Schwarzenegger Repeals Vehicle License Fee Increase

11:59 PM, Nov 17, 2003   |    comments
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Less than an hour after taking office, Gov. Arnold Schwarzenegger performed his first official act by signing an executive order repealing the tripling of the vehicle license fee. Executive Order No. 1 is seen as a quick victory for the new governor because the VLF increase is so universally despised. The VLF increase has been a point of controversy since word came out last summer that the tax would be raised to its original two percent of a vehicle's value. The deep budget gap faced by the state triggered the increase. It meant a three-fold jump in the tax vehicle-owners pay. Opponents of the increase characterized the hike as an unfair burden on the poorest Californians. Although the fee is hugely unpopular, cities and counties greet the fee reducution with considerable trepidation. Revenues from the VLF, which total about $4 billion per year, were given to local governments, which used them to fund a variety of services. Many local governments are warning of cuts to fire, police and other vital services if no alternate funding source is found. Schwarzenegger has promised local governments will continue to receive the money. Advisers have suggested returning to cities and counties the property tax revenue the state took from them a decade ago. Schwarzenegger issued another executive order to suspend all proposed state regulations and call for the review of all regulations adopted, amended or suspended in the last five years to make sure they are not unnecessarily burdensome to California's economy. All proposed regulations will be suspended for 180 days while they are reviewed.

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