Tom McClintock

Mr. McClintock is an expert on matters of the State budget and fiscal discipline. He is a Senator in the California State Legislature and ran for Controller on the Republican ticket in 2002. His valuable website is found at www.tommclintock.com

The Shadow Controller
Referendum on the Car Tax Increase
Statement by Senator Tom McClintock, Shadow Controller
1/8/03

Thank you for coming.

The purpose of this press conference is very simply to put the legislature and the governor on notice that they should not expect to see a penny from increased car taxes if they adopt AB 4X.

If the Democrats want the biggest statewide tax revolt in 24 years, this is the quickest way to get it.

Within minutes of that measure being chaptered, the paperwork will be filed with the Secretary of State to referend it. This will automatically suspend the act for 90 days.

We have with us today representatives of the major grassroots taxpayer organizations in the state, who are already pledged to make a referendum of the car tax their top priority. I can certainly pledge the statewide campaign structure that I have built during my campaign for the state controller's office. And I intend to request the formal support of the California Republican Party as well.

It will require 373,000 signatures to qualify the referendum, at which time the effect of the tax increase will be stayed until the next election. At that time, the people will have the opportunity to reject the tax increase, which I believe they will do overwhelmingly.

I also want to address the canard that somehow the state legislature intended the current car tax rate to increase in bad economic times. If that were the case, you wouldn't need to change the law, would you?

Existing law has been clearly understood and practiced by the state controller's office from the first day of its enactment. There are only two circumstances that would trigger an increase in the car tax under existing law.

The first is gross incompetence by the Controller in failing to maintain sufficient funds in the treasury to cover the anticipated obligations of the state. The other is if the state was closed out of the capital market.
Neither of these events has ever occurred in the history of California.

The Democrats want to fundamentally change this law in a manner that would automatically triple the car tax.

Last week, local government officials said they "already" were reducing police and fire protection. That's not because of the car tax.

In fact, local governments have never lost even a penny of revenue in the five years since the car tax was first reduced. It would take a majority of the legislature to do so, and before the local government horror stories are given any credence, I challenge them to name even one legislator who supports such a measure.

And there's a reason for that. There is no excuse for the state raiding local government funds at a time when it is already spending a higher percentage of people's earnings than ever in its history.

As the Sacramento Bee pointed out yesterday, California's CURRENT car tax is higher than the next five largest states in the country, and in fact is twice as high as the next runner-up.

The $4 billion of tax increases proposed by the Democrats is about what the Governor has allowed his bureaucracies to overspend—beyond the approved budget—even knowing the condition of the state's finances.

Indeed, the legislature's Democrats have already rejected billions of dollars in actual program reductions that the Governor proposed in December. So to the inevitable question, "What do you substitute for the tax increase?" let's start with the program reductions that the Governor has already proposed.

An overall reduction in the neighborhood of 9.5 percent of state spending, held constant for 18 months, would completely address the budget deficit without raids on local governments, pilfering of pension funds, tax increases, or accounting gimmicks.

So those who vote for this bill should be on notice not to expect a penny from this tax. The filing and qualification of the referendum will stay the effect of this bill until the people of California have the opportunity to soundly repudiate it. And then they will have the opportunity to repudiate the politicians who sought to triple their car taxes.