‘Crash tax’ proposal crashes

City Council will shelve the controversial proposal

Peter Marcus, DDN Staff Writer

Thursday, July 22, 2010

A proposal to charge a fee to at fault non-resident drivers who are involved in an accident came to a crashing end yesterday when City Council members decided to shelve the controversial proposal.

The so-called “crash tax” had already made its way to the full Council. But after a push by Councilwoman Jeanne Faatz, the proposal was pulled back into the Safety Committee for further discussion. A request by the Safety Department yesterday to withdraw the proposed ordinance sealed its fate.

The bill will make its way to the full City Council again on July 26th, but the Council will recommend a “no-vote,” Councilman Doug Linkhart, chairman of the Safety Committee, said yesterday following the discussion.

Mel Thompson, a deputy manager of safety, acknowledged that safety officials had “overstated” original revenue estimates. Officials had originally told Council members that the proposal would generate about $1.1 million in revenue from the fee. Mayor John Hickenlooper had supported the proposal as part of a budget-balancing plan.

A spokesman for Hickenlooper said yesterday that the mayor’s office does “agree there needs to be further evaluation of the idea.”

The mayor’s office is confident it will present a balanced budget for 2011.

Thompson acknowledged that the numbers were inflated, including the number of accidents, the cost of providing emergency services, and the collectibility rate. For example, fire officials had originally stated that the cost of providing emergency services is about $600. But that number was later revised to around $400.

“We have continued to bring that down, we have continued to look at the logistics of implementing it, and so right now the Department of Safety would like to withdraw the process and the ordinance we have submitted to continue to look at this in probably a broader context of recovering our costs in the department,” said Thompson.

The ordinance would have allowed the Denver Fire Department to collect a fee from at-fault non-resident drivers involved in an accident that requires an emergency response by the fire department on state highways within the city. Fees would have been based upon the “cost of the incident response,” according to the language of the proposal.

There are no set fees in the proposed ordinance, but the fee could not “exceed the actual cost to provide such services.”

Critics say it is unfair to charge non-residents a fee simply for causing an accident on state highways within city limits. Critics point out that non-residents already pay taxes to the city for things like working inside the city and for purchasing items within the city. They say non-residents passing through the city should be afforded emergency services without a fee just like residents are afforded those services.

Concerns were also raised that the ordinance would cause insurance rates to increase, as it is likely that insurance companies would be the ones paying the fee.

“That is conceivable that insurance rates would go up slightly based on that,” said Thompson in response to a question from Councilman Paul Lopez.

The Denver Fire Department officially supported the proposal. But concerns were raised that it might turn into a public relations nightmare for the department if non-residents started getting hit with high fees. Fire departments usually enjoy high public support. But requiring taxpayers to pay fees to the department could have shifted that sentiment.

The fire department itself would have been responsible for collecting the fees, which could have also led to collection and staffing issues.

Faatz raised a concern over state lawmakers retaliating against Denver for imposing the fee. She said it is entirely possible that state lawmakers would propose a bill to ban the practice.

In 2008, five states banned accident response fees, and in 2009, three more states followed suit. Recently, Alabama passed a law prohibiting accident response fees.

Only three known governments charge accident response fees in Colorado, including Foothills Fire District in Jefferson County, North Washington Fire District in Adams County, and the South Adams Fire District.

“I have been in the Legislature long enough to know that Denver is not always the name to bring smiles to all the other legislators, and if they can find a way to stick it to you, they will,” said Faatz, a former state representative who served for 19 years. “It just seemed to open up more questions than it solved in money.”

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