Rohnert Park man fights Petaluma's 'crash tax' after wife's collision
Published: Thursday, February 28, 2013 at 5:21 p.m.
Last Modified: Friday, March 1, 2013 at 10:30 a.m.
Dave Albaugh was waiting to hear if his wife's car was repairable after a collision when he got an unexpected call from his insurance agent. She asked about a $550 bill to reimburse Petaluma for sending emergency personnel to the crash.
Albaugh, a retired Coast Guard lieutenant commander, was surprised, thinking his taxes already pay for such public services.
But the more he researched, the angrier he got. And he's not slowing down.
At issue is an "accident response fee" or "crash tax" that Petaluma charges nonresidents for sending fire and paramedic personnel to wrecks they cause.
Albaugh -- and some politicians and insurance companies -- say the charge is unfair, discriminatory and an illegal form of double taxation.
"It's a scheme. It's a revenue tax that's flying under the radar that the public doesn't know about," said Albaugh of Rohnert Park, whose wife and daughter work in Petaluma.
The city and its billing company, Fire Recovery USA, defend the fee as necessary to recover of the cost of services provided to those who don't pay property taxes in Petaluma. Those taxes, in part, fund emergency services.
It's an issue that surfaced about seven years ago when the economy soured and local jurisdictions sought additional ways to increase revenues to ease budget shortfalls.
State law allows municipalities to seek cost-recovery fees, but cities have passed different ordinances that create a patchwork of rules motorists are subject to -- mostly unknowingly until their insurance company receives a bill, as in Albaugh's case.
Thirty-four states allow the fees, while 13 others have banned them. In California, about five dozen cities charge the fee, although none besides Petaluma in the North Bay.
Some cities, including Sacramento, Roseville, Woodland, Huntington Beach and Ocean-side, have repealed the fee after public outcry, complaints that the cities were unfriendly to visitors or unrealized revenues. In Crescent City this month, the City Council voted not to charge fees for traffic collision response.
"There is something of a philosophical difference that's going on with this particular party," said Petaluma Fire Chief Larry Anderson, who brought the idea to the Petaluma City Council in 2009. "It's just that, it's philosophical. You're on one side or another."
Albaugh has used the power of social media to whip up a frenzy of anti-tax sentiment against Petaluma's fee, starting a group called End Petaluma Misery Tax Committee.
He is encouraging citizens to contact Mayor David Glass and soon will start circulating fliers to local businesses threatening a boycott as long as "this discriminatory practice" is in place.
It's likely that most motorists have no idea Petaluma charges such a fee.
During the June 2009 meeting in which it was considered, the City Council spent just over 30 seconds on it. There was no public comment, no council questions and no discussion. It passed 7-0.
"We're all in favor of increasing revenues. That's a good thing," quipped then-Mayor Pam Torliatt after the vote, which came after adoption of a budget that included layoffs.
Anderson presented a case in which it was estimated the city would recover $100,000 annually in fees from nonresidents at fault in collisions.
But those expectations have fallen far short, which critics say is common and is partly why some cities have discontinued the policy.
A total of $36,000 has been collected since mid-2009 in 90 of 180 crashes. That's about $400 a case. In 60 wrecks, the at-fault drivers had no billable insurance and 30 others were rejected by insurers.
"It way underperforms what we thought it was going to deliver," Anderson acknowledged.
Fire Recovery keeps about 20 percent of what it recovers, according to its contract with the city. It bills insurers only; it doesn't try to collect from individuals.
In Albaugh's case, his insurance company approved about $350 of the charge. The remaining $150 was rejected, and Albaugh said he won't pay it.
Insurance industry associations, including the Association of California Insurance Companies and the National Association of Mutual Insurance Companies, say most policies don't cover it.
"The big problem here is there are some third-party vendors across the country that have been trying to convince municipalities that property/
casualty insurance companies are the cash cows they've been looking for," said Joe Thesing, assistant vice president of NAMIC, which represents 1,400 insurers nationwide. "They're selling a bill of goods."
But Mike Rivera, co-founder of Fire Recovery, said insurance policies' property damage provisions cover the fee.
"It is covered under all policies," he said. "We show the insurance companies where it's covered in their policies and they pay it."
He said his company has a 90 percent collection rate. Cities that report less either aren't billing all possible calls or aren't collecting the right data for billing, he said.
Nicole Mahrt Ganley of the Association of California Insurance Companies, which represents more than 300 companies, said her organization has lobbied against the fee on several grounds.
"Cities say, 'This doesn't affect our constituents, our voters. Let's just hand it off onto the insurance companies,' " she said.
Some cities that repealed their fees found it "was a reputational issue," she said. Visitors who get hit with the fee after returning home end up having a negative view of the town.
"It really adds insult to injury," she said. "They're victimized twice, once for the unfortunate accident, then when they get this bill. It really does have a negative impact on local businesses."
Despite the paltry returns for using Fire Recovery -- about 10 percent of what was expected based on 2009 estimates -- Anderson said it's money Petaluma property owners won't have to pay to support negligent nonresidents.
"There comes a point where we can't afford to give a service away without trying to recover a portion of our costs," he said.
He takes issue with Albaugh's Facebook group, which he said "morphs into inaccurate information" and has turned "into a disaster."
For Albaugh, it's about fairness. He pays property taxes in Rohnert Park and his family shops in Petaluma. Petalumans who cause wrecks in Rohnert Park don't get charged, he argued.
"It's an issue of the principle," Albaugh said. "It's wrong. No wonder our citizens are becoming apathetic to their governments because they're losing faith in their government's ability to do the right thing."
Plus, he argued, the charge is collected only from those who have insurance willing to pay, and the drivers can't vote out the City Council members who instituted it.
"I understand they were hurting for money, and I understand the worthwhile end of not cutting firemen or policemen," he said. "It's probably a worthy end, but it's a poor means to that end."
You can reach Staff Writer Lori A. Carter at 762-7297 or email@example.com.
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