Accident Tax

topher5150

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Cary Feldman was astride his motor scooter, three cars back at a stoplight in Chicago Heights, Ill., last June when a car bumped him from behind. “It was nothing,” the 71-year old said. “I fell off and got right back up. As I was getting up I noticed a fire truck slow, look at me, and pull away. It never stopped and I didn’t think anything of it.”

But five months later, Feldman received a bill for $200, to cover the cost of the fire truck showing up at the scene of his accident. For months, he argued the charge with the fire department while he fought with his and the other driver’s insurance companies to pay it.

He gave up when a collection agency called. "There was no way to fight it. No court to appeal to," he complained. "It was extortion."

Feldman paid the bill, but he is still angry. "They are despicable thieves,” he says.

As local governments strain against declining revenues, many have turned to a controversial -- and legally dubious -- way to raise money: They're charging accident victims for municipal services that are already covered by taxes. And the biggest proponents of these “Accident Response Fees” -- also known as "crash taxes" -- often are not good government groups and economists, but debt collection agencies looking to expand their business.

The increasingly popular revenue-raising plans generally work like this:

Every time a local public safety service (police, fire, ambulance, hazmat) responds to an emergency call, a bill gets sent to the person who receives aid. In most places, only non-residents get a bill; but in others, everyone does. And in a few places, only those found to be at fault are billed.

The idea is to make up for lost tax revenues by turning municipal workers into on-call contractors. But as often as not, these taxpayer-paid public servants wind up adding to the grief of accident victims by charging for their services at the scene.

The bills can be huge. A simple response to an accident usually costs just less than $500, but the bottom line can quickly soar. In Florida, if a fire chief shows up at your accident, it'll cost you an extra $200 an hour. Need a Jaws of Life rescue in Sacramento, Calif.? Add $1,875. In Chico, Calif., going into a ditch could cost as much as your car, because a complex rescue goes for $2,000 an hour, plus $50 per hour for each rescue worker. And if there is gas or oil to clean up, the hazmat team will bill another $100 per hour per team member. In San Francisco an ambulance ride will cost $1,642 under a new proposal there. A Pennsylvania man recently complained that his bill for an accident on his motorcycle included charges for “mops and brooms.”

Though variations of the plan have been around for a long time, the recession has given it new life. More than 40 towns and cities in California alone are currently considering adopting crash tax measures, according to Property Casualty Insurers Association of America. And 33 other states have begun adopting or studying accident response fees, according to Mary Bonelli of the Ohio Insurance Institute, who has studied the growth of the accident fee industry for the past seven years. That is a 600 percent increase from when she began looking at the industry six years ago.

While the popularity of "crash taxes" is rapidly growing in cash-starved city council chambers, the fees have sparked strenuous opposition from insurance companies, small businessmen, tourism associations and outraged citizens, who see the bills as a double tax.

Many also see an unholy alliance between local governments and the chief backers of the practice: debt collection companies, who they say often try to collect on debts in a heavy-handed and threatening manner -- even though most of the enabling statutes involving accident fees make them uncollectible from all but insurance companies.

According to Bonelli, the current surge of interest started “six or seven years ago,” when an Ohio bill collection company, Cost Recovery Corporation, began approaching government agencies with a “one-stop shopping plan" that would generate a great stream of income at no cost by billing out-of-town accident victims. Their take: 10 percent.

Today dozens of companies are competing for business in places like Tempe, Ariz.; Quincy Mass, and Huntington Beach, Calif.

“They would come into a town and promise to do everything," Bonelli explained. "It was free money. The collection companies would do a simple calculation that promised thousands of dollars a year in extra revenue.”

But there's a catch, Bonelli said: Most of that money does not get collected. Insurance companies refuse to pay the bills, claiming the charges aren't a covered expense. That means the bill winds up in the driver's hands -- and that, Bonelli says, is where the practice goes from repugnant to indefensible.

