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'Crash Tax' More Bust Than Boom For Many Cities
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'Crash Tax' More Bust Than Boom For Many Cities

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'Crash Tax' More Bust Than Boom For Many Cities
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ARI SHAPIRO, host:

People in New York City were outraged when the fire department recently said it would start charging drivers a fee for responding to traffic accidents. But New York is hardly at the front of this trend. According to an insurance industry group, cities in 26 states now have an accident response fee. It's sometimes called a crash tax. The idea has caught on in a big way in California, as NPR's Ina Jaffe reports.

INA JAFFE: Ask John Brown, the city manage of Petaluma, California, why his town has a crash tax and you hear a familiar refrain.

Mr. JOHN BROWN (City Manager, Petaluma, California): Like a lot of cities, we're really struggling here. All of my departments have been trying to find new revenues or cut costs.

JAFFE: So why not pull in an extra $100,000 a year for doing something the city already does anyway - respond to traffic accidents? Residents won't mind because only out-of-towners get hit with the crash tax, and then only if they're at fault. Though just how much they're charged, Brown explains, depends on the kind of accident.

Mr. BROWN: We have a basic engine response that totals about $435. There would also be a $60 per incident environmental cleanup charge. And then when we get into complex, which is multiple...

JAFFE: Add it all up, it can go as high as $2,500, though Brown says the average charge is between $400 and $500. But the take for Petaluma has been far less than the hoped for hundred grand, just $14,000 last fiscal year and probably around $20,000 this year.

Brown explains that the crash tax is administered by a contractor. The contractor sends the bills to the driver's insurance companies.

Mr. BROWN: And then insurance companies have in some instances just refused to pay.

JAFFE: That's because it's not usually covered by most policies, says Sam Sorich, president of the Association of California Insurance Companies.

Mr. SAM SORICH (President, Association of California Insurance Companies): The typical insurance policy covers injuries and damage to property. And what these fees are covering are the cost of the fire department to come to the scene of an accident. And that doesn't involve an injury in and of itself and it doesn't involved property damage.

JAFFE: And if the insurance company does decide to pay, well, that'll cost the motorist in the end, says Sorich.

Mr. SORICH: It adds to our cost of doing business. And what that ultimately will mean is that we're going to have to adjust the price of our product.

JAFFE: Recently, another Northern California city repealed their crash tax. Roseville City Manager Ray Kerridge says it just wasn't worth the bother.

Mr. RAY KERRIDGE (City Manager, Roseville, California): We were expecting somewhere in the region close to $200,000 and we actually got about $40,000.

JAFFE: And it wasn't only a matter of money, says Kerridge. The fire department was complaining about the program.

Mr. KERRIDGE: It was keeping our rigs on scene a lot longer.

JAFFE: Why was that?

Mr. KERRIDGE: Well, because they're collecting information from the drivers about insurance, licenses and that kind of stuff. It meant that it took them out of the rotation for serving the rest of the city for fires and other emergencies.

JAFFE: And then there was the public relations problem. Kerridge explains that Roseville is the retail shopping hub for the region.

Mr. KERRIDGE: We want people to come to Roseville and kind of spend their money here. So really, it's sending the wrong message to the people.

JAFFE: So far 10 states have agreed it sends the wrong message and outlawed the crash tax. Republican State Senator Tony Strickland is hoping California will be the next state to ban it.

State Senator TONY STRICKLAND (Republican, California): Yeah, all this is nothing but a double tax on hardworking Californians that are really living paycheck to paycheck right now.

JAFFE: But Strickland's bill wouldn't ban the crash tax in the 50-some cities that already have it. They can continue to rely on the misfortunes of out-of-town drivers to keep their cities from bleeding red ink.

Ina Jaffe, NPR News.

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