Higher Car Fees May Be Reinstated

Faced with angry reactions from local officials up and down the state, Democratic leaders of the California Legislature said Tuesday that they are prepared to raise vehicle registration fees in order to avoid deep cuts to cities and counties.

Assembly Speaker Herb Wesson (D-Culver City) said restoration of the fees to earlier levels, which Gov. Gray Davis did not include in his 2003-04 budget proposal released last week, would be part of a “balanced” plan pushed by Democrats in the Legislature for solving California’s fiscal problems that will also involve major cuts in government spending.

Vehicle license fees, Democrats contend, can be raised by majority votes of the Assembly and Senate, meaning that no Republican cooperation is needed, unlike tax hikes, which require a two-thirds majority and thus some GOP support.

“These are very tough times, and you have to make tough decisions,” Wesson said. “I think that’s what we’re doing.”

Democrats already passed such a bill in the Senate last year and indicated that they would probably do so again. The move would generate about $4.2 billion in revenue and cost the driver of a $22,000 car, for example, up to $300 the first year of ownership. But Davis said he would be reluctant to approve such a measure.

“I don’t like to rule anything out, but I’m not enthusiastic about that at all,” he said.

The proposal would bring vehicle license fees back to what they were in 1998, when the state cut the rate by two-thirds. Money from the fees that were cut was going to local governments at the time. The state has been making up the difference.

The Davis budget proposed to stop sending those payments -- amounting to $4.2 billion over the next 18 months. That plan, however, infuriated Democratic and Republican officials from local governments, and touched off discussions about how to navigate the politics of the fees in a delicate economic time.

“It’s just unconscionable that the state would try to balance the budget on the back of local government,” Los Angeles Mayor James K. Hahn said Tuesday. Hahn, like Davis, is a Democrat, and the mayor has been lobbying other Democrats to rally around the needs of local government.

Los Angeles County supervisors were even more harsh after hearing a report by county Chief Administrative Officer David Jannsen outlining what the reductions would mean for Los Angeles County.

“This is really quite a diabolical scheme,” said Supervisor Zev Yaroslavsky. “This is the most hostile budget ever proposed as it relates to local government in the history of the state.”

Hahn estimated that the city stands to lose $70 million this year and $175 million in 2003-04 if the state stops sending the payments at issue. As a result, the mayor instituted a “hard” hiring freeze in every department except police, fire and sanitation, and halted all purchases of city equipment.

Jannsen said that the state’s halt in sending the payments alone would cost the county $191 million this year and $472 million in 2003-04 -- or 30% of the county’s discretionary revenue.

Told of Wesson’s comments Tuesday, some local government representatives were pleased at the prospect that would not lose the payments.

“The cut was a tax holiday when we had a surplus of cash,” said Chris McKenzie, executive director of the League of California Cities. “We clearly don’t have that today. We support restoring the vehicle license fee” to earlier levels “if that is what it takes for the Legislature to keep its constitutional funding commitment to us.”

Hahn, who spoke with Wesson about the fees, also welcomed the speaker’s comments.

“It’s absolutely the right thing to do,” Hahn said. “I’m pleased that Speaker Wesson has agreed that this money from the vehicle license fee rightfully belongs to local government and it shouldn’t be used to balance the state budget. It’s a very welcome message from the speaker, and I’m very pleased by his leadership on this.”

But some Republican legislators warned that restoration of the fees to earlier levels would hurt residents.

“We think it is awful that they are considering tripling the car tax on basically everyone in the state in the middle of lean economic times,” said John Campbell (R-Irvine), vice chairman of the Assembly Budget Committee.

As soon as Thursday, Wesson said, Assembly budget subcommittees will begin combing the state budget looking for places to pare costs and using the governor’s proposal for more than $10 billion in cuts for this year as a blueprint.

Once the car fees have been increased and several billion in cuts made, Wesson said, the Assembly will consider Davis’ proposal to raise the sales tax by a penny on the dollar and boost the personal income tax of wealthy people.

While those issues continue to be hashed out in Sacramento, Los Angeles County supervisors, along with other local officials, are also concerned about Davis’ proposal to shift responsibility for many state programs to counties and defer reimbursements due to local governments for administering state-mandated programs.

Davis has proposed $8.2 billion in new taxes to fund programs that would shift from state to county control. Among those are some of the fastest-growing, including Medi-Cal benefits and In Home Supportive services.

Several supervisors voiced concerns that the funding would not keep pace with program growth.

“To fool the public with some type of revenue stream which is really not a revenue stream is wrong,” said Supervisor Mike Antonovich.

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Times staff writers Beth Shuster, Gregg Jones and Nancy Vogel contributed to this report.