Why a Colorado Ambulance Company Pours Millions Into a California Tax-Limiting Initiative

BY ALEXEI KOSEFF, CalMatters

A feud between private ambulance companies and local fire departments, with millions of dollars in profits on the line, underpins another battle about a ballot measure to restrict taxation in California that looms over the end of the legislative session.

American Medical Response, the Colorado-based corporation also known as AMR that reigns in the medical transportation services industry, has poured more than $3 million into the November 2024 initiative that would increase the requirements for implementing taxes, fees and other government charges—the single largest donor so far outside of its sponsor, the California Business Roundtable.

“It is painful to imagine why an out-of-state company with a mission to make a difference by caring for people in need would contribute millions of dollars worth of its profits toward an initiative that will undermine publicly provided emergency services to our communities.”

NEIL McCORMICK, CEO, CALIFORNIA SPECIAL  DISTRICTS ASSOCIATION

The contributions from AMR stand out especially in a campaign that has otherwise primarily garnered backing from real estate interests. Spokesperson Jason Sorrick said the company wants to stop fire departments from charging paramedics for the fire engines that respond to medical calls alongside them—fees that Sorrick said can add more than $1,000 to a patient’s ambulance bill and amount to taxing them again for a taxpayer-funded service.

“These charges prevent us from increasing wages and improving benefits for our paramedics and EMTs. They also limit our ability to improve or enhance our services because the revenue we are collecting is going to cover fire department overhead that has already been covered by taxpayers,” Sorrick said in a statement. “The intent is to let the voter, and thus the patient, decide if this practice is acceptable.”

Opponents say the fire departments that back up paramedics on these calls are providing a supplemental service, so eliminating their fees would shift the cost to taxpayers, boosting the profits of AMR and its peers. Some speculate that, in a sector where private companies regularly square off against emergency services agencies for lucrative exclusive contracts to provide ambulance rides in a community, AMR sees an advantage in limiting the ability of its public competitors to fund operations.

“It is painful to imagine why an out-of-state company with a mission to make a difference by caring for people in need would contribute millions of dollars worth of its profits toward an initiative that will undermine publicly provided emergency services to our communities,” Neil McCormick, chief executive officer of the California Special Districts Association, said in a statement.

Tax Debate Déjà Vu

The California Business Roundtable initiative, dubbed the Taxpayer Protection and Government Accountability Act, secured its eligibility for the November 2024 ballot in February, but it suddenly threatens to become a central focus of the final stretch of the legislative session, which ends on Sept. 14.

A proposed ballot measure introduced last week with the backing of Assembly Speaker Robert Rivas, a Salinas Democrat, would flip the initiative’s own higher standards against it, requiring that changes to the threshold for approving state and local taxes pass by that same margin. That would mean the California Business Roundtable initiative would need to secure two-thirds support from the electorate, rather than a simple majority, a high hurdle for a statewide measure.

AMR made three contributions to the initiative committee in spring 2022, totaling $3.1 million, or about a fifth of all money raised since it launched in late 2021, according to campaign finance records.

If the Legislature rushes this counterproposal through by the end of session, it could appear on the March ballot, before voters weigh in on the California Business Roundtable initiative. It advanced out of its first committee on Aug. 23, and would need to pass by two-thirds in both chambers in the next month.

“Clearly there’s a pattern of people trying to use the initiative process to change the rules of the game for their own interests and I would just like things to be implemented fairly,” said Assemblymember Chris Ward, the San Diego Democrat who is carrying the legislative measure. “It just made all the sense in the world to me to say, ‘Look, if you’re going to try to move the goalpost, then you should have the same proportion of voters agree with you.’”

For now, lawmakers and other opponents of the proposed tax restrictions are brushing off any notion of negotiations this time around. But they seem perplexed by what the initiative’s major funders are after.

Carolyn Coleman, executive director of the League of California Cities, said she was unsure why companies who do business with their communities would want to restrict the tax revenue they need to pay for those services. She compared it to “biting the hand that feeds them.”

“A measure that makes it harder for cities to have the resources to do what is necessary and important to serve their residents, to have a service provider like AMR contribute to that is sort of surprising to us,” Cole said.

What Supporters Want

AMR made three contributions to the initiative committee in spring 2022, totaling $3.1 million, or about a fifth of all money raised since it launched in late 2021, according to campaign finance records. The ambulance company sent another $500,000 to the California Business Roundtable’s political action committee—which has put about $6.4 million into its initiative campaign so far—during that time.

Meanwhile, contributions from investment companies, developers, property managers and builders make up nearly 40 percent of the $16.5 million raised by the campaign—and more than 90 percent of the $12.8 million donated to the California Business Roundtable’s committee since 2021.

