Bid to End Car Tax Puts Officials in High Gear

Jeff Knight’s assessment of a proposed ballot measure that would wipe out car taxes?

“Everyone’s going to vote for it,” said the 23-year-old Simi Valley man as he prepared to pay $71 in vehicle license fees at a Department of Motor Vehicles office.

Never mind that local governments get the willies just thinking about Assemblyman Tom McClintock’s (R-Granada Hills) plan to rid California of its registration fees. Or that counties and cities depend on the cash to pay for such things as pothole repairs, police protection and libraries.

For Knight and other motorists interviewed last week, getting rid of the tax is as appealing as tooling down Pacific Coast Highway in a cherry-red convertible.

“People don’t worry about city services,” said Knight, a college student who works for a telephone marketing company. “As long as the streets are still there in the morning, they’d rather keep the dollars in their pocket.”

That response makes local government officials shudder. So much so that, though McClintock has yet to formally kick off a campaign to put the initiative on the ballot, they are already joining forces to oppose it.

Cities and county government in Ventura County are planning education campaigns to inform voters that car fees are needed to pay for everything from police cars to city parks, from city landscaping to health care for the poor. Labor unions and the education lobby are expected to join cities in opposing elimination of the fees, which bring in nearly $3 billion across California.

“We’re going to fight this battle for the second year running,” said Olav Hassel, a Thousand Oaks program manager. “Nobody likes to pay taxes. But how do they expect us to provide services without funding?”

Skirmishes over the car tax underscore a widening distrust between cities and counties and the Sacramento politicians who decide how revenues should be distributed. Finance managers are wary of the Legislature’s penchant for generously doling out money--only to take it back when times get tough, local government advocates say.

Half a dozen panels are meeting across the state to seek agreement on how to hand out money in a way that makes sense to taxpayers and allows local governments to reliably plan budgets. One of them, the California Governance Consensus Project, has been discussing solutions for more than four years, the group’s director, Jim Connor, said.

Local governments have made clear they want a guaranteed source of revenue they can call their own, Connor said. One proposal is to increase the proportion of property taxes that goes to cities and counties because local government sees that as more stable funding, he said.

The group plans to unveil its recommendations in mid-May.

Despite McClintock’s pledge that fee revenue would be replaced by other state dollars, city and county officials are suspicious. They question the reliability of such financing if the economy turns sour. City and county governments in Ventura County divide a $75-million pot annually.

“We get a good hunk of money from this and we just don’t trust the state to give it back,” said Sheryl Lewanda, budget manager for the city of Ventura, which receives $4 million in car fees each year.

Cities are wary--in part, because of history.

Lawmakers shifted $3.4 billion in local property taxes during a recession in 1991 and still have not given that money back, said David Jones, a lobbyist with the League of California Cities.

Although the state’s treasury is flush now, the economy will not stay good forever, Jones said. Even if the state is prohibited from reducing the amount of money flowing to cities and counties from registration fees, there is nothing to stop legislators from scooping up another pot of money, he said.

“They could still come in and say, ‘Well, let’s take more of your property taxes,’ ” Jones said. “Absent of complete protection of city revenues, it does not make sense.”

Jones and other opponents of the initiative say the public will vote against it once voters understand how vehicle license fees are used. Young Hwan Bae, a Los Angeles paint contractor, is one motorist who does not mind paying $104 to register his 1988 Dodge van.

“It’s fair,” said Bae, visiting a DMV office last week. “This money is needed. It’s the price you pay for having good police and fire service.”

McClintock, who is running for a Senate seat being vacated next year by Simi Valley Republican Cathie Wright, said he will decide within a week whether to mount a full-scale campaign aimed at getting the vehicle license fee question on the March 2000 ballot.

The initiative would amend the state Constitution to exempt the first $10,000 of a vehicle’s value from taxation and to phase the fees out completely over three years. Before moving forward, McClintock is attempting to raise $500,000 to $750,000 in pledges to fend off an expected vigorous opposition from public employee unions and other groups.

