California Politicos: Cut Spending, Hike Car Tax

SACRAMENTO, California, January 28, 2003; Reuters reported that legislators in California, facing a huge gap in the state budget, voted on Tuesday to slash $8.6 billion in spending and raise taxes on cars to the tune of $4 billion annually.

As the California economy flourished during the Internet boom, the state lowered annual vehicle licensing fees in 1998 to less than one percent of a car's value from two percent.

Yet in 2003, California, like many U.S. states, is mired in a severe fiscal crisis because of a slack economy and weak stock markets that have drained revenues.

The state assembly voted 45 to 33 to restore the old level of vehicle taxes, a move likely to raise typical annual fees by more than $100 per car. The measure now goes to the California Senate and then would require the governor's signature.

Also on Tuesday, the state assembly approved nearly $8.6 billion in budget cuts.

"These votes are very difficult votes," said Jenny Oropeza, Democratic chair of the Assembly's budget committee. "We don't feel good about making these cuts, but it has to be done. That's why the voters sent us here and we have to do the job."

In a state where many voters consider an automobile as essential to life as the sunshine and the ocean, the car tax increase is likely to rankle.

"As it now stands, in California we pay the highest vehicle license fees than any other state," said Republican State Senator Dennis Hollingsworth. "The governor and the Democrats should not be asking families to pay for their spending spree."

Gov. Gray Davis proposed a budget earlier this month for fiscal year 2003-04 that includes $8.3 billion in tax hikes and $21 billion in spending cuts to help the nation's most populous state close the deficit.

He has said he does not want to raise vehicle taxes but has not said he would veto the measure.