Is California Ready to Raise Its Vehicle License Fee?

Every state has its “third rail” that politicians are afraid to touch. When I began my advocacy career in New Jersey in 2004, politicians were deathly afraid of raising any tax after Democratic Governor Jim Florio was ousted in the solidly blue state because of tax increases he pushed through. Florio had been defeated over a decade earlier in 1993.

fault
This piece of California roadway needs constant attention because it sits on top of a geological fault. This picture was taken in 2002, but the road was repaired in 2008. Image:##http://geotripper.blogspot.com/2010/11/california-has-her-faults-heres-one-of.html##Geo Tripper##

In California, the third rail is the state’s vehicle license fee, known as the “Car Tax” to conservative and mainstream media outlets. While there were certainly other issues that led to Governor Gray Davis’ recall in 2003, candidate Arnold Schwarzenegger campaigned aggressively against the vehicle license fee increase that Davis enacted and reduced it as his first act in office. Southern California Assemblymember Ted Lieu proposed raising the fee in 2012, but quickly backed off after a firestorm of public complaints.

However, two powerful advocacy groups, the labor-backed Rebuild California and Transportation California are proposing to increase the fee from .65% of a car’s value to 1.65% through a voter-approved constitutional amendment initiative that would appear on the ballot this fall. All of the proceeds would go directly to rebuilding California’s roads, highways and bridges. There is a backlog of road and bridge repair projects throughout the state, and other ballot initiatives have failed to fill the funding gap.

Notably, the constitutional amendment proposal skips the legislature and governor’s desk entirely. It would be entirely up to voters to decide whether to increase the vehicle license fee to fix California’s crumbling infrastructure. No political courage will be needed.

The organizations are awaiting imminent poll results on the issue to decide whether or not to continue pushing the amendment. But even if the polling shows it has a good chance of passing in the fall, there’s still the little matter of gathering 807,615 signatures by April 14. Once it is certified for the fall ballot, it needs a simple majority vote to become law.

Will Kempton, executive director of Transportation California, and James Earp, executive director of the California Alliance for Jobs, wrote to the Attorney General late last year to certify the legality of the petition. They used the letter to both fill a legal requirement before the initiative can go to the voters and as a tool to make the case for the fix-it-first initiative.

California has a critical need to implement a new revenue measure that would support maintenance and rehabilitation of its state and local road and transit systems. This new revenue source should be independent of fossil fuel consumption, increase over time at a rate that is equal to or greater than inflation and produce enough revenue to significantly reduce the huge backlog of unmet road, bridge and transit maintenance and rehabilitation costs.

Will Kempton is hardly a new figure in transportation. As former Secretary of Transportation for the State of California and executive director of the Orange County Transportation Authority, Kempton has been around the block a couple of times. Photo:##http://www.fhwa.dot.gov/publications/publicroads/07mar/alongroad.cfm##FHWA##
Will Kempton is hardly a new figure in transportation. As former Secretary of Transportation for the State of California and executive director of the Orange County Transportation Authority, Kempton has been around the block a couple of times. Photo:##http://www.fhwa.dot.gov/publications/publicroads/07mar/alongroad.cfm##FHWA##

Rebuild CA and Transportation CA estimate the tax would generate $2.9 billion annually in its first years, enough to begin to address the $27 billion backlog in road repair projects. The funds would be dedicated towards transportation infrastructure repair to prevent the legislative raids that have occurred with past transportation revenue measures.

While the increased fee wouldn’t go towards highway expansion, the current language also limits funds from being spent on transit and sidewalk fixes.  Bicycle network improvements aren’t mentioned in the text, but some insiders argue that when roads are re-paved, the cost of adding bicycle lanes where they are expected would be negligible when the new asphalt is re-striped. The same argument could be made for crosswalks and other pedestrian markings.

