Firefighting used to be a private for-profit industry. In the 1800's, the early days of urbanization, in cities like New York and Baltimore, there were private companies who were in charge of putting out fires. The way it functioned was the first company at the scene got money from the insurance company to put out the fire. So, they had an incentive to get there fast. They also had an incentive to sabotage competition. They also often ended up getting into fist fights over territory and many times buildings would burn down while firefighters were busy punching each other in front of it.
Firefighters were hired, not for their prowess in putting out fires, but for their ability to brawl. One tactic that used to be employed was the "plug guard." These were people hired to race to the scene of a fire, place a barrel over the fire plug, and sit on it, thereby securing the water source for his employer's exclusive use.
Rivalry among the volunteers was the cause for the establishment of the country's first paid fire department in Cincinnati in 1853. In 1851, two of the city's volunteer fire companies crossed paths on the way to a fire, and before the fight was over, ten companies were involved. Help was sent from Covington, Kentucky, across the river-not help to put out the fire, but to assist one of the companies in the fist fight. The building burned to the ground.
It wasn't long before insurance companies began taking the position that firefighting was a community responsibility, and stopped paying the fire companies. Coupled with the loss of buildings due to the aforementioned brawling and the reputation that these departments earned due to those fights, private fire protection in America was doomed.
There are only a few ways to fund a fire department, and we can look at them here:
1. Through user fees. A fee is charged for putting out fires. The problem here is that fire departments get few fires. The department that I work for responds to less than 300 fires a year, yet has a $20 million budget. Except for large commercial buildings, the fees required to make this profitable would be more than the value of the building. A homeowner would probably refuse to pay a $600,000 fee to save a $200,000 house. What if the fire spreads to more than one house? Does each homeowner have to agree to pay before the fire department can act? Or only one? If only one, do they all have to pay a share of the bill, or does the homeowner who made the decision pay the costs of putting out all of the houses?
2. Through membership fees. Charge a small fee for fire departments to respond to members' homes. Anyone who isn't a member, too bad for you. Of course, there will be those who take their chances, and some of them will lose. See here for an example of this plan.
3. Through taxes.
and before you mention volunteers, remember that diesel fuel is $3-4 a gallon, fire engines, hose, protective gear, and all of the other equipment needed costs money. That money still must be provided from somewhere.