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    Council Urges Sacramento To Trigger Higher Vehicle License Fees And Let City Hall Keep Its Current Cut; Howard Jarvis Taxpayers Ass'n Blasts Attempted "Car Tax" Hike, Vows Court Fight

    (January 28, 2003) -- The LB City Council has urged Sacramento to trigger increased CA Vehicle License Fees (VLF) so City Hall can keep its current cut of the fee that means millions to the city's General Fund.

    DMV figures indicate this could raise an average car registration by about $115 a year, boosting the average annual fee from about $55 to about $170 (your fee may be higher or lower).

    The Howard Jarvis Taxpayers Association has blasted attempts to hike the VLF, which it calls the "car tax," and has vowed a court battle if state lawmakers do so.

    The Council's vote comes just weeks after it voted to include in its annual state legislative agenda support for changing Proposition 13 to make it easier for local government to raise property taxes. (To view coverage, click here)

    At the Council's January 28 meeting, 2d district Councilman Dan Baker and 6th district Councilwoman Laura Richardson are scheduled to present a report on their recent trip to Sacramento in which they asked the legislature (in the words of their agendizing memo) to "restore VLF funds for use by local governments."

    In 1998, the state legislature lowered the VLF cost to drivers by effectively tapping into the state's then-surplus and backfilling to cities amounts not paid by drivers, allowing cities to continue to receive their share of the VLF fee.

    Five years later, the states former surplus is a deficit...and CA Gov. Gray Davis has proposed diverting VLF money to help cover the red ink (the legislature spends more than the state takes in.) LB City Hall is also running a deficit (the Council spends more than the city takes in) and wants that VLF to avoid an even deeper budget hole than it already faces.

    On January 21, the City Council voted 7-0 (Baker in Sacramento, Richardson in transit) to adopt a resolution (pertinent portions below) urging the Governor and legislature "to implement the provisions of current law providing for the reduction of the VLF offset in bad economic times and to restore the VLF in an amount necessary to reduce the VLF backfill."

    This would effectively raise drivers' VLF cost to what it was before 1998...but would allow millions to keep flowing to City Hall.

    The Council resolution adds, "[T]he City of Long Beach hereby expresses its profound appreciation to the legislators who support such VLF restoration legislation."

    The only Councilmember speaking to the matter was 4th district Councilman Dennis Carroll, who said "I want to go on record wholeheartedly supporting those efforts of everyone at the city level to allow us to retain those monies which would make valid and reliable that three year budget plan that has been prepared by our city staff. We are cutting and proposing to cut to the bone...and this [losing the VLF funds] would begin to remove the bone..."

    Councilman Carroll also urged "those members of our city who are adept at the internet and wish to involve themselves in supporting their city government, please write your local legislator and the Governor. We need this Vehicle License Fee to continue operating."

    [ maintains permanent email links to the Governor and LB area Sacramento lawmakers on the left side of our front page and article pages. Just click on Sacramento.]

    Former LB Councilwoman, now Assemblywoman Jenny Oropeza (D., Carson-LB) tried last year to raise the VLF (the measure failed) and supports legislative efforts to raise it now.

    Last week, the Assembly Budget Committee, chaired by Oropeza, approved legislation that would trigger a $4 billion increase in vehicle license fees. In a written release, Assemblywoman Oropeza called the legislation "a significant and responsible first step toward addressing our budget crisis."

    Meanwhile, the Howard Jarvis Taxpayers Association has blasted the VLF as "a very regressive tax falling disproportionately on working class California families." A written statement by the group's president, Jon Coupal, said it was "ironic that at the same time that the legislature is increasing funding for its own perks, it is taking money away from the hardworking citizens of this state."

    Mr. Coupal added, "If politicians try to take [the 1998 VLF reduction] away, they will have a fight on their hands. We will also make sure every Californian knows which legislators are in favor of raising taxes."

    The group vowed a court fight if the legislature moves to raise the VLF:

    "The Constitution -- thanks to Proposition 13 -- mandates a two-thirds vote of each house for any tax increase," Mr. Coupal said. "Not only will an increase in the car tax incur the wrath of voters, but there is also a good chance that the courts would invalidate such legislation should it pass," he added.

    Pertinent portions of LB City Council resolution follow:

    WHEREAS, the VLF backfill accounts for $27 million in the general fund, which equates to approximately 10% of our general fund budget, with roughly two-thirds of that funding committed to support essential public safety services for our residents; and

    WHEREAS, revenues derived from the VLF and backfill are of critical importance in funding vital local public health and safety services; and

    WHEREAS, any failure by the Legislature to maintain the VLF backfill or restore the VLF to pre-rebate levels will cause widespread disruption in local government services essential to the well-being of California citizens and their cities and counties; and

    WHEREAS, Governor Davis' proposal to divert $4 billion in local VLF backfill payments over the next 17 months fails to honor the 1998 commitment and is a direct assault on local services that will be felt by every California resident; and

    WHEREAS, Long Beach alone could lose up to $12 million this fiscal year and another $19 million next Fiscal Year (FY 04); and

    WHEREAS, before hearing of the Governor's new proposal, Long Beach City staff had already begun developing a three-year plan to address the City's structural deficit, which included serious reductions in service, significant impacts to employee compensation and/or benefits, and approximately a 15 percent reduction in the City's workforce; and

    WHEREAS, without the consideration of the Governor's budget proposal, the City of Long Beach was already facing potential layoffs in key departments and with this proposal, layoffs will be certain and swifter than we had anticipated, with even public safety personnel at risk of job loss; and

    WHEREAS, cities are limited in raising fees and taxes by Proposition 218, while the State has the ability to do this without the requisite vote of the people; and

    WHEREAS, the City of Long Beach currently loses over $15 million annually in property taxes to the State, due to the revenue shift created by the Educational Revenue Augmentation Fund (ERAF) in 1991; and

    WHEREAS, shifting $4.2 billion in locally controlled revenues for local services is neither equitable nor fair. No state program or department has been asked to shoulder such a disproportionate share of the budget pain. These cuts come on top of the nearly $5 billion each year that is transferred from local services to fund state obligations

    NOW, THEREFORE, the City Council of the City of Long Beach resolves as follows:

    Section 1. That if the state General Fund can no longer afford the expense of part or all of the VLF "backfill" that the Legislature and Governor of California are hereby respectfully urged to implement the provisions of current law providing for the reduction of the VLF offset in bad economic times and to restore the VLF in an amount necessary to reduce the VLF backfill.

    Sec. 2. That the City of Long Beach hereby expresses its profound appreciation to the legislators who support such VLF restoration legislation.


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