California cities' latest budget trick: fine out-of-towners for car crashes

California cities driven to desperate measures by their own deficits as well as the trickle-down effect of the state’s budget dysfunction are pioneering the controversial use of “crash taxes.”

This month, Sacramento will become the 60th California city to charge a fee to motorists who are found to be at fault for an accident requiring an emergency response. Like many of the cities that have passed similar measures, Sacramento will levy the fee – which could run from $495 to $2,275 – on nonresidents only.

Critics say the fees are unfair, and they point to unsurprisingly strong opposition to such plans in a recent opinion poll. Ten states, including Florida and Pennsylvania, have already approved legislation restricting the practice.

But supporters say these services need to be paid for somehow, and deep budget deficits require new thinking. Cities including New York, Denver, and Tulsa, Okla., are debating the idea.

The problem is particularly acute in California, because a series of ballot initiatives during the past 40 years has starved local governments of cash. The stuttering economy has made the shortfalls worse, with Sacramento facing a $35 million deficit this year, for example.

“It is evident that cities and counties have been victims of the recession as well, but the state has done nothing but give them more and more duties which are not funded,” says Barbara O’Connor, director of the Institute for Study of Politics and Media at California State University, Sacramento.

'We have no other way to pay'

In Cathedral City, Calif., city officials see the fee as a necessity.

“The opposition is calling this a crash tax because it’s sexier and gets more attention, but this is really cost reimbursement for services we have no other way to pay,” says Fire Chief Bill Soqui. “These ideas are nothing new, they’ve been on the books for years, it’s just that now cities are beginning to use them because the state has taken away our money.”

Opposition is fighting back. State Sen. Tony Strickland (R) has introduced a bill that would outlaw cities from passing crash taxes.

A nationwide Harris Interactive poll suggests support for such a measure. In it, 76 percent of respondents said that taxes should be sufficient to cover emergency response to traffic accidents. Six in 10 said charging fees is wrong, according to the poll, which was done for the Property Casualty Insurers Association of America.

“Thousands of drivers come to Sacramento each day to shop, work, park, stay in hotels, dine in restaurants, and attend entertainment events,” says Sam Sorich, president of the Association of California Insurance, which opposes the fees. “This ordinance tells these supporters of Sacramento’s economy that they are second-class citizens who are not welcome.”

Many of the city laws are subtly different, with some charging fees for helicopter rescues, others for use of the “jaws of life,” and others for the cleanup of hazardous materials. Mr. Sorich says insurance companies will try to go after other companies potentially liable – tire manufacturers, windshield wiper makers, and so on – to try to pay a part of the fee.

Where crash taxes didn't work

In Roseville, Calif., however, the fee has not been the fiscal boon that was expected. On Wednesday, officials are scheduled to reconsider the crash tax they instituted 18 months ago. City Manager Ray Kerridge says it was an experiment that didn’t work out.

“There were expectations that it would bring in a certain amount of revenues for the city,” he says, “and those revenue projections were not met – even close.”
The program netted them $40,000 instead of the projected $100,000 per year, he says.

But the fees are not supposed to be a revenue generator, says Dorothy Holzem, associate legislative representative for the League of California Cities.

“This is cost recovery for a state recovering from a budget black hole,” she says. “All these cities are trying to do is maintain 24/7 response for their residents.”

To some experts, the fees are merely an extension of fees like the hotel occupancy tax, which intend to have transients help pay for the local services they use.

The appeal “is that transients can’t vote against the people who imposed the tax,” says Jack Pitney, professor of government at Claremont McKenna College.

“It probably won’t have much immediate impact on business or tourism,” he adds. “Most people don’t start a trip expecting that it will end in a collision. In any case, many transients won’t even know about the tax until they get the bill.”