Posted on 01/21/2004 5:49:54 PM PST by calcowgirl
SAN FRANCISCO -- Gov. Arnold Schwarzenegger's key campaign promise to roll back a tripling of the state's car tax was challenged directly to the California Supreme Court on Wednesday by a coalition of college students and social activists whose members and clients will bear the brunt of his budget cuts.
Opponents of the governor's November tax cut, which saves motorists $4 billion a year in annual registration renewal fees, want a majority of the seven high court justices to overturn the pledge, which has deepened the state's deficit, and along with it, the need for cuts to services.
The petition says Schwarzenegger had neither the constitutional authority to lower the car tax nor the legislative approval needed to demand $150 million in immediate budget cuts -- in addition to requiring future cuts -- to offset the car tax reprieve.
The suit was the first legal attack on the centerpiece of Schwarzenegger's fiscal strategy of depending on budget cuts and voter approval of a $15 billion bond measure on the March 2 ballot to erase deficits without raising taxes.
Gov. Gray Davis tripled the vehicle fee by invoking 1998 legislation allowing a governor to raise the tax without legislative approval in a financial crisis. In one of his first acts after winning the election to recall Davis, Schwarzenegger repealed the increase.
But the suit says the car tax can only be lowered if there is enough money in state coffers to compensate for the loss of revenue.
"It was improper and inappropriate for the governor to lower the vehicle license fee when it compelled cuts," said Warrington Parker III, an attorney representing the groups that petitioned the high court.
The case, unusual in that it was filed directly with the Supreme Court and not the lower courts, is a classic showdown between the powers of the chief executive and the Legislature.
While acknowledging the governor's veto power, the petition says the "California Constitution and California's statutes provide that the Legislature is solely charged with determining how public moneys should be collected and spent."
When making the Dec. 18 order to slash $150 million, Schwarzenegger proclaimed he had such powers because he declared that California was in a fiscal emergency. Davis, his predecessor, invoked emergency spending powers to deal with the energy crisis.
A Schwarzenegger spokesman referred inquiries about the lawsuit to the Finance Department, which said the governor was exercising his powers appropriately. "We believe we are on solid legal ground on the actions the governor has taken," said H.D. Palmer, the department's deputy director.
The cuts, announced as lawmakers were in holiday recess, included a 0.5 percent reduction for the University of California and California State University systems, closing a migrant farmworker housing center and, among other things, reducing funding to the Department of Motor Vehicles.
The justices did not indicate whether they would take the case. But it would be highly unusual if they did.
The court generally takes cases after they matriculate through the lower courts, even in times of constitutional crisis.
Before the Oct. 7 recall election, the high court declined to entertain several constitutional challenges seeking to block or postpone the vote, saying they were not ripe for review.
Parker said the University of California Student Association, Californians for Justice and the Equal Justice Society went directly to the Supreme Court in hopes that it would act immediately. A case of this scope commencing in a trial court could take months or years to resolve.
And the odds that they would enjoin the action are astronomical.
But there's no way that the California Supreme Court (which is still stacked with Republicans) is going to reverse Schwarzenegger on the Car Tax. People were really, really pissed off about the tripling of their license fees. Even the Democrats were looking for a way to undo the tripling, except that their way was to find a replacement tax or to make the tax progressive (i.e., keep it high for luxury cars but reduce it for cheap cars).
The voters of California just recalled a Governor. The California Supreme Court Justices know full well that if they reinstate the Car Tax, they just might find themselves next on the recall firing line. At the very least they could kiss their re-election chances goodbye (it's happened before).
Right. If Rose Bird were still alive, she could tell you all about how that works! Thank goodness she's six feet under.
I'm so sick of these snot-nosed, whiny college students and "social activists" who want everybody else to foot the bill for them. And I'm really tired of them using the courts to get their way when they can't get laws passed by a majority of the legislature or the people.
For those who don't understand the California VLF here's a quick review.
The "in lieu of" property tax rate on vehicles (the VLF) hasn't changed since 1948. What has changed is how those taxes are paid.
In 1998 a system was introduced allowing the vehicle owner to pay a portion of the total tax due through his sales and income tax contributions instead of direct payment to the DMV. That portion has changed, beginning with a little from sales and income taxes, then increasing to 2/3s from sales and income taxes, then back to 1/3 and now back to 2/3s.
