City leaders applaud county suit against state

Deirdre Newman

City leaders are lauding the county’s decision to sue the state over

the loss of hundreds of millions of dollars the county usually gets

from vehicle license fees, but they are not optimistic that the

county will recover the funds.

Orange County was one of a dozen California counties and cities

that decided Tuesday to sue the state after the Legislature couldn’t

agree how to replace the money lost when Gov. Arnold Schwarzenegger

reduced the so-called “car tax.”

Cities and counties have been depending on this source of revenue

from the state for the past 70 years. The money typically covers the

cost of expenses such as fire and police departments.

“The state really did mess up that revenue source for cities and

counties, and I’m glad to see some cities and counties go after the

state,” Newport Beach City Manager Homer Bludau said. “I don’t think

our chances are great as far as succeeding, but it’s worth the

fight.”

The lawsuit is a dramatic move to illustrate how much county

governments will suffer if the money isn’t replaced soon, said Tom

Wilson, chairman of the county Board of Supervisors.

The county stands to lose between $125 and $140 million, said

Wilson, whose district includes Newport Coast. There are three cities

in Wilson’s district that might have to de-incorporate if they don’t

receive the full amount of vehicle fees they have gotten in the past:

Aliso Viejo, Laguna Woods and Rancho Santa Margarita.

The board of supervisors will be confronted with tough choices if

the Legislature can’t agree to replace the funds, Wilson said.

The Assembly voted on two bills to restore the vehicle license fee

funds to cities during the session that finally passed Gov. Arnold

Schwarzenegger’s deficit bond and spending cap. Both bills failed.

All the Republican Assembly members in Orange County voted in support

of the failed bills, along with one Orange County Democrat,

Assemblyman Lou Correa (D-Santa Ana).

Assemblyman John Campbell said he sympathizes with the cites and

counties that filed lawsuits.

“I don’t blame them,” Campbell said, “If I were in their position,

I would probably be doing the same thing. What’s happened is cities

and counties have really become a pawn in the budget fight between

the governor and the Democrats, and they shouldn’t be.”

Democrats want to wait and see what spending reductions

Schwarzenegger suggests when he rolls out his budget for the 2004-05

fiscal year in January, Campbell said. Democrats don’t want the state

to be saddled with an additional $4 billion in cuts as a result of

the car tax fees being restored to cities if Schwarzenegger wants to

reduce state programs as well, Campbell explained.

“We see it differently,” Campbell said of the Republicans. “We

prefer to see the state programs reduced and leave [the funds] at the

local level, because it’s usually better spent the closer to the

people it is.”

Campbell said it doesn’t have to be all or nothing, though, as a

percentage of the car tax funds could be given to cites and counties.

Neither Newport Beach nor Costa Mesa has joined the flurry of

lawsuits.

Bludau and Costa Mesa City Manager Allan Roeder said there’s no

need to jump on board since the merit of the lawsuit won’t be

augmented by the number of suits filed.

Roeder shared Bludau’s pessimism about getting any relief, saying

the state doesn’t have a very good track record of returning money to

cities. In the late 1990s, when the state’s economy was booming, the

Legislature wouldn’t even consider reinstating property taxes it had

taken from cities, Roeder said.

“At this point, to say, ‘Sorry, cities, we can’t balance our

budget, so we’re going to come back and take even more,’ it goes

beyond insult to injury,” Roeder said.