State Triples Vehicle Fees
The Davis administration tripled the state vehicle license fee Friday, sending Republican legislators scrambling to mount legal challenges to stop the increase and ballot initiatives to abolish the tax altogether.
The increase will cost the average driver $158 more a year -- slightly higher than initially projected -- and provide about $4 billion to help plug the state’s $38-billion budget shortfall. Bills with the increased rate will be sent to drivers beginning Aug. 1, affecting car owners whose registration is due on or after Oct. 1.
Drivers throughout Southern California voiced anger about the sudden tax hike and some even suggested it may force them to trade in their vehicles for cheaper models. The fee on a new Chevrolet Impala purchased for $24,920, for example, will rise from what would have been $162 to $498 in the first year of ownership.
“We’re a struggling family financially already,” said Robin Lloyd, a 39-year-old mother of two from Murrieta who this year paid more than $1,000 to license four cars at the Costa Mesa field office in Orange County. “If they triple that, it’s like a house payment for us. I think they’re doing it just to cover up their mistakes. We’re all paying the price of poor management.”
“Without the increase we would face a severe public safety emergency,” said Gov. Gray Davis, noting the money generated will go to preserve aid to local governments during the budget crisis. “I will not preside over a public safety emergency.”
The so-called “car tax” increase represents the first tax hike enacted by state officials to deal with California’s huge shortfall. Lawmakers remain deeply divided over how to bridge that shortfall with only 10 days left in the fiscal year and government operations threatening to grind to a halt by late summer absent a spending plan. Democrats refuse to make further spending cuts and Republicans refuse to raise taxes.
Assembly Democrats have become so frustrated by the anti-tax stand taken by all but one Republican that they will abandon the Capitol most of next week to lobby local officials up and down the state. The Democrats will urge city and county officials to pressure Republicans to support tax increases on sales, tobacco and the income of high earners that they argue are necessary to avoid crippling cuts in funding for education, medical care and aid to the elderly and disabled.
The car tax is one Democrats say they can increase administratively, without a legislative vote that would require at least eight Republicans to help Democrats reach the required two-thirds majority on tax issues. When the fee was reduced under then-Gov. Pete Wilson in 1998, a provision of the law said that if the state runs out of money the rate can be automatically restored.
As of late Thursday, all the money left in state coffers was borrowed from banks, Department of Finance director Steve Peace declared in a letter to the Department of Motor Vehicles, which collects the fees.
“We are operating today totally on borrowed cash,” Peace told reporters at a news conference. “This is the first time we have been in a position where we have none of our own money.”
Republicans say the rate hike is illegal. They argue that as long as there is money in the state’s general fund -- borrowed or not -- the increase cannot take effect without legislative approval.
“The state is not entitled to that money,” said Sen. Tom McClintock (R-Thousand Oaks), speaking to reporters in the lobby of the attorney general’s office, where he filed proposed ballot initiatives to roll back the tax rate to $1 or abolish it altogether. “They are breaking the law by taking it.”
If McClintock is able to get hundreds of thousands of signatures needed in the coming months, his measures will be on the ballot in November 2004.
McClintock accused the Davis administration of exploiting a clause in the state Constitution that makes it extremely difficult for opponents of the tax to stop the state from collecting it until the appeals process has been exhausted in a court challenge. That could take years.
“They know it is an illegal act but the Constitution prevents injunctions to prevent collections of the tax, so they know they can get away with it for the next several years,” he said, adding that Peace’s argument that the tax hike is legal is “absolute horse manure.”
Others rushed in to defend the increase.
A large coalition of police and firefighter groups promised to campaign vigorously against any measure to repeal the car tax, since their services are supported by car tax revenue. In a letter, the group warned that any lawmaker who supports a repeal “is anti-public safety and is putting California citizens and our communities at risk.”
Several Republicans rallied behind a lawsuit that the Howard Jarvis Taxpayers Assn. is preparing to file in the coming days that would block the increase, but not abolish the tax altogether.
“When [taxpayers] get that bill, they’re going to get mad,” said Assemblyman Tony Strickland (R-Thousand Oaks) from a Simi Valley auto dealership, where he announced support for the lawsuit. “I think it’s wrong that people would have to choose between a gallon of milk and registering a car.”
Assemblyman Tim Leslie (R-Tahoe City) said the tax hike is “sneaky
Meanwhile, the DMV braced for panicked motorists trying to pay their car tax bills before the rates go up. Officials from the department said that is not an option.
“Nothing will be served by showing up at the DMV and attempting to pay the fee early,” said Bill Cather, legislative director for the department.
At DMV offices across Southern California, drivers expressed anger over the rate hike.
Nicholas Burson is thinking he may no longer be able to afford his 2003 Lincoln Navigator, which currently carries a $600-a-year license fee. At $1,800 a year -- and with the price of gas eating a hole in his wallet -- the SUV might cost too much.
“There’s a lot of things that are making me start to question this vehicle,” said the 25-year-old from Huntington Beach. “A Ford Focus seems awfully appealing right now.”
As he left a DMV office near downtown Los Angeles, Kyung-Min Huh, 27, said he was upset over the tripled tax.
“I don’t know how I’m going to pay extra, but I guess I’ll have to,” he said.
Some motorists even suggested the rate hike is reason to support the mounting effort to recall Gov. Gray Davis from office.
“I’d recall [Davis] if I could,” said Jef Newby, 24, as he stood in line at the Ventura DMV office to register his 1988 Honda Accord. “Fees are bad enough as it is.”
Others, however, were more understanding, saying the alternative to paying higher taxes was worse.
Arturo Espinoza, a 42-year-old auto mechanic from Ventura, said he’d rather pay more in vehicle fees than have no freeways to drive on. “Somebody’s got to pay for them -- roads don’t come out of the ground,” he said.
Times staff writers Mike Anton, Hugo Martin, Joy Woodson and Andy Olsen contributed to this report.