First action is to repeal tripling of vehicle fee

The San Diego Union-Tribune

SACRAMENTO — Keeping a campaign promise, a jubilant Gov. Arnold Schwarzenegger swiftly signed an order repealing a $4 billion tripling of the vehicle license fee less than an hour after he was sworn in.

Schwarzenegger also called the Legislature back in special session today to begin work on the state budget and workers’ compensation reform, and to repeal a law allowing illegal immigrants to obtain driver licenses.

As for the budget, Schwarzenegger ended weeks of speculation and announced he wants the Legislature to place a massive bond on the March ballot to restructure debt and limit future state spending.

Schwarzenegger took another step to aid the economy that surprised some and alarmed consumer groups: He issued an order halting proposed state regulations for 180 days, pending review.

He also ordered a 90-day review of regulations adopted, amended or repealed within the past five years to determine whether they are necessary, clear and don’t “cause undue harm to the California economy.”

The Foundation for Taxpayer and Consumer Rights called the freeze on new regulations “a special-interest coup d’etat” that halts controls on pesticides, drinking water standards, privacy protection and electronic waste.

The first action by the new governor was to repeal the increase in the vehicle license fee. According to his press office, Schwarzenegger made a joke about shifting from actor to governor as he signed the executive order at 12:07 p.m.

“Thank you, thank you,” Schwarzenegger said, adding with a laugh: “Makeup please — just joking.

“Very important to know, a friend of mine asked me before I left Los Angeles, he said, ‘Are you going to miss the action in the movies?’

“I said, ‘No, I am going to have enough action up in Sacramento.’ Well, this is action, not just dialogue. This is action.”

With the repeal of the license fee increase comes the loss of $4 billion in revenue that goes to local governments. Schwarzenegger said he wants the Legislature during the special session to replace the revenue to local government.

“He doesn’t want to hurt local government,” said a inauguration guest, Los Angles Mayor James Hahn, whose city could lose $175 million. “He knows local government provides police, paramedics, firefighters.”

The license fee was tripled by Gov. Gray Davis‘ administration under a provision of a 5-year-old law that stated a cut in the tax would be repealed when the state lacked “sufficient” revenue.

Schwarzenegger’s order said the Davis administration “was in error” because, among other things, funds were available through borrowing, and the increase should have been triggered only as a “last resort.”

“Hard-working Californians who want safe, reliable transportation for their families were hit especially hard by this regressive tax,” Schwarzenegger said in a statement. “Now, they will have more money in their pockets to pay for needed goods and services.”

A Department of Motor Vehicles spokesman said details of the plans to carry out the governor’s order are being worked out.

Until more is known, the DMV recommends that, to avoid late-payment penalties, vehicle owners pay license bills that include the higher tax rate.

Assembly and Senate leaders had anticipated the call for a special session and scheduled floor sessions to begin at 4 p.m. today. The Legislature had not been scheduled to return to Sacramento until January.

Schwarzenegger, a Republican, faces a Legislature with a large Democratic majority, and much of what he wants done in the special session is likely to be controversial.

For example, Senate President Pro Tempore John Burton, D-San Francisco, has said he would oppose legislation to repay local governments if Schwarzenegger repealed the increase in the vehicle license fee.

In his call for a special session, Schwarzenegger said he wants legislation to place a bond on the March ballot that would restructure the state’s debt. He didn’t specify the amount of the bond.

This year’s budget is based on two, five-year bonds totaling $12.6 billion, which are being challenged in court because they weren’t approved by voters. A court ruling has blocked one of the bonds.

The next budget has a shortfall estimated at $10.2 billion, which would increase by $4 billion if the state repays local governments for the lost vehicle license fee revenue.

There has been speculation that Schwarzenegger will propose wrapping the two bonds with other debt and putting together a massive bond of $20 billion or more.

Along with the bond, Schwarzenegger wants to ask voters to amend the state constitution to prevent future state spending from exceeding revenue.

Democrats, including Burton, are opposed to a spending limit. On the other hand, a massive bond is opposed by some Republicans, including state Sen. Tom McClintock, R-Northridge, who ran for governor in the recall election.

“I believe that our children will have their own needs to meet without having to pay for this generation’s partying,” McClintock said yesterday.

Schwarzenegger seems to be preparing for a major battle over workers’ compensation, which is the insurance that businesses must purchase to provide treatment and payments for workers injured and disabled on the job.

The cost of the program has soared from $9 billion in 1995 to an estimated $29 billion this year. Schwarzenegger said during his campaign that reforms enacted this year are “bogus,” and that he wants a sweeping reduction to aid business and spark the economy.

If the Legislature doesn’t enact his workers’ compensation reform, Schwarzenegger told the California Chamber of Commerce yesterday, he will seek their help to put the issue before voters.

Another issue Schwarzenegger has targeted is the new law allowing illegal immigrants to obtain driver licenses. Senate Minority Leader Jim Brulte, R-Rancho Cucamonga, predicted the Legislature may repeal that law as soon as today.

But the author of the legislation, Sen. Gil Cedillo, D-Los Angeles, said he was willing to consider altering the law to include anti-terrorism amendments, but will resist repeal. He said the new law will improve public safety by testing more drivers and allowing illegal immigrants to obtain insurance.

“If he has the votes (for repeal), then he has the votes,” Cedillo said of the governor. “The issue doesn’t get resolved by repeal.”

The driver’s license bill, SB 60, takes effect Jan. 1. A signature-gathering drive is under way to have voters repeal the law through a referendum.

“We will as a caucus have a discussion on that (SB 60) and try to figure out how we are going to deal with it,” said Assembly Speaker Herb Wesson, D-Culver City.

Vehicle license fee

The state Department of Motor Vehicles will carry out Gov. Arnold Schwarzenegger‘s executive order to repeal a tripling of the vehicle license fee that took effect Oct. 1.

But a number of administrative decisions must still be made. Here’s what the DMV recommends until more specific information is available:

[] Motorists should pay license fee bills with the higher tax rate to avoid late-payment penalties. Payments must be postmarked by the due date.

[] The governor’s order authorizes refunds for motorists who have paid the higher tax rate. When refunds will be sent and whether they must be authorized by legislation is still being discussed.