Crash Taxes Bring Hefty Bills for Motorists

Dec. 12, 2010— -- Jay Middleton was moving his daughter out of college in suburban Philadelphia when her car rear-ended his. He told a policeman who was nearby of the minor fender-bender, obtained the officer's accident report and filed a claim with his insurance company.

No one was hurt and no traffic was stopped. Both cars in the accident -- Middleton's and his daughter's -- were able to drive off.

But a short time later, a bill arrived at Middleton's New Jersey home seeking nearly $300 for the cost of the police response.

"First I thought someone was playing a joke on me," Middleton says. "But after calling the police department and learning that this is a debt that I am liable for, I just -- I went ballistic."

Around the country, more and more drivers are being slapped with similar bills.

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.

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 most dangerous cities, Camden, recently sent pink slips to about half of its 380-member police force.