Davis Urged to Back Refund of Smog Fees

Two Republican officials demanded Monday that Gov. Gray Davis endorse a refund of $724 million in auto smog fees rather than appeal a recent court ruling that the charge is illegal.

Davis ordered the Department of Motor Vehicles last month to suspend collection of the $300 “smog impact fee” on out-of-state vehicles when they are registered in California while he decides whether to appeal.

“He will make a decision over the course of the next week,” spokesman Michael Bustamante said Monday. The appeal deadline is Nov. 10.

The State Board of Equalization, a tax collection agency that is a defendant in the case, has agreed not to seek appeal, said Dean Andal, a Republican board member. He called on Davis to refund not only the smog fees collected since 1990 but also millions of dollars in interest.

“Every dime of the illegally collected tax should be returned immediately to the people who paid it, plus interest calculated at the same rate the state charged taxpayers during the same period,” said Assemblyman Tom McClintock (R-Northridge).

McClintock said at a news conference that he will introduce a bill in January to ensure a maximum refund, including any penalties. He urged Davis and the Democratic majority of the Legislature to support it.

Based on what they said were data from the DMV, McClintock and Andal estimated the refund at $502.7 million in fees plus $221.6 million in interest.

“The state has a clear moral obligation to pay the same interest to taxpayers who were denied the use of their money because of an illegal act of the state,” said McClintock, one of California’s feistiest anti-tax lawmakers.

He said the DMV data show that the fees have been paid on nearly 1.7 million cars and trucks.

Several thousand motorists already have contacted the DMV about refunds. The proposed McClintock bill would shift to the state the burden of tracking down and paying eligible car owners.

As a budget-balancing mechanism during the economic recession of the early 1990s, the Democratic Legislature and GOP Gov. George Deukmejian imposed the $300 “smog impact” fee on out-of-state vehicles when they registered in California.

The Legislature’s lawyer warned at the time that such a fee violated state and federal commerce laws. The 3rd District Court of Appeal reached the same conclusion last month and struck it down.

In that ruling, the court upheld a 1997 decision of the Superior Court in Sacramento. But the appellate court rejected another part of the trial court’s ruling that would have made refunds as far back as 1992.

Instead, the appeals court restarted a three-year statute of limitations for refunds and applied it to motorists who began paying the fee in 1996, an action that substantially limited the state’s exposure to financial liability.

“Gov. Deukmejian started it. Gov. Wilson collected it, and Gov. Davis has to decide what to do with it,” Bustamante said of the 9-year-old program.