GOP, Democrats Seek Truce on Tax Break Plans

Gridlock in the California Legislature continued to prevent passage of a $100-billion state budget Monday, as Democrats and Republicans began negotiating a truce to their spat over taxes.

Republicans, who refuse to provide the votes needed for two-thirds passage in the Assembly, insisted they will not budge until they ensure that the budget’s $2.7 billion in tax cuts do not erode future cuts in the “car tax,” formally known as the vehicle license fee.

But Senate President Pro Tem John Burton (D-San Francisco) stressed just as forcefully that he was not interested in giving ground on the issue, noting that his house has already done its job in passing the budget.

Under a complex deal struck by former Gov. Pete Wilson and the Legislature to cut the vehicle license fee two years ago, the fee is supposed to be gradually reduced in coming years.

However, if California cuts ongoing taxes by more than $100 million, that amount must be subtracted from future car tax cuts--meaning that unless some remedy is found, the budget’s tax cuts could actually raise the car tax in future years.

Gov. Gray Davis and Republican lawmakers had sought to pass legislation along with the budget to prevent that from happening. But the budget package that emerged from the Senate last week did not protect the car tax cuts, and Republicans in the Assembly balked.

Though Republicans dislike other elements of the budget--notably a slight income tax reduction that Davis inserted in place of a GOP tax cut proposal--they would vote for it immediately if the car tax was protected, said the leader of the Assembly’s Republicans, Scott Baugh of Huntington Beach.

“The budget will get out if the [car tax] issue is fixed,” Baugh said. “If it is not, I am not optimistic.”

But Assembly Speaker Bob Hertzberg (D-Sherman Oaks) questioned whether Republicans are sincere. “They’re just moving the ball,” Hertzberg said, “and changing what they want.”

The Assembly met only briefly Monday before adjourning so negotiations could continue.