Panel Pulls Over Tax Break for Auto Collector

State Sen. William Campbell’s controversial bid to give a $1.4-million tax break to the wealthy owner of a classic car collection appeared to hit a legislative dead end Thursday.

The Assembly Ways and Means Committee failed by one vote to approve the Hacienda Heights Republican’s measure, which sought to exempt millionaire Kenneth Behring from a 7% sales tax assessment that the state wants if he donates 160 classic cars to UC Berkeley, through a museum that Behring controls in Contra Costa County.

Recently published reports about the bill--which would solely benefit Behring, a wealthy developer and owner of the Seattle Seahawks National Football League team--led some lawmakers to question whether the gift is a special-interest ploy to save him money.

Vigorous Lobbying

Those sentiments were repeated Thursday by committee members, who resisted Campbell’s vigorous lobbying.

Assemblyman Terry B. Friedman (D-Los Angeles) criticized both UC Berkeley for “getting into the used car business” and Behring, who was not present Thursday, for seeking the tax break.

“It’s a cynical move by Mr. Behring,” Friedman said. “And the university’s participation . . . raises questions about the integrity of this transaction. We ought (to) not be sucked into some grandiose scheme that in the long run would compromise the university’s integrity.”

At issue is $1.4 million that the state wants to charge Behring if he makes the gift. That is about 7% of the $20 million Behring spent buying the cars with his automobile wholesaler license.

Behring’s donation of the collection to the university is regarded by state tax officials as a “transaction” tantamount to a retail sale, under which Behring must pay the sales tax, the state has said.

$950,000 in General Funds

Forgiving the tax would cost the state’s general fund $950,000 and Contra Costa County $450,000, an analysis shows.

But both Campbell and university officials say it is unfair to charge Behring a sales tax, especially in light of his generosity.

Both Campbell and university officials, who paced the hearing room floor Thursday like expectant fathers, said criticisms leveled Thursday about UC Berkeley getting into the car business are unfounded.

Campbell, speaking to the committee, said the design, engineering and historical significance of Behring’s car collection is just as educational for students as an “impressionist painting.”

While UC officials have said they concur, they have decided to emphasize that they are free to sell the collection when the university takes control of the museum and its cars in 2002.

“The amount of the gift is important, and when you’re looking at the future of the university, gifts of that magnitude are important,” a dejected John Cummins, assistant chancellor at Berkeley, said after the hearing.

40 Cars Already Given

Already, Behring has given UC Berkeley title to 40 cars, as well as the 150,000-square-foot building and 42 acres of the Behring Educational Institute in Danville, three miles from his house. The value of the gift is about $20 million, university officials say.

But the tax problem has left the millionaire balking at turning over the balance of his classic car collection--160 automobiles that include a solid silver 1923 British-made Daimler once owned by the Maharishi Rewa of India.

“I don’t want to make this a rich-versus-poor kind of thing,” Campbell said after the hearing, his neck wringing with sweat from his all-out lobbying of Assembly members.

“Granted, here is a wealthy man. But I don’t want to engage in wealthy-bashing. Here’s a man who wanted to donate $100 million worth of land, buildings and land.”