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NYC Considers "Crash Tax" for Accident Response

Photo Courtesy - Getty Images(NEW YORK) -- Strapped for cash, a growing number of municipalities have begun charging for responding to accidents -- services that have long been covered by taxpayers.  Sometimes, the victim's insurer will pick up the tab for these new fees -- but sometimes the insurers will refuse to pay.

This past week, New York City joined the growing debate over what some are calling a "crash tax."  Mayor Michael Bloomberg announced the city wants to begin charging accident victims hundreds of dollars each as one way to help plug the city's multimillion-dollar budget deficit.

Under Bloomberg's "crash tax" plan, car fires with injuries would incur a bill of $490.  A car fire with no injuries would cost $415.  And a crash with no injuries would receive a "discount" -- a bill of only $365.

Although critics say the New York Fire Department could easily find more savings in its budget -- such as by eliminating the paid drivers of fire chiefs -- Bloomberg said he had little choice.

"Would you like them to close fire houses?" Bloomberg said.  "I don't think so.  So they've got to raise the money."

Some municipalities have instituted accident-recovery fees at the prodding of collection companies that have offered their billing services, in return for a percentage of the revenue raised.  The AAA and the insurance industry oppose such fees, saying accident response and public safety are basic government services that should be paid for with general taxes.

"´╗┐Crash taxes" are just some of the extreme measures states and cities are taking around the country to counter billions of dollars in budget deficits. 

In New York State, Gov. David Paterson has proposed legalizing ultimate fighting, a move that would generate $2.1 million a year.  Arizona slashed its Medicaid program, leaving 98 residents ineligible for life-saving organ transplants.  California Gov. Arnold Schwarzenegger wants to open up the coast off of Santa Barbara to oil drilling to raise hundreds of millions of dollars in new revenues.  And one of New Jersey's more crime-ridden cities, Camden, recently sent pink slips to about half of its 380-member police force.

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