Davis Budget Calls for Array of New Fees

As Gov. Gray Davis made very clear last week, he found a way to close the state’s $12-billion budget shortfall without new taxes.

New fees, however, are another matter.

Buried within the nearly 1,500 pages of the governor’s $100-billion budget proposal is an array of increased fees and penalties totaling, by the administration’s count, $143million.

At the receiving end are some of society’s most politically unpopular members: polluters, drunk drivers, power producers, insurance companies and assorted scofflaws. Fines paid by criminals would rise by 20%, for example. A $25,000 application fee would be levied on new power plants, and filing fees for DUI offenders who appeal suspension of their licenses would grow to $120 to cover their hearings.

Republicans, who are conducting their own analysis of the budget, peg the amount of new fees at nearly $500 million and contend that they target college students, struggling parents and sick, poor people as well.

With the quarter-cent hike in the state sales tax that took effect this month, new revenue in the Davis budget is projected at $1.3 billion to $1.7 billion, according to tax watchdogs. “It’s a transference of wealth from the private sector to the government, and consumers will ultimately bear higher prices,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn.

State Finance Director Timothy Gage said the fees and penalties were fashioned so that users pay a larger share of the cost of services they are receiving from the state, ranging from regulating pollution to maintaining driver records.

The fee on insurers and others who request driver information would rise from $2 to $4, raising $40 million. Drivers who are late with vehicle registration fees could see penalties jump 90%, which would bring in an additional $25million.

Bruce M. Brusavich, president-elect and legislative chairman of Consumer Attorneys of California, an association of 4,000 trial lawyers, took issue with a Davis proposal to tack a 10% surcharge on civil filing fees. The increase is expected to generate $15.2 million.

“Over the years they’ve been making it more and more expensive to get justice,” Brusavich said.

Davis also wants to begin charging power plant builders a $25,000 fee to cover the cost of having their applications processed by the state Energy Commission.

Jan Smutny-Jones, executive director of the Independent Energy Producers, said that because power producers spend several million dollars to get a project through the approval process, it was unclear whether a $25,000 fee would discourage new applicants. He added, however, that the state should be doing everything it can to get new plants up and running. If the economy rebounds at midyear as expected, he said, power consumption will rise dramatically.

“Obviously,” he said, “nobody likes having their fees increased.”

Others, however, praised Davis’ strategy of raising targeted fees rather than administering even deeper cuts to state services.

“I think they’re very reasonable,” said Jean Ross, executive director of the California Budget Project, a group that advocates for the poor during the budget process. “I think what they are saying is that people who are taking advantage of a very specific government service ought to pay for it.”

Ross said that fees levied by the state by law are not allowed to exceed the cost of providing a service and that a fee must be used to pay for the specified service.

But Assemblyman John Campbell, the Irvine Republican who handles budget matters for his caucus, said he is skeptical about how revenue from fees is spent.

“What can happen is that fees are not that,” Campbell said. “The money is put in the general fund and is spent on other services. In those cases, I would say we’re calling it a fee but it’s not.”

Assembly Republicans are counting as new fees a Davis proposal to begin charging Medi-Cal recipients a $1 co-payment on prescription drugs and a series of new child-care charges, which they contend will raise about $240 million. The Davis administration estimates those fees, which it did not factor into the acknowledged increase, will total $185million and will be used to assist more working poor families with child care.

GOP lawmakers say they are concerned that a proposal to eliminate a combined $64-million tuition subsidy paid to the University of California and California State University systems could result in fee hikes for students.

Administration officials say the state over-appropriated the subsidy during the current fiscal year and is merely reducing the systems’ funding to reflect the glitch.

“We’re going to continue talking to the state and see if that money can be made available,” said Brad Hayward, a spokesman for the University of California.

“We don’t expect it to mean a fee increase and we’re certainly not in favor of a fee increase,” state Department of Finance spokesman Sandy Harrison said.