VLF: ‘very little funding’

There’s nothing like a common crisis to make people pull together. Butte County and city of Chico department heads and elected officials did just that on Dec. 11, when they assembled at Chico Fire Station No. 5 to try to get their unified message out that unless the state backfills the lost $4 billion in vehicle-license-fees revenue, the public can expect some deep and drastic cuts in services.

Kicked off by Chico Mayor Maureen Kirk, who said she was wearing black to symbolize the dreary state local governments find themselves in, official after official hammered home the point that there is no getting around the loss of revenue.

This week the City Council passed a resolution asking that the state reinstate the lost revenue. Last week the county wrote a letter to the governor and the Legislature asking for the same thing.

“We’ve got enough to get through this [fiscal] year,” said Chico City Manager Tom Lando. “Next year will be very difficult, and the third year out will be nearly impossible, as we could be facing a $5- to $7-million deficit.”

Lando said he believed the city could make “painful cuts” this year without cutting jobs. The city has $2.1 million in operating reserves and another $2.7 million in emergency reserve.

Paul McIntosh, the county’s chief administrative officer, echoed Lando’s warnings and said county-administered health programs and clinics will be cut, as will police and fire services. “This is an absolute travesty that your local governments are being regulated to the level of beggars,” he said.

The county stands to lose more than $10 million by the end of the fiscal year next June.

County Supervisors Mary Anne Houx and Jane Dolan noted that services in Butte County are already at a minimum.

“People I hear from don’t want less, they want more,” Houx said. “These are human issues.”

Referring to the state legislators who have the power to plug the gap, she suggested, “Perhaps they could cut their SUVs and their credit cards. Maybe they should clean their own houses. The governor has said, ‘Go to the people.’ Well then, let them hear from us.”

Dolan expressed her concern that, if the state does not backfill the revenue to the county, the supervisors will be asked to “cut back services that are not good enough now.”

The supervisors’ sentiments were echoed by officials and department heads from Paradise, Oroville and Biggs. Representatives from Gridley did not attend because of a police emergency that day.

The VLF was a hot topic during the governor’s recall election this past fall. In 1998 the tax, then 2 percent of a vehicle’s value, was lowered to .65 percent because state coffers were overflowing, with the proviso that it return to 2 percent whenever the economy went south. When that happened, however, political enemies of former Gov. Gray Davis laid the blame directly at his feet. The man who would become governor, Arnold Schwarzenegger, picked up the VLF as a political issue and promised to roll it back but never said how he would make up the lost revenue to local jurisdictions.

The voters went for it, and one of Schwarzenegger’s first acts after being elected was to roll back the VLF. He still has not said how or whether he will backfill that lost revenue stream, though he has mentioned possibly cutting money from the state’s education fund.

Police Chief Bruce Haggerty said that on Dec. 10 he had joined in Sacramento with chiefs from around the state to make their voices heard by the Legislature. Haggerty is a Republican who said during the recall campaign that he supported Sen. Tom McClintock, R-Thousand Oaks. McClintock based his entire campaign on rolling back the VLF.

In 1997, when the state budget looked pretty rosy, there were two proposals to eliminate or reduce the VLF. AB 1776, by then Assemblyman McClintock, called for the tax to be eliminated over a five-year period. The other, by former Gov. Pete Wilson, would have reduced it by 75 percent over five years. The state Legislative Analyst’s Office said at the time that Wilson’s proposal was feasible, but only if the state continued to enjoy a moderately expanding economy, the state’s general fund was not overextended to other obligations and the state maintained a large budget reserve.

The Chico City Council voted not to support McClintock’s bill, but the Board of Supervisors voted unanimously to support it with certain modifications, including a constitutional amendment guaranteeing the state would replace the lost revenue.

But at that time, then-County Administrator John Blacklock recommended the supervisors take a neutral position, saying that, even with the modifications, the tax cut would still mean a “wash” for the county.

"The history is that when the state gets into a bad-budget situation, they look to local governments [to bail them out]," Blacklock warned.