Shortfall in Car Tax to Hit Home (Local Govts to receive two thirds less)

[RamboLiberal]

http://www.latimes.com/news/local/la-me-backfill9dec09,1,4985399.story?coll=la-home-local

Gov. Arnold Schwarzenegger's promise to protect local governments from losing money as a result of the reduction of the state's car tax is set to fail its first test Wednesday.

Administration officials have notified cities and counties that the state will be $254 million short on the December car-tax payment to local governments, which originally was scheduled to be $381 million and is due midweek.

Moreover, local officials learned Monday that the pain will get worse next month, when payments to the locals go from a third of what they expected to nothing at all. From January through March, state officials plan to divert all remaining car-tax money away from local governments to pay $600 million in refunds owed to drivers who paid the higher car tax this fall.

As a consequence, local governments across the state likely will have to begin cutting programs ranging from fire coverage to libraries, government officials say. Some local governments and the California League of Cities are threatening to sue the state for the money. Other cities already have concluded that they are unlikely to get paid and are considering tax increases.

[KayLaw]

1. Not in CA

How do Californians feel about this? It sounds to me like they're getting screwed.

[southpaw72]

2. with all due respect to Californians

(and having grown up in so. cal. I guess I still qualify as something of a Californian)

They've screwed themselves. Lifting the car taxes was a very popular position for the Gropinator to take. The home of prop 13, it's a very anti-tax state. Well you can't get blood from a turnip; lower revenues and sooner or later you have to cut services.

Maybe this will be wakeup call.

[Frances]

4. I used to live in a DC suburb and so I got all of the

political advertisements for Maryland, DC, and Virginia. A man was elected governor of Virginia on one issue: reducing the car tax.

People hate having to come up with a big chunk of change at one time. They would rather pay more sales tax because they can control their big purchases, and small purchases are spread out over time.

I don't agree with these people, but if I were a politician, I would not bang my head against the wall on this issue.

That said, I voted against Arnold, and I think I and other Californians will pay a steep price just for his being in office.

[southpaw72]

6. the irony is

... that whenever politicians claim to "reduce taxes" they end up recouping the revenue through fees and sales taxes. So really they're just shifting the burden from progressive to regressive taxes.

The car tax, as I understand it, is an excise tax, so someone who owns a $50,000 SUV pays more than someone with an old $1700 VW golf. Am I wrong about that?

[Tempest]

7. You are correct

The car tax is based upon the value of the vehicle.

The funny thing is, the first $6,000 (or something like that) of the vehicle's value was exempt from the tax.

Most Californians wouldn't have seen an increase since most cars in California are sold used.

[fob]

11. The "car tax" is actually called the Vehicle License Fee, or VLF

The VLF is 2% of the vehicle's value in the first you register it. Each subsequent year the vehicles value is reduced by 10% and then the 2% VLF is applied

FIRST YEAR VLF
$50,000 SUV has a $1,000 VLF
$1,700 VW has a $34 VLF

$50,000 SUV times 90% = $45,000 times 2% VLF = $900
$1,700 VW times 90% = $1530 times 2% VLF = $30.60


Simple, no? Well here is the "Davis tripled the car tax lie" revealed.

The VLF has been 2% for many years before Davis even became Gov. In 1998 under Pete Wilson legislation was passed to create the VLF Offset, a credit of 67.5% against the VLF. This started in 1999. So, to continue the example above, we will assume the vehicles were bought in 1999

SUV: $1,000 VLF minus $675 VLF Offset = $325 paid for VLF
VW: $34 VLF minus $22.95 VLF Offset = $11.05 paid for VLF

In 2000 (Second year Vehicle Value times 90%)

SUV: $900 VLF minus $607.50 VLF Offset = $292.50 paid for VLF
VW: $30.60 VLF minus $20.65 VLF Offset = $9.85 paid for VLF

You can do the math for yourself for years 2001, 2002, and 2003. So the repuke would say the SUV owner got screwed because they paid more but got the same percent reduction as those who only bought a used VW. They would be wrong. The percent is the same, but no one got screwed. In the 3rd year the SUV owner has SAVED more than the VW owner PAID for his entire vehicle!

