Auto theft surcharge rankles enforcers

  • Article by: JOY POWELL , Star Tribune
  • Updated: November 3, 2012 - 12:48 AM

Consumers are paying to combat auto theft, but nearly half of the money collected isn't being used for that.

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Ramsey County Attorney John Choi

Minnesota drivers pay more than $2.6 million a year to a program designed to prevent auto thefts. But for the past decade, nearly half of that money has been diverted to the state's general revenue fund, a practice that needs to end, say a growing number of prosecutors, police and insurance officials.

"It's really wrong," Ramsey County Attorney John Choi said about the $13 million in surcharges that have been used to help balance the budget since 2002. Choi wants the state to use the entire insurance surcharge to stop car thefts, which he notes are often a "gateway crime" for career criminals.

Bob Johnson, president of the Insurance Federation of Minnesota, a trade association, is just as blunt. "At a minimum, it's dishonest to consumers," Johnson said. "It is taking money from consumers on a false pretense and using it as part of the general taxation scheme."

Though the amount consumers pay is small -- $1 a year per vehicle on policies with collision and comprehensive coverage -- opponents object to diverting any of it without taxpayers' knowledge.

Johnson, Choi and others are calling for state legislators in the upcoming session to restore the full surcharge to the theft-prevention program, which provides grants to police departments for equipment such as license plate readers, or to refund some of it to drivers.

"The Legislature should consider rededicating those funds to the Auto Theft Prevention Program," said Minnesota Commerce Commissioner Michael Rothman, whose department regulates insurers. "Consumers in Minnesota absolutely benefit from the program by increased public safety on the streets, and they save money on lower insurance costs because cars aren't being stolen."

Faced with a $4.56 billion budget deficit in 2002, the Legislature and former Gov. Tim Pawlenty approved directing half of the surcharge to the general fund. At the time, auto thefts were beginning to level off, thanks in part to the program, created in 1996.

While fewer cars are being stolen -- thefts are down 40 percent since 2004 -- an average of 23 cars are still stolen every day in Minnesota, according to the state Commerce Department.

The losses of a few can affect the premiums of many.

In St. Paul, for example, auto theft investigators are probing illicitly run garages that allegedly buy stolen autos and parts from Honda and Acura vehicles. An affidavit for one such "chop shop" filed earlier this month in Ramsey County District Court describes how criminals who run the garages are harvesting parts in high demand by street racers.

"Law enforcement has seen an upward trend of auto thieves legally purchasing junk vehicles in order to obtain a 'clean' title," St. Paul Police Sgt. Jon Loretz wrote in order to get a search warrant for a chop shop on the East Side.

He described how the Vehicle Identification Number (VIN) plates are illegally cut out of junk cars and placed into cars with similar makes and models. Other serial numbers in the stolen vehicles are obliterated. Some frames are built up with several stolen cars.

Grants for cops

Statewide partnerships under the theft-prevention program are paying off, said Rothman and Choi.

Law enforcement agencies, from Bemidji to Washington County, are using the program's grants for bait cars, for jailhouse interviews of known auto thieves and their associates, for more crime-scene processing of recovered stolen vehicles and for high-tech license plate readers (LPRs).

Police are finding they can automatically scan thousands of vehicles a minute with the LPRs.

Cameras are mounted atop police cars, and in a blink, they transmit the information through a wireless system to compare plates against a data-base of stolen cars and those linked to missing people and Amber Alerts. Despite privacy concerns, police say the LPRs are a great tool.

Ramsey County Sheriff Matt Bostrom said the surcharge has been "very helpful" for his department and suburban agencies, which will be using the money for a bait car and LPRs.

Cut it in half?

Johnson of the Insurance Federation suggests that given the decline in auto thefts, and if law enforcers request fewer grants, the state could trim the annual fee.

Taxpayers seem to feel, Bostrom said, that dedicated funds have more accountability than those going into the general fund, where taxpayers can lose track and grow "distrustful" of how the money's used.

"If it was essentially earmarked, where it was supposed to go to reduce auto theft, I think most people would say it should do that," the sheriff said.

Rep. Greg Davids, a Preston Republican who chaired the House Commerce and Regulatory Reform Committee and worked on legislation involving the surcharge issue, said lawmakers should evaluate how successful the surcharge-funded programs have been.

Said Davids: "I certainly think it's time we take another look at it."

Joy Powell • 651-925-5038

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