Well, either the FD is a subdivision of the State or it is not. I see no where in 1020.315 does it mention use of funds. IMHO - If you have the proper documentation that the account was opened with the blessing of the city, transactions in that account are exempt. If the city is not aware of the account and the firefighters took it upon themselves to open the account without official city approval under the city's EIN, you have more issues than just filing a CTR.
The opinions expressed here should not be construed to be those of my employer: PPDocs.com