A. The proceeds of the annual tax provided by law on the gross amount of all premiums received on policies and contracts of fire insurance covering property within this state, after deducting cancellations, return premiums, dividends and the amount received as reinsurance on business in this state, are appropriated and set aside for distribution to cities and towns and legally organized fire districts that procure the services of private fire companies and for the payment of benefits pursuant to this article, article 4 of this chapter or Title 38, Chapter 5, Article 4.

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B. Not later than April 30 of each year, the office of the state fire marshal shall certify to the state treasurer the incorporated cities and towns that have organized fire departments, the incorporated cities and towns and legally organized fire districts that procure the services of a private fire company and the areas served by legally organized fire districts, and the department of insurance and financial institutions shall certify to the state treasurer the respective amounts of tax on fire premiums paid in the previous year for properties located in this state. Not later than June 15 of each year, the department of revenue shall certify to the state treasurer the full cash value of the real property and improvements for the previous year in each incorporated city and town and legally organized fire district that procures the services of a private fire company and in each area served by a fire department or a legally organized fire district. The total amount of the tax proceeds shall then be prorated among the several incorporated cities and towns and legally organized fire districts in proportion to the full cash value of the real property and improvements in each incorporated city and town and legally organized fire district that procures the services of a private fire company and in each area served by a department or a legally organized fire district to the total full cash value of all incorporated cities and towns and legally organized fire districts that procure the services of a private fire company and incorporated cities and towns that have a fire department and legally organized fire districts in this state.

C. Each incorporated city or town that has an organized fire department and each legally organized volunteer fire district shall deduct five percent from the salaries or compensation of its firefighters and add a like amount from its general revenues. The employer or the employee may add a contribution greater than that specified in this subsection to the fire fighters’ relief and pension fund. The total of the two amounts shall be paid each month into the fire fighters’ relief and pension fund. The treasurer of each board shall keep a record of the salary deductions. If a firefighter dies under circumstances that do not entitle the firefighter’s dependents to a benefit from the fire fighters’ relief and pension fund, or if the firefighter becomes separated from the service voluntarily or involuntarily without having become eligible for retirement benefits under the fire fighters’ relief and pension fund, all deductions previously made from the firefighter’s salary under this article, plus interest as determined by the board, are payable to the firefighter’s beneficiary in the event of the firefighter’s death, or otherwise to the firefighter.

D. Payroll deductions made under subsection C of this section, plus any additional sums the board of trustees may add, shall be set aside in a permanent reserve fund, the income of which but no part of the principal shall be used to pay retirement benefits or relief, but in order to pay the refunds provided for in subsection C of this section, that portion of the principal that accrues from salary deductions may be drawn on when necessary.

E. For the purposes of this section and section 9-952, full cash value of real property and improvements for the previous year with respect to each incorporated city and town that procures the services of a private fire company are limited to thirty percent of the amount certified by the department of revenue and the percentage shall be utilized in computing the entitlement of an incorporated city or town that procures the services of a private fire company.