[img]http://www.pe.com/imagesdaily/2003/06-21/davis219.jpg[/img]
State to triple car tax Davis says the revenue is needed; Republicans vow to fight in court
06/21/2003
By MICHELLE DeARMOND and CLAIRE VITUCCI
THE PRESS-ENTERPRISE
California's finance director ordered the Department of Motor Vehicles to triple vehicle-license fees Friday to raise money for the cash-strapped state.
Republican lawmakers immediately vowed to sue and launch initiatives to stop the increase.
Gov. Davis, who met with police officers and firefighters Friday in Riverside, said law-enforcement agencies and fire departments would be devastated without the increase. Most of the vehicle-license fee revenues go to the cities and counties, which rely heavily on the money.
Gov. Davis, a Vietnam War veteran, addresses the American Legion Convention at the Riverside Convention Center on Friday.
[b]"If you want the police and fire to protect you, you have to pay for it," Davis said[/b] as he stood on a stage at the California Department of Forestry center in Riverside. "My parents told me there's no free lunch." Motorists who receive bills Aug. 1 or later will be charged at the higher rate, said Anita Gore, spokeswoman for Finance Director Steve Peace. Bills are sent 60 days before they're due, so the revenue won't be available until October.
The average California car owner will pay $234 now, plus other fees, instead of the $76 that would have been owed under the previous formula, she said.
The Legislature reduced the vehicle-license fee in 1998 but continued to pay local governments the same amounts as before. In his budget plan to reduce an estimated $38.2 billion funding gap, the governor proposed ending the backfill.
The law that lowered the annual vehicle-license fee to 0.65 percent of the car's value also stated that if the state ran out of money and could no longer pay the backfill, the fee would revert to the previous rate, which was 2 percent of the value, Gore said.
Peace said raising the fee was necessary.
"The state is broke," he said. "For the first time, we have none of our own money. As of today, we are operating totally on borrowed cash. In addition, we have no more borrowing capacity left."
Outcry from GOP leaders
The decision to trigger the increase prompted an outcry from Republican leaders, who oppose tax hikes and want to see spending cuts in the budget. They vowed to sue within the next two weeks to halt the increase, arguing that it is unconstitutional and should not happen without two-thirds approval of the Legislature.
In March, lawyers for Davis and Controller Steve Westly concluded that Peace could raise the tax on his own if he determined that the state government had "insufficient" funds.
"We believe that this so-called legal opinion is nothing but an end run around the Legislature," said Senate Republican Leader Jim Brulte of Rancho Cucamonga. "Only the Legislature can raise taxes."
Every Senate Republican has signed on to the lawsuit that the Howard Jarvis Taxpayers Association will be filing to challenge the increase, Brulte said.
California law prevents the association from going to court and getting a preliminary injunction to halt the tax, said Jon Coupal, association president. He hopes eventually to get the state to refund the money it will start collecting in October.
Raising the vehicle-license fee is expected to generate $4.2 billion in the 2003-04 fiscal year.
Coupal recommends that vehicle owners keep track of their payments so they can file claims for refunds "when we ultimately prevail in our lawsuit."
Sen. Tom McClintock, R-Thousand Oaks, immediately began efforts to repeal the tax. McClintock filed papers and plans to begin circulating petitions in support of two statewide initiatives that target the tax. One would abolish the tax. The other, a backup measure, would set it at $1 per year.
Local officials urge support
San Bernardino County's interim assistant county administrative officer decried efforts to stop the increase.
"If there's no backfill and they cut the tax permanently and pass it on to counties, it's a massive cut in local discretionary funds," said Dean Arabatzis, who added that would mean the county would have $90 million less in such funds next year.
While in Riverside on Friday, Davis called on local public-safety officials to comment on the issue.
Riverside Fire Chief Dave Carlson said cuts in the vehicle-license fee and backfills could force the city to lose two to four fire stations.
"So it is a severe impact on the city and the fire services and police services in cities, specifically Riverside," he said.
Davis has proposed a balanced budget that assumes the backfill will be eliminated and the vehicle-license fee increased, but the Legislature had not approved it. Democrats oppose program cuts, and Republicans have vowed to reject any budget that includes tax increases.
Democrats are the majority party in the Legislature, but they need the support of two Republicans in the state Senate and six in the Assembly to gain the required two-thirds vote for passage of the budget. The new fiscal year starts July 1.
Davis has estimated that the state will have a $38.2 billion funding gap through fiscal year 2003-04; however, his estimate doesn't take into account about $8 billion in cuts already approved by the Legislature.
Later Friday, the governor was scheduled to stop at Riverside's Mission Inn to meet with the Morongo Band of Mission Indians, whose reservation is near Banning. Earlier, the governor addressed the American Legion at the Riverside Convention Center.
The Associated Press contributed to this report.