Car (double) talk
Herb Wesson and his friends in the Assembly called it a levy. Davis called it dead on arrival.
Sometimes during fiscal crises, red flags fly that should make us follow our politicians like hawks. But we citizens often fail to do so, and the price we pay can be huge. That is why I direct your attention to the glowing red flag that is Assembly Speaker Herb Wesson.
Wesson, a likable Democrat from Culver City near Los Angeles, was the mastermind of the much-debated car tax that was reduced by 67 percent when the state economy was flush in 1999 but that would have skyrocketed right back up if the state Legislature had convinced Governor Gray Davis to sign the awful document.
Much to his credit, though, under the influence of new finance czar and former San Diego legislator Steve Peace, Governor Perfect Hair stuck his neck out. He called it a bad bill, freighted with legal troubles and partisan slaps at Republicans, whose votes are needed to approve far more pressing budget cuts and tax restructuring.
As Peace noted in a phone discussion with journalists, Wesson’s inept bill not only would have turned off Wall Street lenders who are about to give California its new credit rating, but also compromised “the bipartisan atmosphere we are trying to husband to get to a final budget resolution.”
For once, I was impressed.
The media continually minimized the proposed new tax as a mere $115 extra annually. But, if you live in a typical two-car California household, and one or both of your cars are newish, your family would have gotten stuck with $350 to $600 in extra taxes every year at registration time.
That would have been serious pain, made even worse because working-class and middle-class households will be paying $150 to $300 in extra taxes on retail goods such as clothing if Davis and the Legislature find a way to add a penny to the roughly 8-cent sales tax, which they probably will.
I mention this because, with very little discussion about us taxpayers, Wesson and the Assembly decided that it was perfectly OK with you and I that what is now the highest car tax in the United States, by far, go waaay back up to recession-era levels.
The media have reported heavily on the car tax (also known as a Vehicle License Fee or VLF), but an equally disturbing story is the incredible bubble inside which Wesson and the Assembly leadership made their decision, rubber-stamped by the Senate a few days later.
In January, Oregon citizens gave us a preview of what I believe will happen as Californians strike back at a disconnected Legislature and governor far too eager to tax people out of their savings accounts.
In Oregon, the Legislature faced $310 million in budget cuts—big for that small state—because politicians also overspent in 2001 and 2002 while hoping vanishing income-tax revenues would pour back in from a revived stock market.
California’s politicians, as you may know, are the worst example of this wishful thinking, having driven the state more than $26 billion into the hole.
Political strategists trying to gauge Californians’ willingness to pay higher taxes to avoid cuts in services were watching Oregon’s Measure 28 closely on January 28 as a bellwether.
In Oregon, the media predicted that if deep budget cuts were made, children’s programs would disappear, the elderly and poor would lose medical care, and large numbers of highway patrol officers would be laid off. And, just like here, the Oregon news media ran very few stories about how to cut the state bureaucracy instead. The pro-tax forces from the unions, business groups and special interests outspent the anti-tax forces by 100 to 1.
On January 28, big-hearted voters in Oregon, who mirror California in their liberalism, turned out in record numbers to repudiate the tax increase by a vote of 54 percent to 46 percent. The message was clear and hard as Lucite: Politicians must stop spending beyond Oregon’s means now.
When I talked to Wesson about Oregon, shortly before the Davis veto, he was riding high on the view that his new car tax soon would become law. Many of California’s Democratic strategists had assumed Oregonians would approve their new tax heartily and that Democrats could ride on Oregon’s coattails in California.
I was stunned by the following bizarre yet illuminating conversation.
Me: “The voters in Oregon made a strong statement against tax increases this week, and I wonder how surprised you were and whether it changes your view that raising the car tax is a good initial message in this budget crisis?”
Wesson: “The Oregon vote is in? You mean they voted on the tax already? You mean the vote on the measure to raise taxes for services up there … isn’t that vote set for next week?”
Me: “No, it was Tuesday. Oregon voters strongly rejected the tax. You weren’t aware of that?”
Wesson: “Well, I was going to find out about it. I certainly hope it doesn’t reflect on California.”
Incredible, just incredible that the leader of the Assembly has so little clue about what real voters actually think and doesn’t even bother to stay apprised.
Nor did Wesson have any real grasp of the tax he had just bullied through the Legislature—whom it would have affected or how.
I asked Wesson how much money he expected to reap off those with used cars vs. those with new cars, and how much money would have been paid by the middle class and working class vs. the wealthy, and so on.
Wesson said, “We only cared about the net $4 billion we would get.” (His actual words.) Further, he said, “I have yet to ask and have yet to receive any breakdown for how much will come from used cars or how much will come from new cars or how much comes from this group of taxpayers or that group or the other group.”
This, again, was incredible. The Legislature damned well better care who the hell is paying to help it avoid seriously trimming its massive, 37-percent increase in spending since 1999.
So, I asked Wesson if he thought the car-tax bite might have an effect on the middle class. He responded with so much double talk that I thought he was goofing around.
Said Wesson, “The middle-class effect will be a benefit in the sense that they buy vehicles for their children. So, really, a lot of what they are paying the tax for are these second cars.”
It practically makes you want to run screaming for the Oregon border. Work on that one for a few weeks, and you still won’t make sense of it.
Embedded in the new car-tax law was the sneaky provision that the tax could not have been reduced again until the state was no longer borrowing money—a condition the state has not enjoyed in decades, regardless of how fantastically the California economy has done. The truth is that Wesson and the Assembly were trying to ensure Californians would pay the tripled tax forever.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, praised Davis’ decision, which was based in part on the fact that the slimy maneuverings wouldn’t pass even a basic legal muster.
But what rankles me is Wesson’s “tough beans” attitude that it’s perfectly OK to screw the public and shirk the normal legislative checks and balances for approving taxes. What Wesson and the Assembly tried to do, Coupal noted, “was slam down our throats without a two-thirds vote the worst sham of a tax increase, and it [was] the biggest joke in the world.”
Wesson managed to trick The Associated Press, which reported on February 3 that the Assembly approved an exemption for car owners who buy cars for less than $5,000, in order to help the low-income. Wrong!
As everyone who is not catatonic in the Capitol knows, the exemption was included so the Assembly could sneakily escape the required two-thirds vote for increasing taxes in California.
A two-thirds vote would have been impossible because Republicans vociferously opposed the tax. By exempting cars purchased for less than $5,000, which would have constituted a special tax decrease for those owners, the legislative counsel contended that the Assembly needed only a simple majority vote.
On top of that, in order to forestall a voter revolt over such shenanigans, the Democrats declared the tax a “levy” that would have taken effect immediately and that could not have been overturned by taxpayer referendum.
We’d do well not to trust too heavily in Wesson. He has cost the state more than $500 million already, for he alone torpedoed a 50-cent-per-pack cigarette tax proposed by Davis last fall, chucking it in favor of an utterly un-passable $2-per-pack tax that neither side of the aisle saw as fair to smokers.
It’s not that Wesson, so eager to tax us but understanding so little about us, is dumb. It’s that he survived largely on public largesse for years, as an aide to Los Angeles County Supervisor Yvonne Brathwaite Burke.
Now, Davis and Peace are powerfully suggesting that Wesson shake off his comfy cocoon and that the Assembly and Senate stop playing games and start coping with deep budget cuts. If I didn’t know better than to hope for such impossible things, I’d say somebody in Sacramento has finally started hearing us, the long-ignored public.