PE.com, December 17, 2003

Inland cities and counties are vowing to sue the state, threatening to withhold property taxes and organizing a public demonstration as they face cuts to police, parks and libraries because the state is not reimbursing them for funds lost when Gov. Schwarzenegger repealed the car-tax increase.

The Riverside County Board of Supervisors voted Tuesday to sue the state to recoup million it will lose if the county is not reimbursed for the loss of vehicle-license-fee funds. The Moreno Valley City Council voted Tuesday to join any lawsuit that's filed. Other Inland cities also are considering suing.

And in San Bernardino today, hundreds of empty police, fire, public works and other city and county uniforms will be spread across a field at the San Bernardino Soccer Complex to illustrate the loss of jobs that would occur if the money is not paid.

The developments are part of mounting frustration felt by officials who saw tax revenues plunge starting this month.

"The state is skirting their responsibility," Riverside County Supervisor John Tavaglione said Tuesday. "It's a huge source that if lost will result, I have no doubt, in the need to make some cutbacks."

Some local elected officials are even calling for counties to withhold property taxes as compensation. They hope to gain leverage to force Sacramento to pay the billion a year cities and counties will lose.

Reimbursement issues

The state reduced the vehicle license fee in 1998 but continued paying cities and counties the money they would have received from the higher tax. Those payments were known as the VLF backfill.

Gov. Davis ended the backfill in his last budget and tripled the car tax, pledging to give the money to cities and counties.

But Schwarzenegger, fulfilling a campaign promise, repealed the increase his first hour in office, telling legislators to find a way to reimburse local governments, which they have not been able to do.

Some local officials said that state lawmakers have broken their promise to reimburse local government if the car tax was reduced. There also is growing disappointment at Schwarzenegger for not standing by a campaign pledge to protect local services.

"We felt he could bring it all together," Tavaglione said. "Now, he's pointing the finger at the Legislature. It's time for him to knock some heads together in Sacramento."

The League of California Cities and the California State Association of Counties are trying to coordinate the wave of discontent and lawsuits expected across the state. Jean Hurst, a legislative analyst with the counties association, said she hoped lawsuits would be filed by the end of the year.

The Department of Motor Vehicles will stop all fee payments to local governments starting Jan.10 to refund car owners for the short-term increase that Schwarzenegger revoked, Hurst said.

Riverside County officials were not sure whether they would file their own lawsuit or would join other jurisdictions. Hurst named Sacramento, Los Angeles, Orange, San Diego, Santa Barbara and Santa Clara as counties that likely had voted to file suits.

In a closed meeting Tuesday, the San Bernardino County board discussed but made no decision whether to join the Los Angeles City Council in filing a lawsuit, Chairman Dennis Hansberger said. "It is a major problem; it's costing us a lot of money, every day, about 0,000," he said.

Making a statement

San Bernardino County Administrative Officer Wally Hill said the county would not try to withhold property tax revenue from the state. But some Inland leaders want to.

"Don't pay the state. Hold it back," Corona City Councilman Jeffrey P. Bennett urged Riverside County supervisors Tuesday.

Corona has lost million based on the fee rollback and other cuts, said Bennett. The council will discuss suing the state at its meeting today.

"We don't have a choice," Bennett said. "If we don't take some action, we're having to face making layoffs."

Today's demonstration in San Bernardino is being organized by the league of cities' Inland Empire Division. Participating cities have been asked to estimate how many layoffs they would need and send the corresponding number of shirts.

"It's a way of visualizing what Sacramento is stealing from our communities now," said Fontana Councilwoman Janice Rutherford, president of the Inland Empire chapter of the league.

Some city leaders think suing goes too far. Redlands is not considering a lawsuit, Mayor Susan Peppler said. Norco Mayor Frank Hall said any action at this point would be premature.

Riverside County Supervisor Jim Venable split with his colleagues and voted not to sue.

"It creates a lot of bad will," he said. "It's very expensive, just to thump our chest. I don't think that's a good decision."

Blame game

State lawmakers blame each other for the drop in license-fee revenue to cities and counties.

Republicans contend that Davis, a Democrat, illegally triggered the increase in the vehicle license fee last summer. If Schwarzenegger had not reduced the fee last month, a judge would have overturned the hike, Republicans contend.

Late last week, Democrats blocked GOP attempts to bring up legislation to reimburse local governments for lost license-fee revenue. They criticized Schwarzenegger for cutting fees without identifying programs to cut to make up the money for local governments.

Assemblyman Todd Spitzer, R-Orange, a former county supervisor, encouraged cities and counties Tuesday to fight back.

"They should withhold, and then we should litigate," said Spitzer, who represents western Riverside County. "I know (Schwarzenegger) wants a backfill. I told the governor that I was going to hold him to his promise. The backfill has to be honored -- end of story."

Staff writers Melanie Johnson, Imran Ghori, Sharon McNary, Roberto Hernandez, Jim Miller, Dan Lee and Paige Austin contributed to this report.