This Sacramento Bee editorial does an admirable job explaining how big a policy setback Governor Arnold Schwarzenegger's first official act -- lowering the vehicle license fee -- proved to be.
But as an act of governance, his move Monday to roll back the vehicle license fee is indefensible. The car tax, though collected by the state, is a source of revenue for cities and counties. It goes largely to support law enforcement and fire protection.
It is, in fact, the money that pays for the firefighters whom Schwarzenegger praised in his inaugural address for their "bravery" and "determination." Yet after praising them, the new governor put their jobs in jeopardy.
During the boom years, when the car tax was briefly reduced, the state had the money to backfill the loss of local VLF revenue out of state dollars. But that's no longer a responsible option. As the governor's own new finance director, Donna Arduin, reported over the weekend, California has a "staggering" fiscal challenge ahead, including the prospect of running out a cash in the months ahead if action isn't taken to close the hole in the budget, some $10 billion annually, that's been papered over with borrowing and gimmicks.
Here is a prime example of how the policy and political roads can so often diverge.
The vehicle license fee money belongs to cities and counties. The people of California, moreover, voted to reserve this money for them when they passed Proposition 47 in 1986. As the California Constitution now says:
ARTICLE 11 LOCAL GOVERNMENT
SEC. 15. (a) All revenues from taxes imposed pursuant to the Vehicle License Fee Law, or its successor, other than fees on trailer coaches and mobilehomes, over and above the costs of collection and any refunds authorized by law, shall be allocated to counties and cities according to statute.
This Constitutionally protected money has now been replaced by a general fund backfill that is not guaranteed, and is a promise that is going to be exceedingly difficult to meet if the Republicans continue to play their no new taxes game.
No new taxes today, that is. Given that the Republicans want a $15 billion bond to refinance the state's debt, the GOP here is showing that it is just as willing as its national party colleagues to increase the debt tax on our children and future generations.