City leaders ponder car tax

June Casagrande

Just weeks after Gov.-elect Arnold Schwarzenegger rode into office on

an anti-car-tax crusade, city officials are wondering where the

money’s going to come from.

Despite this lingering math mystery, Newport Beach leaders are

confident that Sacramento leaders will make good on their word to

continue send money to cities.

“From what the new governor has said, he has every intention of

trying to repeal the car tax, but the message to us is, ‘Don’t worry.

We’ll continue to backfill it to the cities,’” said Mayor Steve

Bromberg, who endorsed Schwarzenegger’s candidacy. “No one’s sure yet

from where, but I’m comfortable with it. His financial experience is

significant. I think people get caught up in the flash of the

Terminator. But when you talk one-on-one with him, this man

understands finances.”

The license fee is actually a city tax, not a state tax. The state

collects the fees from people registering their cars and then sends

the money to the cities.

During the financial boon of the late 1990s, Gov. Pete Wilson

decided to pass along some of the state’s good fortune to taxpayers

by chipping in about two-thirds of the fee on each vehicle. Wilson’s

plan, which was implemented by Gov. Gray Davis, was to reduce the

amount of money it collects from car owners and dip into the state’s

own treasury to make up the difference to the cities. This is called

a “backfill” by the state to the cities.

When the state hit the skids financially, Davis saw this backfill

as one place to squeeze out some needed cash. He announced he would

stop the backfill, which would effectively triple the rate people pay

to register their cars, a return to the pre-1998 rate.

Voters expressed their disapproval with this and other Davis moves

by recalling him earlier this month and putting in a candidate who

vowed to repeal the car tax altogether. But if the state is to

continue to send money to cities, that money will have to come from

somewhere.

“It’s a concern, but you have to remember that we haven’t had that

money in the budget anyway,” City Manager Homer Bludau said.

Last year, city leaders had already braced for the worst possible

news from Sacramento.

“By the time we adopted our budget, we didn’t know what was going

to happen to the state budget. We eliminated the vehicle license fee

as a revenue source. We didn’t put it in our estimated revenues,”

Bludau said.

And by not counting their chickens before they hatch, city leaders

hope they can continue to prepare for the worst while hoping for the

best.

* JUNE CASAGRANDE covers Newport Beach and John Wayne Airport. She

may be reached at (949) 574-4232 or by e-mail at

[email protected].