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Car Tax Hike Urged Since the release of the March 7 opinion, Davis administration officials have said that they would accept the restoration of the car fees if lawyers concluded that the law required it under these circumstances. Several Democrats, including some who have been critics of Davis, believe that he can begin to redeem himself at least among Democratic activists by presiding over the car tax increase. Those lawmakers believe that such a move would help him show himself as a leader. "In many instances, he overcompensates or panders to [the conservative] part of the electorate," said Sen. Gil Cedillo (D-Los Angeles). "That part of the electorate is never going to be with us." Assemblywoman Jackie Goldberg (D-Los Angeles) said that although Davis has expressed concern about incurring the wrath of Republicans by raising the car tax, not raising it could be more dangerous politically. "Let's say he doesn't do it and cuts $4 billion," Goldberg said. "You don't think that is going to [anger] people?" Some Republicans vow to challenge the car fee increase, which they view as a tax hike. Sen. Tom McClintock of Thousand Oaks has warned that he will file papers in court to stop the car tax hike "within minutes" of its taking effect. He said that raising the car tax will lead to an outright "tax revolt." Such a challenge could ultimately prolong budget negotiations, as a few Republican votes are needed to get a budget passed by the two-thirds majority required by the state Constitution. But other Republicans, such as Assemblyman Keith Richman (R-Northridge), said that although they oppose the car tax increase, it may be inevitable and it is therefore reasonable to factor it into budget solutions. Wall Street analysts are watching closely. They want to see Davis offer a plan that calls for a secure revenue source that could back up the state's borrowing need. Internal documents from the state Department of Finance show that another key part of the revised budget could be a plan to borrow as much as $10 billion to pay off the deficit. Wall Street firms have warned that loans of that size may not be available to the state if lawmakers do not approve new taxes, such as the vehicle license fee increase or a new sales tax. School officials, meanwhile, are closely watching as Davis prepares to unveil his revised proposal for education funding. Many said Monday that they still may have to scrap part or all of the class-size reduction program that Davis vowed to protect. "I am opposed to any retreat from class-size reduction," Davis said last week. "I'm not going to reduce the state's commitment." State government has spent more than $10 billion over the last seven years to keep classes small in the primary grades. The state's current contribution of $906 per student pays most of the cost to reduce class size in kindergarten through third grade to 20 pupils per teacher. School districts, also beset by the worst budget crunch in a decade, have said they can no longer pay their share. Many have said they will have to proceed with plans to raise class sizes up to 30 or more students — abandoning the voluntary program that has been popular with teachers and parents since it was introduced by former Gov. Pete Wilson.
"In dozens and dozens of districts throughout the state this year — and maybe hundreds more next year — you will see a grade-by-grade erosion of the program," said Supt. Jim Fleming of Capistrano Unified, an Orange County district that is considering eliminating smaller classes in third grade to save
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