Over the past 5 years of changing payment methods, the vehicle owner has always paid the full amount of the taxes.
I don't understand what you're saying. Could you make another try so I can understand? Thanks. ; - )
Yep. We sure can't rely on the press for objective explanations.
Thanks again for straightening me out on this issue... as well as a few others ;-)
The "car tax" rate hasn't changed since 1948. It is fixed at 2% of the assessed valuation of the vechicle. Vehicles owners have paid all of the in lieu of property tax since it's inception in 1935. The full tax liability, 2% of assessed valuation, has always appeared on the owner's annual Vehicle Registration Renewal Notice.
What has changed since 1998 is how the tax is paid. From 1935 to 1998, this property tax was paid in full, directly to the DMV.
In 1999 owner's were allowed to pay only 75% of the tax due directly to the DMV and the rest they paid through their sales and income tax contributions.
In 2000, only 50% went directly to the DMV and the balance was paid through sales/income taxes.
In 2001 the DMV "direct" payment went down to 33% of the taxes owed. Again the rest (66%) was paid by the owner through sales/income tax contributions.
In late 2003 Davis increased the "direct" payment to the DMV to 66% and a short time later Schwarzenegger reversed Davis and the "direct" payment went back down to 33% were it had been since 2001.
How do they know that the guy driving the $100,000 Ferrari has to pay more car tax? How does he pay more for his car tax through sales/income taxes than the guy driving the 1983 VW Super Beetle?
Oh, and thanks for the reply. I once again look forward to your response.
The sales tax alone on the car at the time of purchase is enough to pay for several years worth of "in lieu of" taxes. If the sales tax doesn't get you, the gas tax does. Both these items have some proportionality to the cost of the car.
The automobile is the goose that laid the golden egg as far as California is concerned.
But everyone pays and always has paid the car sales tax, whether the car fees were low or high. If the guy with the Ferrari lives in someone's garage, doesn't buy anything and drives his car very little, and the person with the VW buys a lot of stuff and drives a lot, he ends up paying more sales tax so in your explanation, the lower valued car's owner is paying more taxes.
I'm really trying to understand what you're saying, but it doesn't make sense to me. Are you saying that the Ferrari owner isn't necessarily paying more taxes to make up for the lowered licensing fees, but it's being spread out over everyone by taxes? And the luxury car owner isn't necessarily personally paying that "lost" government money, it's just coming from everyone?
If so, in your theory, shouldn't sales taxes be raised at the same time the vehicle fees have been lowered? But they haven't.
I'm really trying to understand what you're saying. Can you tell? ; - )
Please advise.
True but not the point when examined in light of raising/lower the "car tax" which was the point of my original observation.
What Wilson did in 1998, because the state was collecting more general fund revenue than the legislature had authorized to spend, was to subsidize vehicle owner's from the general fund.
Wilson couldn't simply lower the VLF rate because the state was legally bound to return a portion of these quasi property taxes to local governments. The refund formula, defined by law, was based on the 2% valuation.
Wilson, through slight of hand, simply turned sales/income taxes into quasi property taxes and continued to reimburse local governments from both revenue streams. Every one was content. Vehicle owner's perceived that their VLF fees had gone down because of the "offset" they enjoyed and local governments were still getting their legal share of the full 2%.
Last fall, when Davis unilaterally rescinded Wilson's subsidy ("tripled the car tax") for vehicle owner's, he also refused to refund a portion, codified by law, of the "converted" sales/income taxes from the general fund to local governments, something he couldn't legally do.
When Schwarzenegger took office he immediately restored the subsidy to vehicle owners. He was then immediately challenged by local governments to undo Davis' unilateral decision with regard to the general fund portion of the VLF but made no immediate promise to restore that rebate as well. Local governments quickly sued for relief. Schwarzenegger wisely and just as quickly reversed Davis and restored the refund of those "converted" general fund revenues to local governments. He was, of course, received as a hero by local governments.
To comply with the law in an already imbalanced budget, Schwarzenegger had to divert revenues previously planned for other programs to local governments. Since Schwarzenegger couldn't replace these funds because he had stressed "no new taxes" in his campaign, by executive order, Schwarzenegger made "emergency" cuts in other programs to offset the general fund diversions. This made him unpopular with those groups effected. Now those groups have petitioned the California Supreme Court for relief. Hence this thread.
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