More state taxes vs. financial woes

June Casagrande and Deirdre Newman

A proposal by a state assemblyman to raise vehicle license fees

could help Newport Beach and Costa Mesa plug anticipated

million-dollar financial holes caused by Gov. Gray Davis’ proposed

state budget.

The proposal by Assembly Speaker Herb Wesson (D-Culver City) would

raise the average vehicle license fee by $103 to compensate for a

substantial reduction in state funding to cities.

“It would be good news for cities, but bad news for individuals

registering their cars,” Newport Beach Administrative Services

Director Dennis Danner said.

To help overcome an approximate $34-billion deficit, Davis has

proposed eliminating the “backfill” it has paid to cities since 1998

when Davis slashed vehicle license fees by two-thirds. Because these

revenues are supposed to go to the cities, the state has been making

up the difference, thereby giving car owners a little more cash

without hurting cities.

But since the salad days for the state budget have wilted, Davis

has proposed not pitching in the two-thirds difference. That would

cost Newport Beach $1.7 million for fiscal year 2003-4 and Costa Mesa

could kiss about $2.6 million good-bye. For the next fiscal year,

those numbers climb even higher. Since the “backfill” goes into the

city’s general funds, it would affect services like police and fire.

Marc Puckett, Costa Mesa’s director of finance, said the original

intent when the fees were reduced during robust economic times was

that they would be increased when state budget coffers were

substantially diminished.

Since Davis did not propose that as part of his budget, something

should be done to compensate for the loss, Puckett said.

“[The state] should not balance [its] budget on the backs of

cities,” Puckett said. “We’ve been responsible in managing our

budgets, and we should not have to bear the brunt of problems at the

state level in terms of balancing the state budget.”

Danner said that Newport Beach officials have not yet discussed

which programs or projects would feel the pinch of the loss of

funding.

Several other items in Davis’ proposed budget could take smaller

bites out of Newport Beach’s budget. State traffic-congestion relief

funds on the chopping block could mean a loss of roughly $100,000 to

Newport Beach. The proposed suspension of reimbursements by the state

to cities for costs of some state-mandated programs would cost

Newport Beach about $250,000.

For Costa Mesa, Davis’ budget proposal would also enable the state

to take about $94,000 of the city’s property taxes that it collects

for its redevelopment agency.

* JUNE CASAGRANDE covers Newport Beach and John Wayne Airport.

She may be reached at (949) 574-4232 or by e-mail at

june.casagrande@latimes.com. DEIRDRE NEWMAN covers education. She may

be reached at (949) 574-4221 or by e-mail at

deirdre.newman@latimes.com.