This is the conservative lawmaker’s second attempt to abolish car fees. He and state Sen. Ray Haynes (R-Riverside) submitted bills last year calling for the fee elimination and for state money to compensate local government for lost revenues.

During budget negotiations, former Gov. Pete Wilson agreed to a compromise bill that reduced the fees by 25% and replaced the revenue loss with general fund money. McClintock has reintroduced his bill this year, but with Democrats ruling the statehouse and the Legislature, Sacramento lobbyists say it has little chance of passage.

McClintock said the ballot initiative, which would be voted upon by the public, has a much greater chance of winning. A car tax committee that has been in place a year did polling earlier this year and found strong support for the measure, he said.

Campaign workers must collect 670,816 signatures by Aug. 23 to qualify the initiative for the ballot. McClintock said getting the needed signatures will have the bonus of giving him leverage with dealing with lawmakers on this year’s legislative proposal.

When politicians “feel the heat, they see the light,” he said. “But if we cannot qualify the initiative, I think [the legislative proposal] is dead.”

McClintock disputes local government’s contention the measure would jeopardize money for cities and counties. The initiative calls for creation of a Local Government Independence Fund that would replace vehicle license fees with a constitutionally guaranteed slice of state sales tax dollars.

Cities and counties are panicked, McClintock said, “because you have a lot of liberal ideologists who simply can’t stand the thought of tax cuts in any form, even tax cuts that do not affect their government in the slightest.”

Ventura County, however, has many cities run by conservative Republicans who say they are simply trying to protect city budgets from unfair raids.

“We work long and hard to run a fiscally conservative organization,” said Mike Sedell, city manager of Simi Valley. “But when you start taking these revenues away, you are cutting into meat.”

Many cities receive a significant chunk of their revenues from car fees. In Simi Valley, for instance, such fees account for 17% of all revenue. In Ventura, the figure is 8%, and in Thousand Oaks it is 17%.

County government receives $47 million in vehicle license fees each year, about 8% of the budget, said Bert Bigler, finance administrator. Most of the money is discretionary, meaning it can be spent on anything supervisors choose, Bigler said. “If it went away, it would have a tremendous impact on the county’s ability to pay for all of its programs,” he said.

Created in 1935, the fee is an annual levy on all registered vehicles. The fees range from about $15 for a clunker to several hundred dollars for a new sports utility vehicle. The levy is calculated on a depreciating scale based on a vehicle’s value.

Vehicle license fees were initially fixed at 1.75% of a vehicle’s worth, but increased to 2% in 1948. With last year’s legislation, it dropped to 1.5%. The average vehicle owner this year pays about $139 annually.

McClintock says it should be eliminated so state government can make good on a promise to roll back tax hikes enacted during the recession. The proposed measure has the backing of the Howard Jarvis Taxpayers Assn., National Tax Limitation Committee and other anti-tax groups.

To no one’s surprise, it is also popular with many car owners. James Quinn said he is all for it because he believes California’s taxes are too high.

The 34-year-old Moorpark man said he paid $79 to license his 1991 Mazda MX3 in Hawaii, but must cough up $141 in California. Together with other fees to bring their cars from Hawaii to California, Quinn and his fiancee will spend $900 to register two vehicles, he said.

“All that money just to bring our cars back into the state of California,” said Quinn, as he prepared to enter the DMV office in Simi Valley. “That’s a big chunk when you’re trying to get settled in.”

Holly Harvey, 19, of Simi Valley said she might vote for the measure “. . . if I knew the city was going to get other money.”

But other drivers say elimination of the fee is not necessary. Karl Kurtz said he does not mind paying $480 to register his 1997 Pontiac Bonneville because the city needs the money to provide services.

But Kurtz, 57, an engineer, believes fees should be higher the older a car becomes to promote purchase of new cars and to rid the roads of gas hogs, he said.