Tom McClintock

Mr. McClintock is an expert on matters of the State budget and fiscal discipline. He is a Senator in the California State Legislature and ran for Controller on the Republican ticket in 2002. His valuable website is found at www.tommclintock.com

the Shadow Governor
The (Very) Last Refuge of a Scoundrel
Hiding behind tragedy to make a tax grab...
[Tom McClintock] 11/6/03

When Samuel Johnson said, "Patriotism is the last refuge of a scoundrel," he'd obviously never seen California politics. If he had, he would have known that tragedy is actually the last refuge, as evidenced by recent attempts to link the tragic and devastating fires in Southern California to repeal of the car tax.

The argument goes like this: the car tax funds local governments which fund fire departments, and thus any attempt to reduce the car tax to its legal level would decimate the budgets that pay for our heroic fire fighters. At a time when thousands of Californians have just lost to the wildfires, such rhetoric is outrageous. It is also factually wrong.

Five years ago, a series of legislative enactments reduced the car tax by two-thirds. Local governments never lost a penny of funding, as the same law fully reimbursed them from the state's general fund. The law even provided that if the state actually were to go bankrupt, funds would still flow to local governments by a temporary, month-to-month increase in car tax assessments directed by the state controller.

In June, Gray Davis took it upon himself to triple the car tax indefinitely while cutting off reimbursements to local governments for three months. His action cost cities and counties $1 billion in lost revenues and cost motorists an additional $4 billion in taxes - all in direct violation of state law. Ironically, the only time local governments have lost money from the car tax is when Gov. Davis illegally raised it.

How can such a thing happen in a nation of laws? California's constitution forbids a court from issuing an injunction to stop the collection of an illegal tax. A legal challenge has already been filed, but it must go all the way through the legal process - including years of appeals - before Davis' action can be reversed.

The Legislative Counsel's Office (the official legal office of the legislature) has already opined that not one of the conditions required to raise the tax has been met. Assuming the courts agree, the illegally collected tax plus interest will have to be returned to taxpayers in a few years, blowing a multi-billion dollar hole in a future state budget.

Thus, Governor-elect Schwarzenegger's promise to rescind Gov. Davis' action not only could restore the $1 billion that Davis illegally withheld from local governments, it would prevent the state from being suddenly confronted with a gaping budget deficit when the courts finally act.

The constitutional amendment that I have proposed to abolish the car tax - and that is now in circulation as an initiative - provides local governments with a constitutional guarantee of reimbursement that future governors and legislatures cannot evade. It also stops the current practice of the Department of Motor Vehicles that skims seven percent of the car tax off the top as a "collection fee." And it grants county governments greater discretion over the use of their funds than they currently enjoy.

Obviously, economies must be made in the state budget to offset the difference, and that is why bureaucratic reform is essential. The streamlining recommendations of the Reason Foundation alone would provide sufficient savings to afford full abolition of the tax, while providing local governments more funds, greater discretion and stronger protection.

Those who believe in protecting local government need not take refuge in tragedy when there is far safer refuge in the truth.