The measure would introduce a sweeping set of changes that make it more challenging to raise taxes in California, including a requirement for the Legislature to put any new or higher tax before voters for approval.

Los Angeles-based Kilroy Realty, Santa Monica-based Douglas Emmett and Irvine-based Western National Group—the largest of the initiative’s real estate-affiliated donors—declined to comment or did not respond to questions about why they supported the effort. But property development and ownership are a frequent target of taxes, fees and assessments to fund public services and programs, especially by local governments.

Proponents of the California Business Roundtable initiative say they are cracking down on loopholes created by legislators and court rulings that weakened earlier voter-approved tax accountability measures.

“Alarmingly, a large segment of California’s small business community, including those who rent commercial space, are contemplating leaving the state, with many others struggling to stay afloat,” Hector Barajas, a spokesperson for the campaign, said in a statement. “California’s surging taxes and fees are a primary cause of the soaring cost of living, casting a dark shadow over all sectors in California, and housing is at the center of this impact.”

The measure would introduce a sweeping set of changes that make it more challenging to raise taxes in California, including a requirement for the Legislature to put any new or higher tax before voters for approval and another increasing the margin to pass a voter-initiated special tax at the local level, to two-thirds from a simple majority.

But perhaps the most significant provision one that could upend the operation of California government at every level—would reclassify some fees and other charges that fund public services and programs as taxes. This would prohibit administrative agencies from setting these levies, requiring the Legislature or local governments to turn to the voters to adjust them.

Fees currently must not exceed the “reasonable costs” to the government of providing a service. The initiative would change that standard to “actual costs,” defined as the “minimum amount necessary to reimburse the government.” It would also raise the legal standard for the government to prove a levy represents that actual cost—which opponents fear would invite a wave of legal challenges to reclassify administrative charges as taxes that need two-thirds voter approval.

“Imagine asking voters to take up the various governmental charges for regulatory costs, licenses, permits, fines, and more on the ballot with a two-thirds vote,” McCormick of the special districts association said in his statement. “It could grind basic government functions to a halt.”

Local Clashes May Portend the Future

A legal showdown over who controls medical transportation in Sonoma County highlights the potential stakes of this initiative for AMR and its rivals.

In California, emergency medical services operate through the counties, which must designate a local agency to manage their program. Those agencies are responsible for determining coverage areas for ambulance services and then awarding the contracts—which sometimes go to public entities, such as the county fire department, and sometimes to private companies, such as AMR. These providers then bill patients’ insurers for the ambulance rides.

The state’s $2 billion ambulance services industry is divided into 337 zones, according to the California Ambulance Association, about two-thirds of which are served by 170 private companies. The contracts—which generally guarantee exclusivity—can be lucrative and highly competitive.

Local fire officials in some areas have begun making moves for service zones long served by AMR, setting up intense and litigious battles over tens of millions of dollars in annual revenues. Santa Barbara County, where AMR has been the ambulance services provider for more than half a century, held its first ever public bidding process for the contract last year. Though AMR won the bid, the losing county fire department mounted multiple unsuccessful challenges, and the county board of supervisors ultimately voted in June to create a new system that splits the contract into three levels of care, each with its own provider.

In Sonoma County, officials awarded an exclusive ambulance contract to the county fire district in June, after three decades with AMR. The company sued, alleging that the bidding process was tainted by conflict of interest and that the fee schedule laid out by the fire district amounted to an illegal tax. AMR contends that the fire district would retain an excessive “profit” from its rates, more than its “reasonable costs” of providing the service, which should be considered a tax that needs to obtain two-thirds voter approval.

McCormick of the special districts association said this is already a challenging standard for emergency services agencies dealing with the volatile price of labor and materials. Tightening it even further to “actual costs” would be “unreasonable if not impossible,” he said, advantaging private ambulance companies who have freedom to set their fee levels.

“When it comes to emergency response and the safety of our families, what exactly is the minimum amount necessary?” McCormick asked in his statement. “These difficult, multi-faceted decisions are best assessed and determined through locally accountable boards, not through more lawyers in our court system.”

Sorrick, the AMR spokesperson, said the stricter standard for setting service charges will force government agencies to more transparently account for what they are paying for.

“This avoids double or triple charging for a service and prevents using profits generated from the fee to cover unrelated services or costs,” he said in his statement.

The article titled “Why a Colorado ambulance company wants to limit California taxes” appeared first on CalMatters.org.

CalMatters is a nonprofit, nonpartisan media venture explaining California policies and politics.