Guest Commentary

As municipal governments and public agencies continue to feel the effects of a nationwide recession, a countervailing trend of reforms, budget cuts and increased scrutiny of wasteful spending has developed in some geographic areas.  This trend may be followed immediately by an action plan for fiscal responsibility.  Alternatively, some government bodies simply refuse to implement reforms and adopt economic strategies to encourage development, and instead implement new taxes and fees to fund their own budgets.

While deep budgetary cuts have been made, many reforms which have been advocated since the beginning of the recession have yet to be made at City Hall. Even so, city politicians pushed against public opposition by spending $255, 000 to place a flawed, misguided tax increase on the 2009 ballot and another $19,800 in taxpayer dollars to conduct non-publicized phone surveys. The tax increase was defeated by a whopping 68 percent of voters.

Fast-forward a year to the date of defeat of the tax increase. Enter the Emergency Services Cost Recovery Fee, or more accurately, the Crash/Accident Tax—rendered for costs of services at the scene of an accident where liquid (hazardous waste) is spilled. The fees would range from $435 to $2,100 and would be collected (billed to the at-fault driver’s insurance agency by a third party vendor cost recovery fee collection LLC: Fire Recovery USA).

The Emergency Services Cost Recovery Fee first appeared on the city’s ballot May 4, 2010, but was pulled at the very last minute. Incidentally, the very same crash tax was being proposed on the same day as the meeting of the National City Council. Now the crash tax is back and is being recommended for approval at the June 15, 2010 meeting of the Chula Vista City Council.

There are several problems. First and most importantly, Chula Vista taxpayers already pay for these services. The property and local income taxes that help pay for first-responder services fees are currently attached to motor vehicle registrations, traffic citations, and other vehicle-related programs. Furthermore, many municipalities including the city of Chula Vista calculate their tax structure based on the services provided. Thus adding charge backs as a source of revenue is a form of double taxation. In other words, the accident response fees levied by local governments to taxpayers amount to nothing more than additional “back door” taxes.

Let us assume that we are OK with that. As written, funds collected through the crash tax are not earmarked and can be misallocated—and it happens, often. The bottom line is there are no guarantees that tax dollars will be used appropriately.

Therefore, not only is it irresponsible, it also sets a dangerous precedent that other city departments will most assuredly follow by proposing and enacting additional layers of  “fees;” passing on the burden to taxpayers rather than maing necessary adjustments to its budgetary spending priorities.

Obviously it is bad public policy. What about insurance? Here’s what’s going on. In the last few years third party cost recovery vendors (Fire Recovery USA, LLC for example) have gone out and marketed to municipalities and public agencies such as the city of Chula Vista, raking in an average of 10-15 percent commission, 17 percent in the case of Chula Vista if approved.  These third party cost recovery vendors are telling agencies and thereby, residents: “It’s O.K. We’ll just bill their insurance. It was their fault they caused the accident. It’s a win-win.” The fact is many insurance policies do not cover these fees and therefore, the cost is passed back down to the driver.

In Radno, Pa., not only did the township end its program of charging accident response fees, but it also refunded the more than $46,000 collected from out-of- town motorists. According to the Philadelphia Inquirer, in 2006 the township hired Cost Recovery Corporation on commission to collect the fee from motorists or their insurance company. Township Commissioner William Spingler was reported to say that the company was aggressive in its collection practices threatening people’s credit. For township officials, the public relations black eye was not worth the fees collected. (Philadelphia Inquirer Feb. 27, 2007.)

And what about uninsured drivers? They get a pass. The truth is, at least nine states have already banned these cost recovery fee schemes with more legislation and states expected to follow.

If residents allow this dangerous trend in the region of passing so-dubbed “emergency services recovery fees,” insurance rates will most assuredly increase in order to adopt coverage.

It’s clear: The proposed crash tax/ “emergency services cost recovery fee” in the city of Chula Vista is just bad public policy.

Ed Herrera is President of the Chula Vista Civic Association and CEO of the San Diego South County Chamber of Commerce.

                                        

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Comments (5)

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This "emergency services cost recovery fee" is the most STUPID concoction by public agencies. It's a back door tax. Instead of fixing it's own budget problems which we all. know the cv fire dept has (how bout contributioning it's fair share into the pensions;taxpayers foot the whole bill). It's unwarrented. We pay for these services I don't care if it's fire or police recovery fees it's WRONG. if there is a budget problem maybe theyShould Have their unions who contribute to their city council candidates to stop their out of control irresponsible spending like all the money the waste on paying executives and defending them hen paying them off so they don't sue.

chimoy , June 11, 2010

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bigred919 and litebbteaparty, sorry, but your information is wrong. Yes, the San Diego County Taxpayers Association is wrong. They did not check their facts and they are incorrect. Amazing isn't it!

