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Leno: Let Counties Jack Up the Car Tax!

Senator unveils proposal to allow local governments to raise more revenue from cars

Mark Leno, state senator from San Francisco, unveiled on Friday a proposal to allow local governments to raise more revenue from automobiles, just the latest among a litany of measures that state and local officials have floated recently as they stare down another difficult budget year.

Under Leno's bill, counties could opt to raise the local vehicle license fee, or VLF, as it is known, if it is backed by a two-thirds majority of county supervisors and a simple majority of voters. The additional revenue would be kept at the local level, rather than funneled up to Sacramento.

Consumers in California currently pay a 1.15 percent tax for VLF. Leno’s bill, SB 223, would let counties ratchet the tax up to its longtime historical rate — set between 1948 and 1998 — of 2 percent.

Leno, appearing at San Francisco City Hall steps on Friday, called the fee’s current level a “tax break to car owners that we can’t afford.”

Leno said the bill was intended to “return responsibility and authority to local governments” to deliver vital city services.

The legislation itself, he added, “raises nobody’s taxes.”

Despite its relative obscurity, the VLF rate has been fluctuating for nearly a decade along with the vagaries of the state’s economic and political situation. First, it was cut in 1998 in the midst of the dot-com boom. Then, in 2003, former Gov. Arnold Schwarzenegger, who campaigned on cutting the fee, delivered on his promise and trimmed the fee further, to a historic low of 0.65 percent. State legislators restored the rate to the current 1.15 percent while scrounging for revenue in 2009.

Leno blamed Schwarzenegger for the 2003 cut, saying that $6 billion was draining out of the state every year. The city of San Francisco could generate $44 million by boosting the tax to 2 percent, Leno argued. The city is currently facing a $380 million deficit.

He was flanked at City Hall by Mayor Edwin M. Lee, supervisors David Chiu and Scott Wiener, Fire Chief Joanne Hayes-White and Jim Lazarus of the San Francisco Chamber of Commerce.

Saying that the chamber “usually doesn’t support tax hikes,” Lazarus pledged his support to Leno — even if ordinary consumers, not businesses, will bear the brunt of the tax raise.

“We support reform of city government, and we support pension reform, but we also recognize that there’s a revenue side,” Lazarus said.

Chiu said he plans to introduce a resolution on Tuesday to support Leno’s proposal.

“For any driver who’s frustrated with potholes, for any Muni rider who’s frustrated with the service, any cyclist or pedestrian that’s concerned about safety,” Chiu said, “we need these revenues so we can patch up the holes in our transit system and patch up the holes in our infrastructure.”

The mayor, who has publicly said that he is on the market for an electric vehicle, promised to hold off on buying until the tax hike takes effect.

“I would gladly pay that additional vehicle fee to support all the wonderful services this city provides,” Lee said.

Correction: A previous version of this story incorrectly stated that a two-thirds majority of voters would be required to raise the vehicle license fee. A simple majority of voters and a two-thirds majority of county supervisors would be required.

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