portion of Chapter 23 of the Session Laws of 1967 relating to the providing of ambulance service by counties and municipalities.
The questions you have submitted are as follows:
"1. Assuming that it is permissible under the law to pay each claim or a percentage thereof when duly filed and audited by the county, may this expense be charged against the County Poor Relief Fund?
"2. If not, may the city or the county establish a special levy for this purpose?
"3. If the municipality and county were to enter into an agreement with some private concern to provide ambulance service for a definite period of time of at least one year in duration and were to provide for a flat subsidy, said subsidy in all likelihood to exceed approximately $13,200, would the county or the city under the general contracting provisions be required to call for bids?"
The factual situation described is that private ambulance service within City A is to be terminated effective June 1, 1968, and by such termination no other ambulance service is available either to the city or the county. Both the city and county are desirous of furnishing ambulance service to the city or the county, but neither provided for such service in their budget for fiscal 1968.
It seems so well known that judicial notice may be taken thereof, that by virtue of certain provisions of Federal Medicare Legislation, that private ambulance service is disappearing throughout the United States. To alleviate such condition, the public entities are furnishing the same. The 1968 statute, above cited, provides as follows:
"Section I. Counties and municipalities are authorized to provide ambulance service within their boundaries and within a radius of 50 miles thereof, to enter into agreements with other governmental subdivisions and with other persons for such services, and to appropriate funds for such purposes, or in lieu thereof said county or municipality may enter into an agreement with such other governmental subdivision or any competent person to furnish funds for such purposes on an annual basis as may mutually be agreed upon, and to be paid to such person or political subdivision when a claim has been duly filed, audited and allowed by the county or municipality, and to license and regulate persons providing such services."
(Section 2 of such Act provides an emergency clause.)
QUESTION 1: I must assume that this is an attempt to find a legal method to circumvent the provisions of the budget laws applicable to municipalities and counties which provide that unless money is budgeted for a particular item, there can be no expenditure for such purpose and, further, that even if money is appropriated for a particular purpose, the budgeted or appropriated amount is the maximum amount of public funds that may be expended for that purpose.
Without indulging in a long discussion, there seems no question that County Poor Relief Funds are designated and appropriated to aid the poor of a particular county.
Unless the ambulance service the public entities are to furnish is limited to serving only the poor of City A and the County, a use of funds to furnish ambulance service is unjustified. As the factual situation indicates, this is to furnish ambulance service to "all" inhabitants of City A and the county, I must answer question No. 1 in the NEGATIVE.
Question No. 1 is answered NO.
QUESTION 2: It is axiomatic that as municipal corporations and counties have no inherent authority, the city or the county cannot establish a special levy to furnish ambulance service without legislative sanction. I can find nothing in Chapter 24, Laws of 1968 authorizing a special levy for such purpose. The laws relative to special levies for full time health departments, as provided in SDC 1960 Supp. 27.18A do not authorize a special levy for ambulance service.
There seems no direct authorization for a special levy by either a county or a municipality to provide ambulance service within such public subdivisions. There is no authorized purpose to be supported by special levy which infers such authority to furnish ambulance service.
Question No. 2 must be answered NO.
QUESTION 3: It is my opinion that the furnishing of such ambulance services is classified as "personal services," and, as I have many times ruled (as have my predecessors in office, the statutes requiring competitive bidding in letting contracts, would not apply.
However, such contract may be let by competitive bidding, and if the County Commissioners, in joint concert with the governing body of the municipality, found that there could be competition in furnishing such ambulance service, perhaps for the benefit of the general public, the letting of such a contract should be left to calling for bids, and awarding such contract on the basis of competitive public bidding. This, of course, lies within the sound discretion of the governing bodies of such affected public subdivisions of government, and is not the exclusive statutory method.
While you have not asked the question, it is my opinion that the support of such ambulance service, either when done by the city and county jointly, or by contractual agreement of such public bodies, must be financed from the general funds of the county and the municipality. If the factual situation shows that at the time of adoption of budgets for fiscal 1968 there was no knowledge that the private ambulance service would terminate such service, the county and the city could, with propriety, find an emergency exists, and could provide to pay the cost of such services by way of an emergency budget.