Car tax could cost city $4M

Josh Kleinbaum

Now that Gov. Arnold Schwarzenegger has made good on a campaign

pledge to rescind increased vehicle-license fees, Burbank officials

are trying to determine if the city lost out on a big pot of gold.

With Executive Order No. 1, which repealed a 200% increase to the

car tax instituted by Gray Davis before his recall, Schwarzenegger

this week wiped out a $4-million revenue source for the city of

Burbank. The governor said he expects the state Legislature to cover

the $4 billion due to local governments.

Burbank officials, though, are skeptical.

“Basically, we’ve been on a wait-and-see, and we’re following it

closely,” Financial Services Director Derek Hanway said. “We hope the

amount gets backfilled as promised, and the city will definitely be

pushing for that.”

Hanway said the extent of the damage inflicted on Burbank’s budget

depends on whether the city loses the revenue temporarily or

permanently.

“If it’s just the balance of this year, we can take it from

existing resources [without making budget cuts]. We have some funds

we can tap into,” Hanway said. “If it’s long-term, we’re definitely

going to have to make cuts in future years.”

The Legislature convened in a special session Tuesday to discuss

budget issues, but leading Democrats have scoffed at the idea of

funding the vehicle-license fee backfill.

“I think [Schwarzenegger] should come up with the money,” said

Assemblyman Dario Frommer (D-Burbank). “It’s incumbent upon him as a

leader, having repealed the vehicle-license fee and putting a

$4-billion hole in our budget, to propose how he intends to backfill

local governments. We don’t have the money.

“What’s shocking is that he would simply rescind that without

coming up with a plan to replace it. It’s only his first day, so

maybe he’s got something in his pocket we don’t know about.”

Burbank officials hope that is the case. The money the city

receives from the car tax goes into the general fund, which is used

to finance the police and fire departments and other essential

services.

The moral, Hanway said, is to keep local money in local hands.

“A lot of people don’t know the background of [the vehicle license

fee], that it was a local revenue and it went to the state years ago

to be more effectively administrated,” Hanway said. “But once the

state gets involved, what it wants, it takes.”