> ## Content Index > Fetch the complete content index at: https://www.smdp.com/llms.txt > Use this file to discover other available public pages before exploring further. # Legislators propose raising vehicle fees to replace local funding - URL: https://www.smdp.com/legislators-propose-raising-vehicle-fees-to-replace-local-funding/ - Published: 2003-01-23T16:00:00.000Z - Updated: 2026-10-23T01:22:48.000Z - Author: Andrew Fixmer - Tags: Government & Politics, Santa Monica, #archive-import *Legislators propose raising vehicle fees to replace local funding* Santa Monica may not be the worst off when it comes to its budget crisis, but increased vehicle fees won’t make life any easier. If the state chooses to close its budget gap in part by using vehicle licensing fees, Santa Monica’s deficit would grow from $9.1 million to nearly $12.6 million, according to the California League of Cities. That figure represents about 6 percent of the city’s $200 million general fund, from which most city services — including police and fire — are paid for. “The dollar amount is significant for us,” said Santa Monica Finance Director Mike Dennis. The Motor Vehicle License Fee is a tax paid when vehicles are registered annually with the state. Once collected, the money is redistributed to cities based on population and it provides about 16 percent of the general revenues to the average California city, according to the league. Since 1948, the VLF rate had been about 2 percent of a vehicle’s worth, but in 1998 the state Legislature began lowering the tax. Today the registration fee is about.065 percent of a vehicle’s market value, according to the league. The Legislature promised to give cities the same amount of money as they would have received if the tax had not been lowered. According to the league, by last year one-third of the $1.6 billion given to cities was from registration fees and the rest was paid from the state’s coffers. Now Gov. Gray Davis is proposing to withhold much of the money given to cities to make up for the lower VLF tax revenue as a way to help close California’s historic $34.8-billion deficit. If approved by the state Legislature, withholding those fees could make an already bad budget situation worse for Santa Monica and other cities, league officials say. “I believe just about every city in California is facing dire situations this year,” said Ron Merkling, a spokesman for Culver City. “Not just from the state, but from a loss of general revenues everywhere.” But those effects vary from city to city. Some have more diverse local economies where the loss in state funds will make a smaller dent in their total budget. Other cities depend heavily on the revenues to function daily. Compared to Burbank, Santa Monica is faring much better. In that city, officials are predicting a roughly $6-million deficit without the state taking vehicle licensing fees. Without that revenue, Burbank faces a $10.1-million deficit next year — a loss of about 9 percent of its general fund. Already Burbank officials have placed an item before voters during a special election in April that would raise that city’s transient parking tax by 2 percent, which could net the city $400,000 more in revenue. “But there’s only a limited amount of ability cities have to raise revenues,” said Mike McManus, a Burbank spokesman. > “Fees we can raise, but taxes have to go to a vote.” In addition to revenue increases, the Burbank City Council will also likely have to approve deep cuts in programs and services, McManus said. Every city department has been asked to cut 10 percent of its operating budget. “Just trying to stay competitive with our workforce, (we have) grown faster in our salary and benefits than we can sustain,” McManus said. “Our revenues aren’t growing at a rate that can keep up.” Culver City is facing a similar situation to Santa Monica. Without the vehicle licensing fees, it’s facing a $2-million deficit. That figure balloons to $3.6 million without the vehicle licensing fees, which represents a 6.3 percent of its $57-million general fund. Merkling, the Culver City spokesman, said officials there have been polling residents and business owners about what services can be decreased or eliminated. Last year, the city discontinued its DARE program, which aims to keep kids away from drugs, for a lack of funding. “It’s a very difficult decision for citizens and residents to make decisions about... police officers and other services like street repairs,” he said. “How do you make those types of choices? It’s very difficult.” Pasadena is much better off than most cities, including Santa Monica. That city is facing a $3-million deficit which swells to $8.5 million if the state takes the vehicle licensing fees. But even with the higher figure, Pasadena is facing a 3 percent decline to its nearly $277 million general fund. And officials there report strong sales tax revenues and an investment portfolio that is still paying high interest rates. They also say the city has a reserve of $44 million to fall back on if necessary. “Pasadena is in generally good shape,” said Ann Erdman, a Pasadena spokeswoman. “We have really excellent investment planners and a very highly regarded finance director. And they have helped keep the city in very good shape.” As far as other bay cities, Heromosa Beach may lose nearly $1 million of state funding, which represents more than 6 percent of its $15-million general fund. Officials there say the drop-off in funding could be potentially devastating. “It’s a big chuck of money for us,” said Steve Burrell, Hermosa Beach City Manager. “In the near term, we would adjust or expenditures. And in the long run, we’ll probably recommend things (to the City Council) that we can do without and try to save whatever we can.” Manhattan Beach City Manager Geoff Dolan said the only financial troubles his city is facing stem from the loss of state funding. “We’re not nearly as bad off as other cities,” he said. “We seem to have some lean years ahead of us. And the state’s problem is looking bad, so we’ll have to see how that shapes up. But for now we’re OK.” A group of legislators have introduced a bill that would raise the Vehicle Licensing Fee back to its 1998 level of 2 percent to make up for the decline in state funding. Cities across the region, including Manhattan Beach, have begun enacting resolutions supporting the bill. However Santa Monica’s Mike Dennis said he’s not so sure raising the fee will make a difference. “I guess my fear is that the state will increase the motor vehicle tax to what it used to be,” he said, “and keep the money to help them further reduce their deficit.” *Originally published in the Santa Monica Daily Press print edition on January 23, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/012303.pdf?ref=smdp.com)