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Car Tax Hike Urged Both moves, Capitol observers said, appear designed to appeal to the Legislature's liberal-leaning Democratic majority and shore up an important political base as he girds to fight a campaign to recall him from office. Higher vehicle license fees will annually cost drivers an average of $136 more than they pay now but help lawmakers avoid an array of program cuts. Lawmakers of both parties have assumed for weeks that the car fees, which some consider a tax, would increase this year. But Davis initially resisted those hikes, so his decision to include that money in his budget reflects a change in his assessment of the need for that revenue in the face of an increasingly dire budget shortfall. Continuing the $1.7-billion school class-size-reduction program, meanwhile, will probably come at the cost of other services but gain favor from one of the governor's key support groups: teachers. Together, some observers said they believed that Davis' moves come in response to the Capitol's shifting politics, especially the threat of a recall campaign against him. "He's scared," said Wayne Johnson, president of the 330,000-member California Teachers Assn. and a frequent critic of the governor. "He sees this recall movement as having some potential, and he needs education and labor." Johnson said Davis has begun meeting with the union's officers every other week in his Capitol office to talk about the budget and other issues. Such meetings, Johnson said, used to occur about twice a year. "Now when he's in trouble, he's moving back to talking with his core constituencies again and doing something [for] them," Johnson said. "It's so obvious that it's almost insulting." The move on the so-called car tax also will please those core constituencies. Labor union officials said the tax hike is vital to overcoming the state's $35-billion shortfall over this year and next. Davis administration officials denied that the threat of a recall has influenced their budget deliberations. They said that should the recall efforts gain momentum, they will be prepared to beat them back. In the meantime, they dismissed the signature-gathering as a fringe effort that is having no effect on the business of state government. Though administration officials would not comment Monday about what will be in the revised budget, lawmakers briefed during a meeting of the Democratic Latino caucus in the Assembly confirmed that the car tax will be included. Many of Davis' critics in his own party feared that the governor would resist including the car tax in his revised budget because it would hand his opponents a potent weapon in their drive to recall him. In February, when Davis threatened to veto a Democratic bill to hike the fee, he said it was because he did not want to anger anti-tax Republicans whose support could be crucial to passing a final budget. A March 7 opinion by lawyers for the state Department of Finance and Controller Steve Westly, however, set forth a roadmap to raise the car tax by what some Capitol insiders call "immaculate conception." In essence, the opinion said a law that cut the car fee years ago authorized the Department of Motor Vehicles to restore it if general tax revenues are so low that the state risks not being able to pay its bills.
And the revised budget that Davis will issue Wednesday is key to that calculation. That document will show that costs are significantly higher than he
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