Fire Departments are billing in Alabama. Oklahoma Fire departments are billing. Florida fire departments are billing. Georgia fire departments are billing, including Atlanta, Tennessee fire departments are billing, Missouri is one of most popular states for billing (over 20 fire departments bill there and the state even sets the rates), Pennsylvania fire departments are billing, and Indiana fire departments are billing. Also, over 70 California fire departments are billing, and have been for over 20 years.

The laws that were incorrectly cited outlaw "law enforcement" billing. This is by the police and has nothing to do with the fire departments. Also, what fire departments are billing for is to recover part of the costs to mitigate the incident, not accident response fees. I am against accident response fees as are some states, but I and they see nothing wrong with cost recovery for some services provided by the fire departments. Given the choice of lowered fire services, and increase in taxes, or billing the responsible party who caused the accident, I'll take the latter.

Concerned citizen , June 11, 2010

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Thank you Mr. Herrera. Excellent article!

Nine states so far have pass bills to ban accident recovery fees:


2010
Alabama, is close to become the 10th state to outlaw the accident response fee.
Act HB306 states “To prohibit any person or other entity from imposing an accident response service fee for vehicle, or any other person or entity.” Effective upon the signature of Governor Bob Riley.

Currently, Chicago, Ill. citizens speak out against crash fees- I would not be surprised if Chicago ban the crash fee.

2009
Louisiana’s Senate and House unanimously passed HCR 147.
• Oklahoma Governor Brad Henry signed HB 2013 into law on May 28, '09 effective immediately, banning law enforcement fees for accident response or investigation.
• Florida’s bill SB 2282 signed by the Governor, effective July 1, 09.
• Arkansas passed HB 1895

2008
5 states pass bills to ban fees
Georgia SB 348 was signed on May 16 ‘08 effective immediately
Tennessee HB 2547- Public Chapter No. 651 effective March 28, 09
Missouri SB 66 effective Jan. 1 ,08
Pennsylvania HB 131 effective Feb. 18 ,08
Indiana’s SB 81 bill banning police fees became law on July 1 ,08.

litebbteaparty , June 10, 2010

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Ha "concerned citizen" I suppose they have a PR team to push for this stupid crash tax. I suppose the San Diego County Taxpayers Association is also wrong?

Nice try ;)

"Cate (of San Diego County Taxpayers Association) calls the fee a form of double taxation and says nine states have already outlawed such fines, calling them unfair to citizens.

" (http://www.sandiego6.com/news/...bKdpQ.cspx)

Ha "concerned citizen" I suppose they have a PR team to push for this stupid crash tax. I suppose the San Diego County Taxpayers Association is also wrong?

Nice try ;)

"Cate (of San Diego County Taxpayers Association) calls the fee a form of double taxation and says nine states have already outlawed such fines, calling them unfair to citizens. Cate's biggest fear if the fee passes in either city is what he calls unintended consequences" (http://www.sandiego6.com/news/...bKdpQ.cspx)

The San Diego County Taxpayers Association strong opposes yet another attempt by a government agency to charge its constituents twice for providing a service already funded through their taxes.

Following other agencies down the road of double taxation, the Chula Vista City Council will consider imposing what it calls “cost-recovery” fees for accident related services rendered at the scene of vehicle accidents at its meeting on Tuesday, May 4, at 4 p.m. The party responsible for the accident
would be responsible for payment of the fee. - (San Diego County Taxpayers Association Press Release)

bigred919 , June 10, 2010

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There are several "errors" in this article.

1. Taxpayers are not already paying for theses services. They are paying for a portion of these services. If taxes fully covered the operating costs of a fire department, there would be no need for billing.

2. Why is it bad public policy to charge the responsible party for their share of the costs to mitigate an incident they caused?

3. Regarding the issue on Radno, PA , this is what happens when a city contracts with a vendor that doesn't follow the law or pretends to be a collection agency.

4. Regarding uninsured drivers - they are breaking the law. How can a fire department be expected to deal with outlaws? That's the police's job and they should be fined.

5. Your claim that "nine states have already banned these cost recovery schemes…" is completely untrue. This information was simply copied from the internet Do you believe everything you read on the internet? The states that the "Crash-Tax" websites speak of are have specific laws allowing billing and some even set the billing rates, by statute. I recommend checking your facts prior to writing an article that is so full of errors.

Concerned citizen , June 10, 2010

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