The out-of-towners: Footing the bill for auto crashes

Looking for a new experience? Get in a traffic accident near Roseville, Upland, Forest Hill, Loomis, Pinole or Nevada City — to mention just a few — and you may be in for a big surprise.

Strapped for money and facing deeper cuts from city and county governments, some local districts across California are pushing a novel approach to get cash: Send a bill to at-fault drivers for the costs of handling car crashes – but only if those drivers come from outside the area.

“It’s basically developing into a way of taxing foreigners,” said Jeff Fuller, vice president and general counsel of the Association of California Insurance Companies. Insurers, who presumably will wind up footing the bill, oppose the idea, which appears to be getting some traction in the state as well as nationally.

Foes call the levy an unfair “accident tax” and the equivalent of a speed trap.

But a number of communities, led by their fire districts, already have approved the fine as a way of recouping funds that otherwise would be lost. They say the fine is a “user fee” that is not intended to expand local budgets but is one way of replenishing funds that already have been spent.

 “It is not a revenue generator. We are trying to recover costs for the fire departments. It is revenue neutral. If a person gets into an at-fault accident, the insurance companies raise their rates. That’s a fair system. It’s a lot fairer than a fire department having to consider reducing the level of services or, more importantly, the timeliness of services,” said Rick Benner, chief operating officer of Fire Recovery in Roseville, a billing company.

The fee, pegged to the cost of providing the services, exists in several other states, including Florida, where legislation has been introduced to eliminate it.

It’s so new in California that few statistics are readily available.

But apparently it ranges from $500 to $2,000 per accident, by one estimate, and about 80 percent of the fees are near the $500 level.

The tax is not levied on those who live within the local jurisdiction, because those people already pay taxes for police, fire and other protection. Rather, the fee is imposed on those who live outside the area and only those who are deemed at fault in the accident.

 “So if you are driving through Fresno and somebody who lives in the district runs into you, you’ve got to pay, just because you are from outside the district. The irony here is that Roseville, for example, wants everybody to come in and spend money at Thunder Valley (a casino near Rocklin),” Fuller said.

Fresno's fire protection district is considering the fee, which local officials say would save the area $550,000 annually in service costs.

Led by local fire districts, some communities straddling highways with heavy pass-through  traffic – Roseville on Interstate 80 or Nevada City on Highway 49, for example – have already approved or are nearing approval of crash fees. Others are considering establishing them.

At least 10 California towns or fire districts have adopted some version of the fee or are nearing approval, according to Modesto Fire Chief James Miguel, who has reviewed the promotional material from at least one billing company.  

They are Pinole, Forest Hill Fire Protection District, the town of Penryn, Pioneer Fire Protection District, Nevada County Consolidated Fire District, the City of Upland, the town of Montezuma east of Stockton, Kirkwood, Loomis Fire Protection District, Newcastle and Nevada City.  

Numerous others, including Los Angeles, San Diego, Oakland, Sacramento, Orange, Palm Springs, Ontario and Riverside, are considering it. “Every major city in the state is considering it,” Benner said.

Miguel said his people have been researching the issue at the behest of his City Council but have not made a final decision. The issue first arose a month ago.

“Our discussions have revolved around all vehicle accidents, not just the out of town drivers. We have considered just billing insurance companies, because it is something insurance companies will pay,” Miguel said.

Simple on its face, the issue is fraught with complexity.

If blame is a factor in the setting the crash fee, who determines blame? Is it a tax or a fee? If it is a tax, do voters have the right to decide the issue? Should it be pegged to the cost of cleaning up a crash or should it be a flat rate? If it is pegged to the cost of the crash, will local jurisdictions send out more equipment than necessary to handle the incident, then bill accordingly? Is this another version of a “speed trap,” or is it a reasonable way for strapped locals to recover their costs? Should motorists who pay taxes in other districts be charged for events, just because they occur somewhere else? In determining the cost of cleaning up an accident, should out-of-towners be singled out?

Ultimately, is this an unintended consequence of Proposition 13, the tax-cutting measure that cut tax revenues and, by extension, local services?

“This is Prop. 13 coming home to roost. Where is local government now supposed to get the money to operate its services?” Fuller said.

Leading the push for the fee are the local fire departments, whose personnel and equipment are on the line and who already can charge for drug- or alcohol-linked crashes or spills of hazardous materials. The strongest opposition has come from people who view the fee as unfair.

Nationally, an Indiana-based company called Emergency Services Billing Corp. is advocating for the fee, which it promotes as a sound method for local governments to recover money that otherwise would be lost. The fee, or tax, helps “local taxpaying citizens of your district by returning money from parties involved in vehicular accidents, which are burdening your entire tax base when your tax base is not responsible for their negligence.” The billing company, meanwhile, would receive a percentage of the fee for handling the billing and paperwork.

“Keep in mind, every response your department makes lessens the value, safety and life expectancy of your equipment—not including money spent on fuel/maintenance costs,” ESBC says on its Web site. “Our services allow you to bill for any auto or trucking response for which your department responds. This payment for your services is typically covered by the insured’s auto insurance policy. By not billing, your services will go unpaid, forcing your community to continually subsidize accidents they did not cause.”

In California, insurers are waiting to see if the Legislature will step in, as it has in Florida. And if so, how?

“It’s not a slam dunk,” Fuller said.