That, however is not the end of the story. It seems the legislation was very prescient in it's outlook. The VLF Offset was dependent on a budget SURPLUS and would be rescinded AUTOMATICALLY upon budget DEFICITS! So, when bush* crashed the national economy while Cali was being raped by his energy buddies, the budget collapsed and a large bush* deficit took its place.

The VLF Offset had to go, so it was set in motion, per the legislation, by a supposedly craven Governor under threat of recall with mid 20% approval. The recallniks drummed up the "Davis is tripling your car tax", by conveniently leaving out any facts and, well you know the rest.

So you say, if you rescind a 2/3 reduction in a tax you are tripling it, how can you say different?

Insolent, but a good question nonetheless. I will respond with a short quiz;

1. What was the VLF BEFORE Davis was Governor?
a. 2%
b. .065%

2. What was the VLF DURING Davis admin?
a. 2%
b. .065%

3. What would the VLF be if it were tripled?
a. 6%
b. 2%

4. What is the VLF NOW?
a. 2%
b. 6%

5. How much was the deficit increased by Ahnolds decision to reinstate the VLF Offset in dire budgetary times
a. $4.2 Billion

6. On whose back does Ahnold plan to fund the VLF Offset?
a. Disabled, poor, least able to withstand cost increases or service cuts
b. Ken Lay and his ilk

7. Where does the VLF money go?
a. Local cities that use the money to fund services like firefighters
b. Pays for the hookers that show up at Neil Bush*s door in China

ANSWERS BELOW___________________________________

IF you answered anything but a., you are wrong.

Extra Credit
Essay question
Compare and contrast the reactions of the SUV owner and VW owner under the auspices of repubs telling the entire, truthful story about the VLF Offset and what that "savings" was really gonna cost them and include your prediction of the October 7 election results under the same assumption.

[terrisel]

14. Very Astute. It is the lump sum that is hard to swallow n/t

[Tempest]

5. Californians don't care, they screwed themselves willingly

We were warned this was going to happen during the recall election but reversing the car tax was still a high priority for the voters.

Fuck 'em. They got what they asked for.

[Ernesto]

8. Thanks for your respect

YOU sound like a very nice person........NOT

[Tempest]

10. I live here too

Considering how many Democrats in California voted for the Gropinator, we're all guilty of this farce.

And you sound like a fool.

[Ernesto]

12. thanks again

Got road rage?

[nothingshocksmeanymore]

13. Actually Ernesto, many of us had posted that this would NOT

be tax relief but a SERVICE CUT. Look at what ARnold is doing now asking for a bond. He is taking what was a FIXED cost based on the value of your vehicle and turning it into an unknown future expense and service cut. The most UNNERVING aspect of it is that San Diego even after devastating fires removed two bond measures from their upcoming value because even after this community was devastated and many lost their homes, they still do not want to pay for the services necessary to protect themselves.
WHile I might have said it differently than Tempest...the sentiments are there. The car tax would have been temporary as is mandated by law, once the state returned to a better financial outlook. One can hardly call a bond into the unforeseeable future temporary.

[shanti]

9. please

we didn't ALL ask for it, nor did we ALL vote for him. have some compassion for us that didn't! we will suffer too.

[truthisfreedom]

3. ahh-nold is proving to be the same exact kind of liar as bush... say any-

thing to get elected, then screw everybody.

[terrisel]

15. Where are the jobs and business he was going to generate ?

A guy of his capitalist capabilities and his stature with his world-wide recognition-the American success story-should have already rounded up a bunch of contracts. Aren't the Austrians sending their euros or whatever to California yet? His old hometown said he would be a great governor----tell them to send their pension fund investment money.

Let everyone ask himself---would you trust the new governor of California with your money? --A guy who had a top level meeting with Ken Lay shortly before the Enron crash?