State Senate Slashes $3 Billion

In an effort to revive stalled budget negotiations, the state Senate on Monday approved more than $3 billion in cuts to state programs this year and removed a car tax increase as a condition for achieving those cuts.

But the decision to decouple the car tax from the budget cuts does not mean that drivers will be spared the expense of an increase in registration fees.

Legislative Democrats say they still expect the increase, which has been opposed by Gov. Gray Davis, to take effect. They are now relying on language in the 4-year-old vehicle license fee law that triggers the increase absent action by lawmakers when there are “insufficient funds” in the state treasury to cover the rebates drivers have been getting since 1999.

If the higher fees are imposed, either by legislative action or reliance on the 1999 language, drivers in California can expect to pay, on average, $136 a year more, starting this year.

In political terms, the latest interpretation is an attractive prospect for officials who are eager to use money from the fees to plug a 17-month budget gap estimated at $26 billion to $35 billion, but are wary of casting a vote to hike it.

Raising the tax offers an alternative to the original plan Davis proposed, which involved ending the $4-billion-a-year reimbursements local governments had been getting since the state cut the tax in 1999, and forcing them to absorb the loss. Local leaders warned such a cut would jeopardize their ability to provide essential services, such as police and fire protection.

Some Los Angeles officials, including Mayor James K. Hahn, have lobbied for restoration of the fee or at least for a plan that would not force local governments to shoulder the cost of the new policy.

Davis has lately indicated that he would support raising the tax if lawyers for the administration and the Controller’s office determined that the statute calls for it. As administration officials await that finding, they are emphasizing that it was Republican Gov. Pete Wilson who signed the original legislation.

“We’re working very hard with a number of parties to make sure we understand the law Gov. Wilson put on the books,” said administration spokeswoman Hilary McLean.

Republicans characterize the governor’s latest position as a betrayal only weeks after Davis announced he would veto the tax hike because it was pushed through without any Republican support, setting the wrong tone for budget negotiations.

“It’s only taken him four years to figure out what offends us,” said Senate Republican Leader Jim Brulte of Rancho Cucamonga, adding that raising the car tax by administrative order would be just as bad as Davis signing the bill to do the same. “I think it’s a distinction without a difference.”

Brulte said tax groups are prepared to challenge any car tax hike in court.

“I’m told a lawsuit will be brought if the trigger is pulled, and I have no reason to believe that is not the case,” he said. Sen. Tom McClintock (R-Thousand Oaks) has already announced that he will launch a ballot initiative to abolish the tax altogether the moment it is raised.

Assembly Speaker Herb Wesson (D-Culver City), meanwhile, said he is committed to protecting the car tax reimbursements to local governments. He said the Assembly is unlikely to vote on the cuts approved by the Senate until the administration makes a determination that the car tax will, indeed, go up on its own. Assembly Democrats meet Tuesday to discuss how to proceed.

The bills approved Monday by the Senate would achieve $3 billion in budget savings by making spending cuts in a variety of programs over the next five months. Davis had called for nearly double that amount of cuts, but legislative leaders opted instead to hold off any more cuts until the next fiscal year, which begins in July.

Among the cuts approved Monday were $2.3 billion in education reductions. Nearly half that will come in the form of a deferral, in which the state delays funding a few weeks so the money comes out of next year’s budget, instead of the current budget.

The bill included a scaled-down version of the cuts to the criminal justice system that Senate Democrats had earlier pushed through. The earlier bill included $31 million in reductions that would have been reached through the early release of some nonviolent inmates, as well as early discharge of parolees. The bill passed Monday included only $5.4 million of those savings, to be achieved by granting prisoners enrolled in work credit programs early release even if there is no job available for them in prison.

The bill approved Monday also did not include about $7 million in savings that would have been achieved by lowering the penalty for petty theft with a prior and for second-degree burglary.