Gov.-Elect Urged to Keep Car Tax Hike
Arnold Schwarzenegger won the recall race as a fiscal conservative determined to roll back the car tax rate, resist new taxes and cap state spending. With much of Southern California afire, firefighters stretched thin and thousands of people left homeless, the governor-elect’s promises will face an early test.
Various state and local officials want Schwarzenegger to preserve the car tax rate that tripled under Gov. Gray Davis, contending that the money pays for lifesaving fire and emergency services now being marshaled against the wildfires. They are also hoping Schwarzenegger will raise taxes under a caveat that he carved for himself: Such a move would be considered in the event of a terrorist attack or natural disaster.
“I don’t believe that it’s in the moral fiber of the Legislature or the governor-elect to compound the tragedy experienced by thousands of Californians by reducing the level of public safety on which we rely,” said Assemblyman Mark Ridley-Thomas, a Los Angeles Democrat.
Few officials expect the incoming governor to abandon altogether his campaign pledge to slash the vehicle license fee, though they would welcome some flexibility. During one of Schwarzenegger’s final campaign rallies, a crane operator dropped a wrecking ball onto an Oldsmobile Cutlass, punctuating Schwarzenegger’s commitment to flatten the car tax.
Will the governor-elect heed calls to preserve the threefold increase in the vehicle license fee that raises $4 billion for local government?
“In a word, no,” said H.D. Palmer, a Schwarzenegger spokesman.
Los Angeles Mayor James K. Hahn, a member of the governor-elect’s transition team, said he has spoken privately to Schwarzenegger and left the conversation convinced that he would not budge.
“I don’t believe that the governor-elect is going to change his mind,” said Hahn, whose city receives about $175 million a year in car tax revenue.
Still, Schwarzenegger said he would make certain that local governments do not suffer once the $4-billion tax hike is wiped out. He has vowed to make up the difference, though Hahn said that, given the state’s sagging finances, “I don’t know how.”
If Schwarzenegger insists on repealing the car tax increase, some lawmakers hope he will at least wait. State Sen. Deirdre Alpert, a San Diego Democrat whose chief of staff lost his house in the wildfires, said she would like to see Schwarzenegger take a year to evaluate the state’s finances and assess the fire damage before easing the rate.
“Good leaders, when they reexamine in light of this kind of peril, realize you have to do things differently than you may have hoped. And I’m hopeful he’ll find a way to make sure local services are properly funded,” she said. “I don’t think we even can imagine the dollars this [wildfire] is going to cost, but it will definitely be in the billions.”
Carroll Wills, spokesman for the California Professional Firefighters union, said the 1,500 firefighters from cities like Sacramento, Vacaville and Davis who are now helping fight the blazes would likely be unavailable if not for the car tax money.
“They are able to go down and help because they know there is still a core of fire protection services left at home,” he said. “If this money is taken away, those firefighters will not be able to leave. That would have a dramatic impact on resources available to fight these kinds of fires.
“These events as much as anything spotlight the critical role these revenues play,” Wills said.
Yet that link is not widely understood. Proponents of the car tax concede that the broad public doesn’t see a connection between car tax revenues and weary firefighters struggling to minimize the wreckage.
About 20% of car tax money is used to help pay for local fire departments, according to the California State Assn. of Counties. Rough estimates suggest that the city of Los Angeles spends about $100 million each year in car tax money on fire protection services, Riverside County about $15 million.
Hahn said he would be surprised if one in 10 residents grasps the nexus, creating a political environment where the pressure to keep the tax comes largely from a small, if influential, cadre of mayors, city council members and state lawmakers.
“I remember during the recall campaign when the governor-elect dropped the wrecking ball on the car and how popular that was,” said Patrick McOsker, president of United Firefighters of Los Angeles, which represents more than 3,300 firefighters in the city. “And I remember thinking they might as well drop that wrecking ball on firetrucks, ambulances and police cars, because that’s the effect that the car tax repeal will have here in L.A.”
Outside a local Department of Motor Vehicles office in Los Angeles, sympathy for the tax was scarce.
“I don’t know what they’re doing with the money,” said Orlando Ruiz, 19, a Sacramento resident who works in a pizza shop and attends community college. “As long as I see prices going down, that’s all I care about.... It’s hard enough paying for school. Something has to be lowered. It never ends. We’re a couple of tax increases away from a riot.”
A politically palatable scenario for Schwarzenegger to raise revenue without breaking a campaign promise might be to proclaim that the fire is the sort of natural disaster he said would justify a tax increase. Firefighting costs are expected to run into the hundreds of millions of dollars. The federal government is to pick up 75%. At a time when California is facing a roughly $10-billion budget shortfall, covering the rest could prove difficult.
“I think this qualifies [as a natural disaster],” said state Sen. Richard Alarcon (D-Los Angeles). “Thousands of people are going to be homeless as a result of this event. The economic damage is going to be ongoing for several years. If that doesn’t rise to the level of an emergency that meets the criteria [Schwarzenegger] expressed during the campaign, I don’t know what does.”
For his part, Schwarzenegger said that with the fires still burning, it is too early to say if it is time to raise taxes.
After a helicopter tour Thursday over fire-ravaged parts of the San Bernardino National Forest, Schwarzenegger told reporters:
“We are right now in the middle of the disintegration. I’m not going to make these decisions now. I’m thinking only about how proud I am of the firefighters.”
Times staff writers Faye Fiore and Lance Pugmire contributed to this report.