Drive to End Vehicle License Fee Picks Up Speed

The money pays for everything from police cars to city parks, from economic development schemes to health care for the poor.

All told, Ventura County’s city and county governments expect to receive $71.5 million this year from a single revenue source: vehicle license fees.

But some state lawmakers, eager to provide tax relief in these flush times, are considering eliminating the extra tax on car owners.

Three separate bills call for repealing the fees that bring in nearly $3.9 billion across California. Two would provide state money to make up the losses to cities and counties, but local leaders are wary that such promises would vanish with the next recession.

Chances are the legislation won’t pass this year. But analysts in Sacramento and Ventura County’s city halls say the idea could well spark an initiative drive--or gain the kind of political momentum that swept an underdog candidate into the governor’s mansion in Virginia last fall.

“I’m hopeful that by and large citizens will realize that that is a significant amount of money for local government to lose, whether it’s the city of Thousand Oaks or Simi Valley or Los Angeles or Glendale,” said Bob Biery, finance director and treasurer for Thousand Oaks, which expects $4.5 million in vehicle fees this year.

Still, it’s not hard to find residents opposed to the annual license fees, which average $185 per household.

Consider Mike Swanson of Oxnard, who this year spent about $500 to register and license his 1996 sports utility vehicle.

“It’s just outrageous,” Swanson said, as he stood in line at the DMV office in Ventura for half an hour last week. “They ought to eliminate it.”

Assemblyman Tom McClintock, sponsor of one of the bills seeking to eliminate the fees, couldn’t agree more. Californians rank third in the nation in overall vehicle taxes and eighth in vehicle license fees, he said.

“They are abusive, they are outdated and it’s time to get rid of them,” said McClintock, a Northridge Republican whose district includes parts of eastern Ventura County. “If we can’t cut taxes when the state Treasury is overflowing, how will we ever be able to cut them when times are tough and revenues are short?”

McClintock and state Sen. Ray Haynes (R-Riverside) have each submitted a bill calling for state money to compensate local governments for lost license fee revenues.

The third bill, filed by Orange County Republican Sen. Rob Hurtt, doesn’t even make that promise. It simply proposes to do away with the vehicle tax.

But Hurtt, of Garden Grove, has deferred to McClintock’s and Haynes’ bills, which would phase out the car tax over five years and replace the lost local government funds with a constitutionally guaranteed slice of state sales tax dollars.

In the minds of local government leaders, state guarantees are meant to be broken.

Consider, they say, the revenues that cities and counties received to make up for funding lost following the voters’ approval of Proposition 13, the landmark 1978 measure that curbed property tax increases.

As soon as the recession hit in the early 1990s, state lawmakers shifted millions of those promised dollars away from local governments to balance the state budget--stripping libraries and other institutions of needed funds, city leaders said.

“There’s a history of the state saying we’ll backfill with other monies,” said Ojai City Manager Andy Belknap. “That may prove true for the short term . . . but our track record is never too good there. It usually just goes away.”

The Ventura County government, which expects to receive $47 million in vehicle taxes this year, is as concerned as any local bureaucracy.

“If the state is going to replace it, OK, but you don’t take away a major revenue source without causing a tremendous impact on the operation,” said Bert Bigler, Ventura County’s chief deputy administrative officer. “These are big dollars.”

The state’s Motor Vehicle License Fee was enacted in 1935 when automobiles were excluded from property taxes.

The theory was that the state could more uniformly and efficiently collect the fees for local agencies, and then dole them back out to individual jurisdictions.

According to the League of California Cities, California is one of seven states that use a vehicle tax system in lieu of a property tax. Ten states do not tax vehicles at all, and three subject cars and trucks to local property taxes.

McClintock says the average California household pays $210 to the Department of Motor Vehicles every year. Of that, about $27 is a registration fee used to support the DMV and California Highway Patrol. The remaining is the vehicle licensing fee, $172 of which is poured into the general funds of cities and counties. The rest supports local health and social service programs.

The fees, which can range from about $20 for a clunker to several hundred for a new sports utility vehicle, are calculated on a depreciating scale based on the vehicle’s estimated value.

McClintock believes the fees deter new car sales by discouraging people from getting rid of their older vehicles and their lower license charges.

Jamie Rush of Ventura says she’s a case in point.

She paid just $59 this year to re-register her 1983 Toyota Tercel. Because she knows a new car would mean paying a higher license fee, she keeps the Tercel.

“That’s one of the things that’s deterring me from getting a new car,” Rush said. “Coming up with a big chunk of money every year is hard.”

To no one’s surprise, the new legislation--which has yet to reach either the Assembly or Senate floor--already is generating huge support among car owners.

In Virginia, Republican candidate James Gilmore proposed the vehicle tax repeal in his campaign for governor and watched his poll numbers climb. He won the election last November.

McClintock’s Web page allows visitors to calculate how much cheaper their registration would be if his bill were to pass.

“The response we’ve gotten has been overwhelming,” McClintock said. “We have the critical mass to be successful, if not in the Legislature, then at the ballot box.”

Though concerned that the bills could find widespread support among lawmakers, Dwight Stenbakken, legislative director for the League of California Cities, doesn’t give them much hope of garnering the two-thirds majority vote needed in the Legislature.

He said there are too many other interests competing for a slice of the state’s swelling sales tax proceeds, which because of a bustling economy are up by $1.2 billion this year.

“I don’t think [McClintock] would have the votes to just take $4 billion out of local government without some type of honest backfill,” Stenbakken said. “And I don’t think he can get an honest backfill because the other interests competing for the general fund won’t let that happen.”

As a ballot measure, however, opponents would have a more difficult time, Stenbakken said, having to convince tax-weary car owners to place the needs of local governments over their own desire to save a couple of hundred dollars each year.

“Those are funds that pay for basic services, not capital projects, but everyday services like police and fire, recreation, libraries . . . ,” said Biery from Thousand Oaks. “I would hope that some part of the citizenry understands and recognizes that those services need to be paid for.”

An Assembly hearing date for McClintock’s bill has yet to be set. Hurtt’s and Haynes’ bills are scheduled for an initial hearing April 15.

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Vehicle License Fee Revenue

Here’s a look at how much money local governments receive or expect to receive from vehicle license fees.

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1996-97 1998-99 Agency (actual) (projected) Ventura County $45 million $47 million Camarillo $2.37 million $2.5 million Ojai $290,000 $301,000 Ventura $3.9 million $4.07 million Oxnard $6.1 million $6.6 million Port Hueneme $871,000 $870,000 Thousand Oaks $4.25 million $4.5 million Moorpark $1.13 million $1.3 million Simi Valley $4.06 million $4.2 million Santa Paula $1.07 million $1.08 million Fillmore $506,000 $513,000

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Source: Ventura County and individual cities