How local governments recover money for damaged road infrastructure

The number of vehicles registered in Poland is growing every year and so is the traffic intensity. This, in turn, translates into more road accidents. The year 2020 was an exception: there were fewer road accidents due to pandemic-related traffic restrictions.

Part of road infrastructure damages have direct impact on road safety. In such cases roads authorities are obliged to fix them immediately, which often involves high costs. NIK auditors have found that the costs of repairing or replacing individual road infrastructure facilities ranged from several tens of PLN to nearly PLN 100. The perpetrator should be liable to cover these costs. Road infrastructure owners should seek compensation for damages, mainly from the perpetrator’s  civil liability insurance.

Key audit findings

City roads authorities acquire information about damages to city road infrastructure on their own, from entities responsible for maintaining and rebuilding the damaged infrastructure as well as from inhabitants and road users. One of the information sources is the Police. In the audited period the number of identified damages  reached nearly 11 thousand. Only about 14% of cases were reported by the Police.

NIK stands in a position that only close cooperation with the Police may effectively limit the number of unidentified damages to city road infrastructure. According to NIK providing such information to roads authorities by the Police (which they did in some cases, although there was no legal obligation to do so), would not only make it easier to identify those damages but also to pursue relevant claims. Interestingly enough, road accident perpetrators reported only 60, or 5.5%  of damages to city road infrastructure.

In nearly 70% of cases the audited roads authorities failed to establish the perpetrators of damages resulting from road accidents. In 18 of 24 auditees there were cases where the data on perpetrators were established with delay or not at all. As a consequence, roads authorities did not pursue compensation to repair damages to road infrastructure, which was against their obligation set out in the Public Finance Act. The said irregularities caused an unjustified burden to the cities’ budgets with expenditures due to repairs, totalling at least PLN 320 thousand.

Another issue identified by NIK is  low effectiveness of recovery of repair costs from damage perpetrators. The roads authorities had to pay nearly PLN 19 million for repairing the city road infrastructure damages. As much as PLN 7.6 million from that amount burdened the cities’ budgets because the roads authorities failed to recover money from road accident perpetrators, their insurers or urban insurance policies. Only one roads authority managed to recover the total costs of repairs (PLN 900 thousand).

According to NIK, roads authorities are obliged in each case to establish perpetrators and recover full costs of repairs of city road infrastructure from their insurance policies. Only if road accident perpetrators cannot be established, roads authorities should use their own insurance policy.

NIK also found irregularities in recovering receivables from perpetrators’ civil liability insurance policies. In 16 of 24 audited entities in some cases roads authorities did not recover their receivables from the perpetrator’s insurers or did that with delay. In case of six roads authorities, since they failed to recover their receivables, the claims totalling nearly PLN 41 thousand were barred by statute of limitations after three years. As a result of all those irregularities, the cities’ budgets were burdened - without good reason - with the total amount exceeding PLN 191 thousand.

The audited roads authorities also found it difficult to recover money for repairing damages from their own policies. In seven auditees NIK identified 46 cases of irregularities in that area. As a result of all those irregularities, the cities’ budgets were burdened - without good reason - with the total amount of over PLN 120 thousand.

In view of the above, NIK filed ten reports of violation of public finance discipline to relevant commissioners for public finance discipline. Besides, having found a breach of the Polish Accounting Act in case of one city roads authority, NIK filed a report of  possible criminal  activity to the relevant tax office.

Key recommendations

To city roads authorities:

• implement effective methods to identify causes of city road infrastructure damages resulting from road accidents;
• start regular cooperation with the Police to obtain information on whether the given city road infrastructure facilities were damaged as a result of a road accident and thus to establish the damage perpetrator;
• remove all damages to city road infrastructure caused by road accidents;
• take effective measures to establish perpetrators of road accidents resulting in damages to city road infrastructure and numbers of their civil liability insurance policies;
• take actions to ensure effective recovery of receivables due to compensation for damaging city road infrastructure from insurance policies, in line with the Public Finance Act.

To the Commander-in-Chief of the Police:

• list entities which may be provided with information on road accidents processed in the register of road accidents and collisions;
• specify that the Police should provide roads authorities periodically with detailed information on road accidents resulting in damages to city road infrastructure.