Revenue from the measure would be split among state, local and regional transportation agencies as follows:

  • 25 percent of all new revenue to all cities in California distributed on a formula allocation based on population.
  • 25 percent of all new revenue to all counties in California based on a formula allocation equal to 75 percent of fee-paying vehicle and 25 percent road miles.
  • 40 percent of all new revenue to the State Highway System based on a formula allocation of half allocated 60 percent to Southern California, 40 percent to Northern California, and half allocated on a “highest need” basis statewide.
  • 10 percent of all new revenue to public transit system maintenance, rehabilitation and vehicle replacement based on the current State Transit Assistance Program formula.

While Rebuild CA and Transportation CA are awaiting their poll results, there is already pushback reported by some media outlets. An opinion piece in City Journal desperately looks for alternatives under the belief that cuts elsewhere can raise the needed $30 billion. In the end, the best option it devises is exploring “public-private partnerships” for the repairs. Of course, those partnerships would likely end up costing Californians more in the long-term.

  • Justin

    Ahhh, raising taxes, won’t get more creative than that. And they’ll guarantee that them raised taxes are used only for………..how often have we been there before? Super BS, the whole thing.

  • Matt

    This tax never should have been reduced in the first place. Californians always paid 2% (going back to the 1940’s). Electric cars now pay no gas taxes so they get a free ride. PPP’s will result in tolls most likely, but there will be outrage if people have to pay for maintenance through tolls on roads that previously did not have them. I imagine they should start closing the roads with bridges that need to be replaced now.

    Unfortunately, people in CA will raise taxes when they don’t have to pay them themselves (income taxes on high income earners and property taxes in high rent cities like Los Angeles), but not on themselves.

  • Repair costs from damage caused by potholes are a tax. There are ways to create trust funds with strong protections. Proposition 42 ended the raids on transportation funds. That is history, not BS.

  • EastBayer

    Though I don’t have any issue with raising taxes (though I’m not sure I’d classify a vehicle license fee as a “tax”), there is a valuable point here…I do think that the public is wary because there have been times when funds promised for road and bridge repair get used for pedestrian and bicycle projects.

    I love pedestrian and bicycle projects, but that seems alienating. Bicyclists in particular would really benefit from simple road repair, which seems like a political win-win,

  • calwatch

    The voters in LA County have raised sales taxes many times for transportation. As far as the Vehicle License Fee, that is legally an “in lieu of” personal property tax. Since property taxes were reduced in 1978 as a result of Proposition 13 to an across the board 1%, the VLF should have also been decreased from 2%. Otherwise you have a discontinuity in the treatment of real property and personal property. However, the rate of 0.65% is lower than the real property rate – I thought 1.15% was a fair compromise.

  • calwatch

    Public private partnerships would cost Californians more, but it would begin to monetize the fair value of these improvements. People bitch about what Chicago did to sell their parking meters to foreign investors, but ultimately that “unlocked the value” of the scarce parking space in Chicago. There are more tolls, and more political whining, but at least people would pay the cost of their infrastructure. http://www.governing.com/columns/mgmt-insights/Chicago-Parking-Meters.html

  • SuperQ

    Vehicle taxing shouldn’t be done based on the value of the car, but based on the gross vehicle weight and emissions.

  • Razedbywolvs

    CALIFORNIA CONSTITUTION
    ARTICLE 19 MOTOR VEHICLE REVENUES

    SEC. 8. This article shall not affect or apply to fees or taxes
    imposed pursuant to the Sales and Use Tax Law or the Vehicle License
    Fee Law, and all amendments and additions now or hereafter made to
    such statutes.
    Now you have to send your money to the sac DMV witch is as far as i can tell a
    separate government entity with the same name. God only knows were that
    money goes.
    We already pay a 54 cents a gal “road tax” on gas that the crooks funneled in to the general fund.
    Screw this madness let’s just abolish the DMV.

  • Mickton

    They already raised the fees to create a rainy day fund when arnold was here, What happend to all the money from that increase? Oh wait it went up all the legislators butts.
    Here come those crooked greedy bass turds again

  • Mickton

    are you new to ca the vlf was raised with arnold.

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