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Update: City puts off ‘crash tax’ proposal for a month

Sacramento is rightly proud to be the capital of America’s largest state. It should be welcoming with open arms those from outside Sacramento who work in the city and visitors from around the world.

Instead the City Council is about to send a message that Sacramento operates like a small-town speed trap that gouges unwary drivers who are involved in accidents. 

The council on Tuesday (Aug. 17) is scheduled to vote on an ordinance that would impose a tax – or what the city calls a fee – on non-Sacramento residents who are involved in traffic accidents within the city limits.

Sacramento, like most local governments, faces some tough economic challenges. But taxing out-of-town motorists – including the thousands of workers who commute into the city every day – is dreadfully wrong and unfair.

In a recent editorial, the Los Angeles Times said the crash tax is “ripping holes in the fabric of local governments.

” … Cities that impose such fees are abandoning the commitment to the common good that inspired people to form fire departments in the first place: the idea that we should all share the cost of putting out fires, of rescuing the injured and trapped. What’s more, they give fire departments a financial incentive to show up whether or not they’re needed.” 

There are many things wrong with Sacramento’s proposed ordinance. Here are just three: 

  • The ordinance is misleading and makes revenue promises that it can’t keep.
  • The ordinance could increase insurance rates for all drivers.
  • The ordinance is unfair.

The ordinance anticipates contracting with a third-party billing company that will bill insurance companies. The ordinance’s scheme is based on the notion that insurance companies will pay the bill. 

But the fact is that auto insurance policies were never designed to cover these fees. Therefore, many accident victims will be forced to pay the tax out of their own pockets.

One sure thing in all of this is that the billing company that gets the city contract will always get paid first. The billing company takes its cut. Then it sends the rest of the payment to the city.

Sacramento’s crash tax is supposed to be imposed on drivers who were at fault for the accident. Decisions of who is at fault will be made by the same billing company that profits from the tax. Drivers won’t get a fair shake.

The proposed ordinance is in effect double taxation. The emergency services are paid for with property taxes. Sacramento, as a result, will be double-dipping at the expense of motorists. For non-resident accident victims, it’s taxation without representation.

It should be noted that the fees will not affect just non-resident drivers. Some insurers pay these bills. Those payments increase insurance costs, and that could increase insurance rates for all drivers. 

Insurance companies are in the business of resolving auto accidents claims. We know how traumatic an auto accident can be for our customers. Sacramento’s ordinance literally adds insult to injury. A driver who experiences the trauma of an auto accident could be hit with a bill for more than $2,000. 

The ordinance is also shortsighted, it anticipates additional revenue but fails to consider the amount of lost sales revenue when residents from surrounding areas and potential visitors decide to stay away to avoid being taxed for just being in an accident. 

The ordinance tells Californians — who come to work in Sacramento, who come to the city for recreation, shopping and entertainment and who come to Sacramento to visit their state capital — that they are second-class citizens.

It’s reasonable to suggest that a sign be posted outside Sacramento warning visitors of the financial peril they face. It could read: “Warning, entering Sacramento, you outsiders could be taxed for being in an accident. Come back soon, we need the money.”