Reprieve on the Car Tax
By Calf. State Senator Tom McClintock

When I began the drive to abolish California's car tax in 1998, one of the more interesting aspects of the polling was that registered Democrats favored getting rid of the tax as much as Republicans. Hispanic voters were particularly keen on removing the odious levy.

And all voters were convinced that a Democrat would be more prone than a Republican to favor abolition "because it would help working families like mine."
How ironic that having come safely through the election, the first major act of the legislature's Democrats was to triple the car tax.
By vetoing the measure, Gov. Davis rejected the twin canards that have been served up as an excuse to betray their constituents.
The first, parroted by liberal city officials, is that without raising the car tax, "local fire and police protection will be devastated." Oh, please.
In the five years since the car tax was reduced, local governments have not lost a penny. In fact, only a vote of the state legislature could eliminate support to local government, and the budget committees of both houses have unanimously rejected such a move.
The other is that earlier reductions in the tax have "blown a $4 billion hole" in the state's revenues. This, too, is demonstrably false.
In the four years since Gray Davis took office, inflation and population have grown at a combined rate of 21 percent. AFTER the car tax was reduced and AFTER the dot-com collapse and AFTER the state's revenues plunged, state general fund revenues have grown 28 percent -- outpacing combined inflation and population growth by fully a third. The budget crisis is not a revenue problem.
Nor is California's current car tax unreasonably low. After the reductions, it is still the highest among the five largest states, and indeed is twice as high as the next runner-up.
In order to enact this tax over unanimous Republican objections, the Democrats ignored the Constitution's requirement for a 2/3 vote and illegally enacted the measure with a simple majority. By vetoing it, the governor recognized that the courts would have quickly struck it down anyway.
But taxpayers aren't out of danger yet. Current law does trigger an increase in the car tax if there are "insufficient funds" in the state's operating account to maintain the state's commitment to local governments. There are two circumstances that could create this condition. One is if the Controller were simply incompetent and failed to maintain sufficient cash in the general fund to meet the anticipated obligations of the state. The other is if he could no longer arrange for the short-term borrowing necessary to do so.
Neither of these events has ever occurred in the history of California. But if the state's unraveling finances are not corrected soon, California could end up where no state has gone before: insolvency. At that point, the state's car tax could triple anyway, and that may indeed be the Democrats' end game.
In evidence of that, they made the few spending reductions they grudgingly adopted conditional on the governor's approval of the car tax increase. Thus, by vetoing the tax hike, he also effectively vetoed the spending reductions. And so, the state's excessive rate of expenditures continues unabated.
If the Democrats expect to triple the car tax by driving the state off a financial cliff, they may find the voters bailing out on them. In just five days, the mere threat of the tax hike produced 5,000 volunteers on my web site to stop it by referendum or initiative.
The legislature has now lost two full months that were crucial to prevent the financial collapse of the state of California, but there is still time. An immediate 9.5 percent reduction in the approved rate of spending for this fiscal year - if held through the budget year - would correct California's financial spiral. But every day of delay makes the necessary spending reductions all the steeper and insolvency all the closer.

Note: Calf. State Sen. Tom McClintock is one of the few Republicans in the Calf. Senate and represents the 19th State Senate District, which covers an area Northwest of the Los Angeles downtown area. His web site is www.senate.ca.gov/mcclintock

Filed February 2003