New governor, old politics
Granted, he’d promised during his campaign to rescind the fee, which was hugely unpopular. But that doesn’t change the reality on the ground: By rescinding the fee, Schwarzenegger made sure his first action was to increase, by more than $4 billion this year alone, the size of the state’s already huge budget deficit.
And how does he plan to replace this money, which goes to cities and counties to pay for fire and police protection? He can’t possibly cut services enough to cover the existing deficit, much less the additional $4 billion. And he refuses to raise taxes. So instead he’s going to ask voters to approve a huge bond measure in March—to borrow the money, in other words.
(Remember, the car tax was originally set at 2 percent in 1935, and for more than 50 years Californians willingly paid it. Then, in the late 1990s, when the economy was roaring and state coffers were flush, the Legislature and former Gov. Pete Wilson reduced it to .65 percent, with the proviso that the 2-percent rate could be re-triggered in a fiscal emergency. That emergency arrived, Gov. Gray Davis pulled the trigger, and it cost him dearly.)
One of the reasons California is in such terrible fiscal shape is its politicians’ tendency to practice bait-and-switch financing. That’s what Schwarzenegger has done here: given us a feel-good fee reduction today that he intends our children to pay for in the future—with interest.