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State Triples Vehicle Fees The increase will cost the average driver $158 more a year — slightly higher than initially projected — and provide about $4 billion to help plug the state's $38-billion budget shortfall. Bills with the increased rate will be sent to drivers beginning Aug. 1, affecting car owners whose registration is due on or after Oct. 1. Drivers throughout Southern California voiced anger about the sudden tax hike and some even suggested it may force them to trade in their vehicles for cheaper models. The fee on a new Chevrolet Impala purchased for $24,920, for example, will rise from what would have been $162 to $498 in the first year of ownership. "We're a struggling family financially already," said Robin Lloyd, a 39-year-old mother of two from Murrieta who this year paid more than $1,000 to license four cars at the Costa Mesa field office in Orange County. "If they triple that, it's like a house payment for us. I think they're doing it just to cover up their mistakes. We're all paying the price of poor management." "Without the increase we would face a severe public safety emergency," said Gov. Gray Davis, noting the money generated will go to preserve aid to local governments during the budget crisis. "I will not preside over a public safety emergency." The so-called "car tax" increase represents the first tax hike enacted by state officials to deal with California's huge shortfall. Lawmakers remain deeply divided over how to bridge that shortfall with only 10 days left in the fiscal year and government operations threatening to grind to a halt by late summer absent a spending plan. Democrats refuse to make further spending cuts and Republicans refuse to raise taxes. Assembly Democrats have become so frustrated by the anti-tax stand taken by all but one Republican that they will abandon the Capitol most of next week to lobby local officials up and down the state. The Democrats will urge city and county officials to pressure Republicans to support tax increases on sales, tobacco and the income of high earners that they argue are necessary to avoid crippling cuts in funding for education, medical care and aid to the elderly and disabled. The car tax is one Democrats say they can increase administratively, without a legislative vote that would require at least eight Republicans to help Democrats reach the required two-thirds majority on tax issues. When the fee was reduced under then-Gov. Pete Wilson in 1998, a provision of the law said that if the state runs out of money the rate can be automatically restored. As of late Thursday, all the money left in state coffers was borrowed from banks, Department of Finance director Steve Peace declared in a letter to the Department of Motor Vehicles, which collects the fees. "We are operating today totally on borrowed cash," Peace told reporters at a news conference. "This is the first time we have been in a position where we have none of our own money." Republicans say the rate hike is illegal. They argue that as long as there is money in the state's general fund — borrowed or not — the increase cannot take effect without legislative approval.
"The state is not entitled to that money," said Sen. Tom McClintock (R-Thousand Oaks), speaking to reporters in the lobby of the attorney general's office, where he filed proposed ballot initiatives to roll back the tax rate to $1 or abolish it altogether.
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