The Car Tax Hike That Never Was

Politically risky proposal to triple California's car registration fee is dropped

Carmageddon II
AP Photo/Reed Saxon

There wasn't even time for the inevitable statewide wave of outrage to properly form.

On Monday, less than a week after telling the Los Angeles Daily News that he intended to introduce a bill asking voters to triple California's car tax, State Senator Ted Lieu, D-Torrance, announced that he's changed his mind and is dropping the idea.

"Over the last few weeks California's political landscape has changed," Lieu said in a prepared statement.

So much for the idea that a two-thirds supermajority in the legislature will automatically lead to full-throated pursuit of new taxes.  Democratic leaders at the Capitol are well aware of how the car tax plan would have looked; fueling criticism from the right that Democrats can hardly wait to use their new powers to tax and spend.

Gov. Jerry Brown, having successfully won voter approval of a tax hike package with Proposition 30, also knows how abusive it would have looked to pursue another major tax so soon.

The car tax is a particularly volatile issue in car-happy California, as former Gov. Gray Davis found out.

In 2003, his finance director, Steve Peace, announced that reductions in the tax would end, effectively tripling the rate from .65 percent to 2 percent of the value of a car.  Davis invoked a provision of state law that triggered the increase in the face of a fiscal emergency.

It also triggered an enormous outcry and, in a case of especially poor timing, provided a spark that lit the budding recall campaign against Davis.

Arnold Schwarzenegger ran in the recall, in part, on a pledge to undo the tax increase.  Immediately after his swearing in as governor that November, Schwarzenegger made good on that pledge, summoning journalists to his office and signing legislation to cut the tax to its previous level.

That action immediately blew a $4 billion hole in the state's already troubled finances that year as well as in future years.  But no matter.  Campaign pledges are pesky things. Schwarzenegger had promised to do it and would have been pilloried if he hadn't followed through.

Gov. Brown knows his history, and the need to follow through.  It's why he's pledged to display restraint when it comes to pent up demand from interest groups to restore spending cuts and pursue revenues.  That conflict will be one of the ongoing narratives at the Capitol in 2013.

Pursuing a vote to raise the car tax would have antagonized the very voters who gave Brown a significant win with Prop 30 on November 6th.

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