Car-tax cut bleeds local budgets

By Carolyn Barbre & Reggie Ellis

Saying that people who can afford to purchase big new sport utility vehicles can afford to pay 2 percent of that cost in state licensing fees won't get you elected governor - or allow you to keep the post as was recently demonstrated in the Gov. Davis recall election.

But keeping it at .065 percent means the administration has to provide $600 million in refunds to 3.3 million drivers who paid the higher car tax after Oct. 1.

As a result, administration officials have notified cities and counties that the state will be $254 million short on the December car-tax payment to local governments. And next month car tax payments, officially termed the Vehicle Licensing Fee (VLF), to local governments go from a third of what they expected to zero, which could continue possibly through March.

City Administrator Roy Chace said the City of Exeter budgeted for a worst case scenario - that the city would not receive the majority of the $550,000 in VLF money - back in June when it was preparing the FY 2003-2004 budget.

"We built our budget around the idea that we would only see about $180,000," Chace said.

However, Chace said while the city was able to soften the blow for one year through shrewd planning, another year like this one would devastate the city's budget.

"Then there would be no alternative to making huge cuts," Chace said.

VLF money makes up 24 percent of Exeter's General Fund each year. Fifty-three percent of that goes to pay for local police and fire departments, which is likely where the cuts would have to be made.

"We would be looking at laying off at least five employees," Chace said. "We also wouldn't be able to provide financial assistance to local organizations, such as the Boys & Girls Club."

Tulare County

District 1 Supervisor and incoming board chairman Bill Sanders said the county may lose $28 million by the end of the fiscal year in June.

"This is the most critical situation that local government has ever faced," Sanders said. "We already have a hiring freeze so the next step would be reducing the workforce."

Sanders said the county could borrow against its reserve fund to make up the difference, but that type of action would affect county budgets for years to come.

"The cuts would have to be deep and drastic," Sanders said.

"Non-essential" services such as planning and parks and recreation could be among the first to go. Sanders said other cuts would begin in overtime pay, which could mean services throughout the county could have reduced or limited hours. Sanders, and Tulare County, has been active at the state level for more than a decade. Each year he makes several trips to meet with state lawmakers and officials, make new contacts and to support key legislation. But after 11 years, Sanders said he is losing faith in the system at the state level.

"I continue to see the bickering between the parties in Sacramento and I don't know if it is worth the time to go up there anymore," Sanders said. "I'm going to sit back and wait before wasting another trip. Neither party has done any good in the last 10 years."

As one of his campaign promises, Gov. Arnold Schwarzenegger had promised not to cut into local funds. Finding a way to keep money flowing to cities and counties was supposed to be part of a budget deal that the governor had planned to work out with the legislature last week, but it involved asking voters to authorize borrowing $15 billion to help pay for the car-tax cut. Schwarzenegger also wanted a constitutional spendIng cap and the Legislature failed to come to any agreement on these proposals by the deadline of midnight, Friday, Dec. 5. On Thursday, the Assembly overwhelmingly passed the bond plan. The Senate passed the bond on Friday. The bond measure will now appear on the March 2 ballot. Voters could pass the measure with a simple majority.Tulare County has been active at the state level through the California State Association of Counties. CSAC, along with the California League of Cities and California Special Districts Association, are all pushing for a ballot initiative on the November 2004 ballot that would protect local funds used from state money grabs. The initiative, named the Local Tax Payers and Public Safety Protection Act, would require voters to approve an legislative action by the state that would take away funds used for local police, fire, health care, parks, libraries, transportation and other essential services.

According to CSAC, the state has taken more than $30 billion in local property taxes during the past decade from local governments to payoff money owed by the state. This forces local governments to either raise fees or taxes to maintain current services, or cut back on critically needed services.

The initiative would also require the state to reimburse local governments for the cost of state mandated programs, something Sanders said has been an increasing problem in the past five to six years.

"We spend several hundred-thousands of dollars on state mandated programs that we don't ever get back," Sanders said.

Despite their efforts, Sanders said change will ultimately have to come from the people.

"When they start noticing that the sheriff's deputy or fireman isn't there when they need him, I'm sure they will let their legislators know," Sanders said. "But unless people start calling and writing them now, we may end up there."

Chace was more optimistic about state government under new Governor Arnold Schwarzenegger.

"I believe they are going to do what they should do and eventually find a way to give us back that money," Chace said. "I think by next year the money should be re-established."

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