Adding Insult To Injury

This article originally appeared in the Fall 2011 issue of the NMA’s Driving Freedoms magazine.

In a well-publicized survey taken ten years ago, an auto insurance company polled several thousand policyholders involved in accidents the previous year. Almost 70 percent indicated that the accident occurred within ten miles of home, while only 17 percent experienced their fender-benders (or worse) more than 20 miles away.

The usual rationale for those results is that a driver’s attention for detail ratchets down a few notches when entering a “familiarity zone” around home base. The same theory indicates that longer trips in lesser known environs sharpen the focus of most motorists. In reality, more accidents occur close to home because that is where most driving is done.

In recent years, several cities have adopted policies that make it even more important for out-of-town drivers to avoid accidents.

That policy is called a “crash tax” or accident response fee. A crash tax is a fine imposed against a motorist – often a non-resident motorist – who is involved in an accident that triggers a response from a local police or fire department.

The crash tax is one of the very few issues that has the NMA and the insurance industry aligned on the same side. Of course, the insurance companies do so to avoid costs that lower their profit margins while the NMA opposes the crash tax because it is used to produce revenue to help localities fill budget gaps. We also object because often times the tax is levied against motorists who are not at fault.

Communities with crash tax ordinances initially bill the insurance companies of the parties involved in the accident. Insurance policies rarely have provisions to pay such fees, so the insurers ignore the payment notice. Third party collection agencies are then unleashed on easier prey – the insured drivers.

Take the case of Cary Feldman. As he was riding his motor scooter in Chicago Heights, Illinois two summers ago, he was bumped from behind by another vehicle. He was uninjured, and there was no appreciable damage to the scooter or the car that struck him.

Nevertheless, a bystander called 911 and a city fire truck was dispatched. In Feldman’s words, “There was no fire, there was no explosion, there was no debris. From what I saw, they [the firemen] came, they saw, and they left.” Feldman was billed $200 by the Chicago Heights fire department.

Our criticism of the crash tax is not meant to denigrate the dedicated work of emergency care first responders. Rather, we deplore the opportunistic approach by some cities to charge non-residents for police, fire, and other emergency services that traditionally are paid by citizens in their home districts. The crash tax is a form of double taxation.

Not that we should be surprised. Municipalities continually find creative ways to generate income in order to bolster their budgets. The crash tax fits the bill, figuratively and literally.

Motorists, through various excise taxes and traffic tickets, have always been a steady source of that stop-gap revenue. (“Always” is a bit of an exaggeration, but not to the degree you might think. The first speeding ticket issued in the United States occurred on May 20, 1899. Taxi driver Jacob German was pulled over in New York City for exceeding the 8 mph speed limit by a whopping 50 percent in his electric car.)

Speed traps, for example, have become common practice based on the growing dependence of local governments on traffic ticket revenue. Two researchers, Thomas Garrett and Gary Wagner, found a direct correlation between cities and counties having difficult fiscal years and a corresponding increase in ticket revenue after analyzing 13 years worth of ticket data. (Details of their study, “Are Traffic Tickets Countercyclical?” can be found here.)

Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Missouri, Oklahoma, Pennsylvania, and Tennessee have passed laws that ban the imposition of a crash tax. But at last count, cities in 37 states charge, or are proposing ordinances that would permit, a fee for responding to a roadside accident.

In early 2011, Sacramento, California began billing fees starting at $435 to non-resident drivers involved in accidents that required help from emergency personnel – regardless of fault. It is no coincidence that these fees are being imposed at a time the capital city is facing a $35 million deficit.

Sam Sorich, president of the Association of California Insurance Companies notes, “It’s bad public policy. This is a fundamental government service. Anyone who comes to Sacramento expects that the government will be there to come to the scene of an accident.”

Other prominent cities that have enacted their own versions of a crash tax include Bridgeport and New Haven, CT; Buffalo, NY; Dallas, TX; Quincy, MA; and Toledo, OH.

Jay Middleton of Mount Laurel, NJ was incensed when he was billed almost $300 by Radnor Township, Pennsylvania for a minor accident while helping his daughter move from college. He said, “You’re not welcome here, outsiders not welcome. That’s what it says to me.”

There has been some backlash. Radnor Township subsequently repealed its crash tax ordinance. Several cities in California have also dropped accident response fee programs.

Petroskey, Michigan, which depends on tourism for a large portion of its revenue, considered instituting a fee for police or fire department responses, but ultimately decided against it. Said Petroskey Chamber of Commerce president Carlin Smith, “. . . it’s not something you do to people. They’ve just had an unfortunate situation. You don’t make it more of a misfortune.”

That isn’t stopping New York City from charging $365 to $490 any time its fire department is called to the scene of an accident. In typical New York fashion, the fee applies to residents and non-residents alike. But then, Mayor Michael Bloomberg’s statement that he wants to see a red-light camera on every corner of the city makes it clear that motorists are shakedown targets for the city.

There is another aspect to the crash tax that deserves special mention. As Jill Ingrassia, AAA Managing Director for Government Relations and Traffic Safety Advocacy, notes, “We really don’t want to discourage any motorist involved in a crash from calling for police or rescue services if they fear they are going to be billed for it.”

Not an NMA Member yet?

Join today and get these great benefits!

Comments are closed.