Should you be liable for "crash taxes"?

Marketplace Staff Feb 18, 2011

Should you be liable for "crash taxes"?

Marketplace Staff Feb 18, 2011


Tess Vigeland: You know a topic is controversial when people can’t even agree on what to call it. That’s most definitely the case with the subject of our next story, a growing trend around the country called, well…

Montage: We call them crash taxes. The crash tax. It’s not a tax. It really isn’t a crash tax.

Now that we got that cleared up, Krissy Clark of KQED in San Francisco explains what these ‘things’ are, why there’s such a fuss about them, and how they might be coming to a car crash near you.

Krissy Clark: Let’s put the terminology aside for a moment, and consider a balmy Monday last May, in the Southern California town of Cathedral City. A high school football star named Michael Karls is in his truck, driving back from the gym when the car in front of him brakes suddenly, to avoid a bus stopped at a bus stop. Karls tries to brake too, but it’s too late.

Michael Karls: My car was smashed, leaking engine coolant and oil.

Karls is in Ohio now, in college. But when I caught him on the phone recently, he remembered the scene well. A fire engine came to make sure everybody was OK — they were. The firefighters cleaned up the oily mess on the road, and left. A few weeks later, he got something in the mail.

Karls: A bill from the fire department for $400.

Four hundred sixty-nine dollars and 49 cents, to be exact. According to Rhonda Guillaume, the admin assistant for the Cathedral City Fire Department. She should know — she sent it.

Rhonda Guilllaume: What we have here is an invoice for a hazardous material clean up.

Cathedral City charges the at-fault driver for spills like this. Guillaume goes down the list of costs in Michael Karl’s spill, item by item. Seventeen dollars and 50 cents for 20 minutes of a firefighter’s time. A hundred and thirty-eight bucks for the oil clean up kit.

Guillaume: Which includes the hazardous materials absorbant.

All in all, the stuff we take for granted when the fire department swoops in. But swooping in costs money, which has to come from somewhere. And increasingly, as fire departments across the country face shrinking budgets and growing expectations of service, that money’s coming from the people actually involved in the accident. Cities in nearly 30 states now charge fees that critics call “crash-taxes.” Others call them:

Bill Soqui: Cost recovery.

Bill Soqui is the chief of the Cathedral City Fire Department.

Soqui: There’s no such thing as a free lunch. And so, I think most people understand that there’s a cost with providing those services.

Dispatch radio noise

Clark: Those services.

As if on cue, a report of an accident interrupts us over the radio dispatch.

Soqui: Those services. That they’re willing to pay a few dollars.

Or more typically, a few hundred dollars. The charges go for different things, depending on which fire department you’re talking about. Some charge for directing traffic. Some for helicopter evacuations.

Regardless, California state senator Tony Strickland thinks the basic idea of cities charging for the costs of accident response is just wrong.

Tony Strickland: The most essential role of government especially at the local level is public safety. And if they’re not funding that as a priority, what are they funding?

Strickland, a Republican, recently introduced a bill, modeled after laws in 10 other states that would make it illegal for California cities to charge for accident response.

Strickland: They need to start strapping their belts just like every hard-working family is doing right now.

I put that to Fire Chief Bill Soqui in Cathedral City.

Soqui: We’re at the point where there’s not much more belt-tightening to do.

To illustrate his point, he opens the giant door to the fire station, where one of the city’s fire trucks has been mothballed because of budget cuts.

Soqui: This is our ladder truck and it’s browned out currently. On the other side is an ambulance that normally we staff up.

Soqui says in tough financial times like this, recovering the costs for accident response can be the best bad option.

Soqui: Some communities may decide no, we’re going to shut down a library or we’re going to close down a park. Those are the kinds of tough choices that communities are facing.

Cities typically recover a few hundred thousand dollars a year out of accident recovery programs.

Of course if you happen to be driving through a community that has implemented one of these programs, and you do get in an accident, the next question is, will your car insurance cover the extra costs?

That’s what I wondered. So I called my broker’s office.

Broker: State Farm, how can I help you?

Clark: This is Krissy Clark. I have a theoretical question.

Broker: Oh sure, the old friend of a friend of a friend. I know.

She looked at my liability policy.

Broker: It kind of leaves it open; we’d have to look at the circumstances.

So I followed up with Sam Sorich. He’s president of the Association of California Insurance Companies.

Sam Sorich: There is no express inclusion in the typical policy for a fire department’s response to an accident.

But when I press him, Sorich says there’s typically no express exclusion, either. Then he warns: If insurance policies start paying out on these things more often, premiums might go up.

As for Michael Karls — the football player who crashed his truck — he says his insurance refused to cover the bill he got from the fire department.

Karls: I mean maybe the city should have like a fund for that, or something to that effect.

When I point out they could — by raising taxes — he reconsiders.

Karls: I’d rather just pay it once than like having to pay a tax for it for other people, you know?

Which when you get right down to it, is the crux of the difference between taxes and fees, after all. And where people’s own pocketbooks meet a tricky political debate.

I’m Krissy Clark For Marketplace Money.

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