A Penny Saved Could Be a Fiscal Catastrophe

Several bills pending in the California Legislature propose to eliminate a significant source of revenue to cities and counties throughout the state. These bills would repeal voter-supported vehicle license fees.

Although in the short term it may appear attractive to eliminate what is perceived to be a frivolous fee, the long-term ramifications would be catastrophic. Many services residents now pay for would be jeopardized.

The current law, a constitutional amendment approved by voters in 1986, guarantees that a portion of the money motorists pay to register their vehicles is designated expressly to cities and counties to help fund local, essential services. The proposed elimination of this fee would have a profound effect on the ability of cities and counties to continue to provide these services.

For example, by the end of the current fiscal year, the city of Moorpark will have collected nearly $1.1 million from these fees. In fiscal year 1998-99, that total is expected to increase to nearly $1.2 million. This represents the third-largest source of general fund revenue to our city and more than 23% of the city’s entire discretionary general fund revenue.

Public safety programs are funded entirely from the general fund. In Moorpark, law enforcement is clearly the most expensive service we provide; nearly 57% of our discretionary general fund balance is designated for public safety and crime prevention programs. The result is a community in which residents feel safe and secure, free from the fear of crime and violence.

Any elimination or reduction of these critical vehicle license fees would undoubtedly result in a drastic curtailment of fundamental services designed to meet the needs of our community.

Unfortunately, revenue options are severely limited.

Moorpark receives only eight cents from every property tax dollar. Propositions 13 and 62 severely limit the revenue we can generate. Proposition 218 requires an expensive election to gain public approval to secure new assessments. Cities with limited commercial opportunities would be particularly affected because their ability to capture sales tax is limited.

The lost revenue resulting from the proposed elimination of vehicle license fees simply cannot be replaced with fees or mechanisms currently available to Moorpark. The quality of life for our residents would be diminished.

Moorpark is obviously not an isolated example. Ventura County receives approximately $47 million from vehicle license fees. Other cities across the county stand to lose nearly 25% of their annual general fund revenue.

The cumulative fiscal impact of similar laws recently enacted by the state Legislature has already resulted in millions of dollars of lost revenue to cities and counties throughout California.

In 1992, the Legislature enacted laws that enable state legislators to divert a portion of property taxes originally designated for cities and counties back to the state to balance its own budget. This extremely irresponsible practice has resulted in the loss of nearly $200,000 to Moorpark alone and a loss of more than $263 million to Ventura County.

Therefore, the budget surplus enjoyed by the state is the direct result of money shifted away from cities and counties--funds to which they are legally entitled. The continued loss of these funds, which increases every year, combined with the proposed elimination of vehicle license fees would seriously threaten the fiscal security of Moorpark.

Moorpark joins the League of California Cities, the California Assn. of Counties, California Professional Firefighters and more than 50 other organizations in strongly opposing this myopic legislation.

A representative of the League of California Cities has said it best: “These bills may be good politics but they are poor public policy.”