Mayor Sharon McShurley and Center Township Trustee Marilyn Kay Walker reached a fire-protection agreement late Wednesday afternoon.
The 10-year agreement calls for the city to soon take over fire protection from the township in fringe areas around the city.
Funding provided by the township also allows McShurley to bring back 25 laid-off city firefighters.
McShurley, a Republican, said the agreement with Walker, a Democrat, was significant in a community often marked by political warfare.
"It's just evident that different political entities and parties can come to an agreement and do what is best for the citizens of the community," the mayor said.
"This is best for the citizens of Muncie and Center Township," Walker said. "We're going back to one fire department. It will save money. Everyone talks about the importance of collaboration, working together and consolidation, and that's what we're doing -- consolidating and working together."
The township will pay the city $400,000 a year for fire protection starting in 2012. The township also will pay the city $250,000 for fire protection within the next 30 days, plus another $125,000 for fire protection on Aug. 1 of 2011.
The agreement will allow the mayor to go ahead with a $3.5 million federal SAFER grant to recall 25 laid-off city firefighters. McShurley recently told The Star Press that she needed the payment from Center Township to earmark for unemployment for firefighters if they were once again laid off when the SAFER grant expires in two years.
McShurley had recently expressed concern about delays in reaching an agreement with Center Township, noting that the city needed a month to recall laid-off firefighters. The term of the SAFER grant was to begin Aug. 14.
McShurley said Wednesday evening that letters recalling firefighters would go out "hopefully as soon as we can get them out. It shouldn't be difficult."
McShurley said a decision would be made about the status of fire stations in the coming days. The city closed two fire stations after the layoffs and presumably will have two Center Township stations it might use.
Former Trustee Richard Shirey started a township fire department after a dispute with former Mayor Dan Canan about how much the city was charging the township for fire protection. The township currently employs 10 paid firefighters, who will lose their jobs.