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    Collision Course: Auto Club of So. Cal. Opposes Vehicle License Fee Hike Sought By LB City Hall...And Releases Figures Indicating What Some Drivers Would Pay

    (January 31, 2003) -- The Automobile Club of So. Cal. has come out in opposition to legislation -- which LB City Hall is feverishly supporting -- that could roughly triple the annual Vehicle License Fee (VLF) paid by many drivers, sending the average annual fee rocketing from roughly $55/yr. to about $170/yr.

    In a written release, the Auto Club of So. Cal issued a chart (below) reflecting its research into what some drivers would pay if the VLF is raised.

    A bill passed by the CA Assembly and sent to the CA Senate on January 28 ( posts below the names of those voting for and against) would effectively raise the VLF to 2% of the vehicle's assessed value for drivers. All other real and personal property is taxed at 1%. The current VLF rate for drivers is .65 percent.

    Vehicle* Price Current Rate
    (.65 percent)
    1 percent 2 percent
    2001 Mercury Grand Marquis $25,360 $132 $203 $304
    2000 Ford Explorer $18,000 $82 $126 $252
    1998 Honda Accord $19,485 $63 $97 $196
    (* Note: Chart assumes only one owner of vehicle and that the vehicle was purchased in the year stated.)

    In a letter sent to state lawmakers this week, the Auto Club of So. Cal. said any tax increases of the magnitude proposed for the VLF should be subject to a 2/3 vote of the legislature.

    As previously reported by, the Howard Jarvis Taxpayers Association has blasted the legislation an end-run around Prop. 13's requirement for a 2/3 vote in both the Assembly and Senate to raise taxes...and has vowed a court fight to challenge the increase in what it calls the "car tax." The Jarvis group has also called the VLF "a very regressive tax falling disproportionately on working class California families."

    [As separately reported by, the LB City Council quietly voted late last year to support changing Prop. 13 to make it easier for local government to raise property taxes. To view coverage, click here.]

    In 1998, the CA legislature lowered drivers' VLF cost by using CA's then-surplus to continue sending City Halls the difference (a "backfill"). With CA's surplus now a deficit (state spending exceeding state revenue), CA Gov. Gray Davis has proposed ending the "backfill" to help cover the red ink.

    This has sent LB City Hall into a panic, since the backfill currently provides millions for LB's General Fund (for items ranging from police and fire to perks and pensions). LB's City Council is already spending more than it's taking in even with the backfill.

    On January 21, the City Council passed without dissent a resolution (verbatim text below) saying in effect that if the state could no longer reduce the VLF cost for drivers (because of the state deficit), drivers should pay the full 2% VLF paid before 1998 to continue providing the backfill for City Hall.

    LB Councilmembers Dan Baker, Laura Richardson and LB Mayor Beverly O'Neill travelled to Sacramento to urge state lawmakers to do this. On January 28, the CA Assembly passed and sent to the CA Senate a bill that would effectively raise the VLF paid by drivers. posts below the recorded vote of CA Assemblymembers on this.

    AUTHOR: Wesson
    TOPIC: Vehicle license fees.
    DATE: 01/28/2003
    MOTION: AB4 Wesson Assembly Third Reading First Extraordinary Session
    (AYES 45. NOES 34.) (PASS)


    Berg, Bermudez, Calderon, Canciamilla, Chan, Chavez, Chu, Cohn, Corbett, Diaz, Dutra, Dymally, Firebaugh, Frommer, Goldberg, Hancock, Jerome Horton, Jackson, Kehoe, Koretz, Laird Leno, Levine, Lieber, Liu, Longville, Lowenthal, Montanez. Mullin, Nakano, Nation, Negrete McLeod, Nunez, Oropeza, Pavley, Reyes, Ridley-Thomas, Salinas, Simitian, Steinberg, Vargas, Wiggins, Wolk, Yee, Wesson


    Aghazarian, Bates, Benoit, Bogh, Cogdill, Correa, Cox, Daucher, Dutton, Garcia, Harman, Haynes, Shirley Horton, Houston, Keene, La Malfa, La Suer, Leslie, Maddox, Maldonado, Matthews, Maze, McCarthy, Mountjoy, Nakanishi, Pacheco, Parra, Plescia, Richman, Runner, Samuelian, Spitzer. Strickland, Wyland


    Campbell also posts below pertinent portions of the Jan. 21, 2003 City Council resolution:

    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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