The latest budget gimmick is state Sen. Mark Leno’s proposal, unveiled Friday, to allow counties to ask voters to raise the vehicle license fee.
The VLF, the dreaded car tax of the 2003 recall, is a big contributor to the state’s chronic budget deficits. Leno, D-San Francisco, is right about that. When Arnold Schwarzenegger cut the VLF rate in 2003, it took about $6 billion a year out of local government – cities, counties, schools. To avoid the political fallout of the politically popular decision, Schwarzenegger promised the state would make up the lost revenue, driving its own deficit that much higher.
We can debate whether the state kept its promise, but that misses the point. The VLF was set at 2 percent of a vehicle’s value for 50 years, until a cash-flush state cut it in 1998 (about the same time lawmakers started jacking up pension benefits, but that’s another story). The governor was granted authority to raise it if finances got tight. Gray Davis did in 2003, and found himself out of work.
The car tax has an important parallel with Proposition 13. In both cases, a state surplus became the justification to cut local taxes. In the fallout, the state has asserted more and more control over local government but hasn’t provided the revenue to match the mandates. One of the few exceptions is redevelopment, and the current spending spree by local redevelopment agencies is every bit as dishonorable as the state’s manipulation of the revenue stream.
What makes Leno’s proposal a gimmick is that it just builds on the same broken foundation. The state needs to overhaul its tax code, and probably its constitution, to match taxes and services, to give elected officials flexibility over both and to allow voters to hold them accountable.
Unfortunately, I’m not betting on that happening any time soon.
– Jim Sweeney