Drivers do not realize that they almost never have to pay the bills, she said, because most ordinances that create these programs do not provide for the collection of fees from drivers. The ordinances provide for billing the insurance companies only -- but collection agencies, after getting rejection letters from insurance companies, pursue the drivers anyway. They are allowed to ask, but drivers generally do not have to pay. It is called "soft billing," and it is not legally enforceable.

“If you get a bill, ask to see the ordinance and see if there is a 'soft billing' provision," Bonelli said. "If there is, you can throw the bill out.”

As an example, she cited the case of Stow, Ohio, which implemented crash taxes in 2006 after being told by a billing company that it would generate $95,000 a year in fees for police personnel and equipment. After a few months, she said, the city had collected only $3,000. And virtually all of it came from drivers, not from insurance companies.

Swamped with citizen complaints and saying she was misled, Mayor Karen Fritschel canceled the program and refunded all the money the city had collected.

Backlash against the practice is building, as many communities lured by easy cash back out of the deals. Last year Radcliff, Ky., dropped the program after finding most insurance companies refused to pay the bills and harassed drivers complained and took legal action. By the time it was closed down, the city had actually lost money on the project. In Cleveland, Ohio, the fire department has been accused of sending its biggest trucks to fender benders to increase fees. And in April, Alabama became the 10th state to outlaw the practice completely.

But Regina Moore of Cost Recovery Corporation, which handled Stow, says the fee system is a public service that will benefit everyone because it allows tax dollars to be used more effectively and increases the proficiency of emergency services. She says the fees allow communities to decrease response time in emergencies and help a public sector that is being decimated by budget cuts.

She said, for example, that in Live Oak, Fla., the fees enabled the town to buy a new fire truck and cut response time in emergencies.

“Even if I wasn’t in the business I would still be supporting the fees because it is a public safety issue above all else,” she said.

Critics say they don't dispute that more money helps police and fire departments, they say the argument is over how the money is raised.
 
Not saying it is right or anything, since these are the kind of things your property taxes, sales taxes, and everything else should pay..... But it is extraordinarily expensive to respond to an accident, especially in a larger municipality.
 
Maybe it's time for these municipalities to re-examine their priorities...
And this trend for governments to hire debt-collectors in their pursuit of revenue is disturbing, much as the debt-collectors using the power of government to collect the debts as well.
 
I cant say specifically about how Chicago Heights does things... But being that I am involved in local politics here, I can shed some light on how we do it here in a neighboring suburb.

Many if not most of the chicago suburbs charge for ambulance service. Here, we charge $400 for an ambulance call. This is normally paid for by insurance, workmans comp, etc. The unwritten policy is that if a resident cannot pay due to lack of insurance, we just drop the fee.

It takes 8 paramedics to run 1 ambulance. (this is 2 per shift, 3 shifts, + 2guys to cover vacations, sick days, etc) the cost of 1 paramedic is about $90k a year. (including things like pension, benefits, salary, etc) We run 2 ambulances in this town and the total budget is a little over $2 million a year.

In our particular case, about 60% of the ambulance calls are to non residents. This is because we have 3 major thouroughfares that draw alot of "drive thru" traffic.

We do not charge for Fire Truck response, only ambulance, and only if they actually administer assistance.
 
And since you're in or near Chicago, you've probably observed this-
in times of budgetary shortages, have you noticed the political class avoiding to cut funding to the vote buying programs and career bureaucrats while threatening to cut educators and emergency services?

Unless you accept an increase in your taxes, we have to fire teachers, but we need hundreds, if not thousands of administrators.
We have to fire police officers, but we can't cut back on social services.
And we're going to close fire departments, but the we're going to build a "light rail" system....
 
$90k a year, I'm sure it's not an easy job, but holy :q:q:q:q that's a lot of money

There is their salary, pension, health care, equipment, continuing training and a bunch of other things. Firefighters are really expensive too, I can't remember the number off the top of my head, but it is pretty big.
 
If you were on the ground, with blood running out of your ears.

You will care less how much money the people make who come
to save your life.

Ask your employer what you cost. You will be surprised.
 

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