Editor’s note: This weekend I wrote that local governments, including ones in Grass Valley and Nevada City, this week will discuss coping with the loss of revenue from vehicle license fees. Here’s some good background, tracing the policy back to none other than Tom McClintock, whom we elected to “represent” our small towns.
“Republican legislators have been taking credit justifiably for cuts in sales and car taxes,” writes George Skelton in the L.A. Times. “But they’re disingenuously denying any responsibility for soaring university tuitions, the closing of state parks or the shredding of grandma’s safety net.
“They can’t have it both ways.
The so-called car tax — the vehicle license fee — fell by 0.5% of a vehicle’s value, down to 0.65%. In contrast to the sales tax, the vehicle fee is a simple, fair, broad-based levy that makes perfect sense, except for one thing: The anti-tax demagogues have whittled it down to a ridiculously low level.
The No. 1 demagogue was former Gov. Arnold Schwarzenegger, he of the half-dozen Hummers.
But let’s look at the history.
In the Model T days, California cars were assessed by counties as personal property. But there were wide variations in each county’s assessments. So the Legislature in 1935 adopted a uniform statewide rate of 1.75% and renamed the tax the vehicle license fee. The state collected it, but much of the revenue remained with cities and counties.
In 1948, the rate was raised to 2%, where it remained for the next 50 years with hardly anyone squawking.
This changed after Republican James Gilmore got elected governor of Virginia by promising to repeal that state’s car tax.
In California, anti-tax Assemblyman Tom McClintock (R-Thousand Oaks) — a perpetual candidate for higher office and currently a congressman from the Sierra gold country — saw a budding political issue. He introduced a bill repealing the car tax. Gov. Pete Wilson and Democrats agreed to a 25% reduction, to a 1.5% rate.
With the economy booming, Gov. Gray Davis and the Legislature lowered the rate further to 1.3% in 2000, and all the way down to 0.65% in 2001. But when the economy boomeranged in 2003, Davis — using a legally suspect “trigger” provision — raised the tax on his own back up to 2%.
Schwarzenegger’s first act as governor in late 2003 was to knock the tax back down to 0.65%. It was probably his biggest financial mistake, certainly one from which the state never has recovered.
Brown believes the structural hole will never be filled unless the vehicle license revenue is restored.
He and Democratic leaders are toying with sponsoring a 2012 ballot initiative that would raise the fee back to 1.15%. All the extra revenue would go to local governments to help pay for public safety programs the state intends to unload on the locals. That also would reduce the state’s backfill obligation.
The rest of the article is here.
Filed under: Uncategorized | 8 Comments »