Wednesday, 23 February 2011 23:12

Sacramento Approves ‘Crash Tax’ on Non-City Residents

The Sacramento City Council has adopted a city ordinance approving a “crash tax” on out of town automobile drivers.

The City Council voted 5-4 on Tuesday night to join a growing list of cities across the state that charge out-of-towners hundreds of dollars when they’re in an automobile crash that requires a Fire Department response, according to reports made by Insurance Journal and the Sacramento Bee.

The “fire recovery charge” will impose a fee on out-of-town drivers who get into auto accidents in order to fund the fire department’s response services.

The fee would be imposed on non-resident drivers if insurers find them at fault in the accident. But business owners who live outside the city but have property inside the city would be exempt from the tax.

The fee will be billed through drivers’ insurance companies.

The Association of California Insurance Companies opposed the tax. “Given the difficult economy, it is understandable why the City of Sacramento is looking for new revenue sources.

However, putting this burden on out-of-town drivers is unfair,” said Sam Sorich, ACIC president.

Supporters of the fees say the charges represent a fair piece of the costs that cities incur responding to thousands of wrecks each year.

The fees are not taxes, city officials said, because they will not provide the city with revenue beyond what is spent on the Fire Department’s response.

City officials said they were hopeful the fees would help avoid some future cuts to the Fire Department.

But critics – including a state senator who has written legislation proposing to ban the fees – describe the programs as “double taxes” levied against out-of-towners whose sales tax contributions already pay for fire service.

Several states, including Florida and Pennsylvania, have outlawed the programs.

The city Fire Department responds to 3,600 accidents a year, city officials said. One-third of those involve drivers who live outside the city.

Under the city’s adopted fee scale, nonresidents will be charged $495 if they are involved in a typical incident in the city. Those crashes involve “scene stabilization” by the Fire Department, as well as a cleanup of gasoline or oil.

Crashes in which a helicopter is required to evacuate a victim will run $2,275.

All nonresidents involved in crashes in the city will receive bills for Fire Department service.

Insurance companies will in turn determine who was at fault in those wrecks and then who will be on the hook for the fees.

While city officials are counting on insurance companies to pay the bills,  Sorich  said that the “typical auto insurance policy was never intended to cover these fees.”

Sacramento Fire Chief Ray Jones told the council that the purpose of the ordinance was “not to secure revenue, but rather to recover reasonable costs” incurred when the department responds to an auto wreck.

Still, Jones said the fees collected through the program would help maintain the department’s service levels.

Budget cuts in the past two years have led to two Fire Department rigs getting placed on rolling closures and Jones said the department was “trying to find ways not to have three, four, five.”

City officials projected the program will generate between $300,000 and $500,000 each year.

The ordinance debated Tuesday night was similar to one first floated last summer.

But after the city attorney’s office questioned the legality of only charging nonresidents, a new ordinance was discussed that would have also charged residents for Fire Department response.

That proposal was eventually tossed out in favor of the latest version.