California Insider

Local governments are in an uproar over the car tax cut and the state’s failure to provide the “backfill” that makes cities and counties whole for the lost revenue. Although the locals are describing this as balancing the state budget on the backs of cities and counties, that’s not really what is happening here. The car tax has always been a local revenue source, controlled by the state. If the tax is lowered, as the public seems to have wanted, there is no inherent state obligation to hide the effect of that reduction in revenues by putting it on the state tab. In any case, if the burden is shifted to the state’s books, it will simply force cuts in other programs that people value, or tax increases elsewhere. That $4 billion is becoming like the bulge in the balloon. Budget writers can push on it here, but it simply shows up over there. It won’t go away. Schwarzenegger was foolish to promise in the campaign to make local governments whole even while cutting the tax, as if local government services were somehow more sacred than those provided directly by the state. But now it’s up to him to find a politically acceptable way of doing that or explain why it can’t be done. Here is the latest Bee story on the controversy.