Published Tuesday, January 28, 2003, in the Oakland Tribune

Assembly poised to boost car tax
Republicans say they'll block increase in court or by referendum

By Steve Geissinger
Sacramento Bereau

SACRAMENTO -- Legislators are poised to triple California's car tax
this week in an effort to ease the squeeze state deficit woes are
putting on local governments.

The move pits motorists against local governments that say they would
have to fire police and firefighters without the hike.

The Assembly may vote as early as today on the plan, which would
boost the annual license fee on an average car by $115, from $55 to
$170, starting later this year.

Taxpayer groups opposing the hike warn that some motorists would feel
an even sharper sting -- the owner of a $22,000 car, for instance,
would pay about $300 more in the first year of ownership.

Even worse, tax foes said, California's current property tax on cars
is already higher than the next five largest states in the nation and
is nearly twice as high as the next runner-up, Illinois.

But majority Democrats said the hike -- restoring vehicle license
fees to 1998 levels --would replace payments to local governments
that Gov. Gray Davis wants to cut. Without it, they said, cities and
counties would lose more than $4 billion by mid-2004.

In the Bay Area, that translates into cuts of more than $189 million
for Alameda County and its cities, and more than $83 million for San
Mateo County and its cities.

In San Joaquin County, local governments would lose more than $65
million. Contra Costa County governments would lose more than $116
million.

Though the vehicle license fees represent about 15 percent of the
average local government budget, the fees comprise a much higher
percentage of the money cities and counties can spend as they wish.

Democratic legislative leaders said public safety would be hit the
hardest, with local governments being forced to lay off as many as
12,000 law enforcement officers and 15,000 firefighters.

"If we do lose this revenue, we anticipate losing upwards of 60 to 70
officers next fiscal year," said Oakland Police Chief Richard
Word. "That would be devastating for a city such as Oakland, which is
fighting a violent-crime crisis."

Democrats are in the majority in the Legislature and only a majority
vote is required to pass the hike in vehicle license fees. But the
increase is not openly supported by the Democratic governor. It is
opposed by Republicans, who renewed their pledges Monday to try to
block it in court and by referendum.

"If the Democrats want the biggest statewide tax revolt in 24 years,
this is the quickest way to get it," said Sen. Tom McClintock, R-
Northridge.

The car tax hike would come atop more than $8 billion in proposed tax
increases on sales, cigarettes and the income of the wealthiest
Californians.

The Assembly and Senate are both expected to act on the proposed
vehicle license fee hike this week as legislators scramble to meet
Davis' Friday deadline for them to begin easing the deficit while
California is still at the midpoint of the current, 2002-03 fiscal
year.

Perata and other Democrats said they can approve the hike on a simple
majority vote because they would be clarifying current law. Tax-
related bills normally need two-thirds support in both houses,
requiring that a handful of Republicans join Democrats for them to
pass.

Republicans and taxpayer groups are ready to block any car-tax hike,
either with a lawsuit challenging the increase as unconstitutional
without a two-thirds vote of lawmakers or with an effort to put a
referendum reversing it on a statewide ballot.

Either move could delay the hike for so long that it would not be a
factor in shielding local governments from proposed cuts. But
Democratic leaders said they simply will be making good on a promise
-- and avoiding a $4 billion-plus cut in local government funds -- by
returning the car tax to the rate of five years ago.

The state chose to lower the vehicle fees that went directly to
cities and counties in 1999, during better economic times. To appease
local governments, the state vowed to replace the money cities and
counties lost through the fee cut.

The state further pledged that if it was ever unable to make
those "backfill" payments, it would boost the fees back to the 1998
level.

But Davis, faced with a staggering deficit, has proposed eliminating
the "backfill" as a means of making local governments share in the
fiscal pain.

At the same time, Davis has urged lawmakers not to raise the license
fee, saying the move conflicts with his overall budget plans.

Some of Davis' critics are skeptical, saying the governor is leaving
the politically unpopular work of hiking the car tax to legislators
but would ultimately sign the bill.

Contact Steve Geissinger at sgeissinger@...

The car-tax clash is expected to climax by the end of the week as
legislators approve the initial spending cuts and tax hikes to close
a state funding gap of as much as $35 billion through June 30, 2004.

"I think if they can get it out of the Assembly, we will have no
problem finding the necessary 21 votes in the Senate," said Sen. Don
Perata, the Oakland Democrat who is majority leader in the upper
house.