Squander It. Your Duty Is Clear.

The tax that undid Gray Davis is now wending its way back into the pockets of the electorate that made Arnold Schwarzenegger governor.

The first installments of the $3.4-billion vehicle license fee rollback, as the governor promised, have started to arrive in homes across the state. Some of us will get more than $500, others less than $10. The average is $135.

No matter. The question will be, “What should I do with the windfall?”

The first thought, for the frugal among us, might be to put the money into tax-free municipal bonds and watch it grow over the next 30 years. That way we will be certain to earn more than the $1,664 it will take for every man, woman and child to repay the $15-billion bond Schwarzenegger has put on the March 2 ballot -- in no small part because his refund is strangling state finances.

Of course, putting the money into the bond market has consequences, not least that an unsuspecting investor might buy the very debt being issued by the state to write the rollback checks in the first place. What’s the point of that?

The refund is a little cash-back bonus from Sacramento for having fleeced us too long and too often. I say spend the money now, on ourselves, and fast. Here, then, are a few modest suggestions for putting the refund to use.

If, like mine, your check is in the single digits (I got $7.01), you’re probably stuck. Very few indulgences worth indulging can be had for that pittance. You might consider shredding the check, but that would be tantamount to giving the money back, and that’s not why you voted for Schwarzenegger, is it?

You might consider donating the money to one of the governor’s numerous, expanding political slush funds -- already larger, by the way, than any Davis amassed. The small gift might pay considerable dividends. If you got back a couple of bucks on your car tax, imagine what the governor might give you on your income tax.

For those who got $100 to $200 checks, a political contribution is not a viable option. Giving the money to the governor would yield a poor rate of return when weighed against a prospective tax break.

You could spend it on goods and services. Here, again, we hit some turbulence. Can’t buy Lotto tickets, for instance, because that is just another way of funding public education, which would be mimicking what you’ve been excoriating the state Legislature for doing.

Probably the safest way to stay within the bounds of refund mania is to promptly cash the check and squander it. Act like you’re rich. Act like Arnold Schwarzenegger when he bought his first Hummer. That will send a message to those stodgy legislators hung up on things like healthcare and schools.

Now, if you are rich, you’re likely to have a later-model car and be among the elite few who’ll get a $500-plus refund.

May I suggest that you drive your Range Rover straight to the understated atelier of car customizer William Rau and have him install a tiger-maple-and-ebony steering wheel. At $1,500 it’s a bit more than the refund, but consider this: The value added to your car goes untaxed. Now that’s truly abiding by the governor’s idea of civic spirit.

Of course, the refund may be a ruse. By putting quick-spending money into everyone’s pockets, the governor may have unleashed a stealth weapon to revive California’s sagging economy. Sales tax revenues continue to fall, and 8% of $3.4 billion is a lot of money. It goes right into state coffers.

And deposit that check from the state controller with care. You’ll have to declare it as income on your state and federal returns. What budgetary profligacy will that fund?

Perhaps it’s better to skip out to Vegas on a tax-deductible business trip and blow the whole wad on red or black. At least then California won’t see a penny of it ever again.

Greg Goldin contributes to numerous publications, including LA Weekly and Los Angeles magazine.