Action by Royal Governor Brazenly Illegal

Action by royal governor brazenly illegal

Illegal taxes are what political revolutions are made of. Just ask King John, whose illegal taxes produced a taxpayer revolt that ended with the Magna Carta. Or George III, whose illegal taxes provoked the American Revolution. California's royal governor could profit from their example.

Gov. Gray Davis' action to triple the car tax is brazenly illegal. According to the Legislative Counsel's Office, the official legal office of the state Legislature, only the controller can raise the car tax, and only then on a month-by-month basis, and only then if the state cannot write a check to reimburse local governments for lost revenues, and only then for the amount of the shortfall.

Not one of these conditions has been met in the governor's decree. He has simply ordered the theft of $4.2 billion of taxpayer money that he has no legal authority to collect. King John would be proud.

How can that happen in a nation of laws? California's Constitution prevents a court from issuing an injunction to block an illegal tax, meaning it will take several years before the courts can stop him. In 1990, the state imposed a $300 tax on every car brought into California in direct violation of both the state and federal constitutions. It took 10 years before the courts could order a refund.

Of course, when that happens with the car tax, Californians will be due all of their money back, plus interest. If legislators go along with the charade and pass a budget based on this illegal tax, they will be setting themselves up for billions of dollars of refunds that are certain to break any future budget. But by then, Davis expects to have gotten out of town and left the whole mess in somebody else's lap.

Until then, Californians face two choices. One is to recall Davis, which could occur as early as this fall. If Davis can claim the authority to raise the car tax by fiat, the next state governor can claim the same authority to lower it by fiat.

The other is to place an initiative on the ballot to abolish California's car tax once and for all. I have filed two initiatives to do so—one of which abolishes the tax completely, prevents the imposition of future taxes, and fully reimburses local governments for any losses.

Is such an action responsible with the state facing the biggest fiscal crisis in its history? First and foremost, the state is not entitled to increase this tax—period.

When the initiative takes effect in November of 2004, it will still take taxpayers nearly three years just to be made whole for the taxes the state has illegally taken from them in the intervening time.

But more to the point, California is not suffering a revenue shortfall. In the first four years of this administration, revenues have increased 25 percent while inflation and population combined have grown only 21 percent. The problem is that spending has increased 40 percent.

Tax increases—even legal ones—cannot bail out a state that is increasing its spending almost twice as fast as its revenues.

The Reason Foundation has identified $6 billion in wasteful bureaucracies that could be eliminated or consolidated and $9 billion in savings from contracting out -- $15 billion that could be cut out of the budget without affecting vital services. But such reforms are anathema to California's powerful spending lobby, and none of them has been adopted.

When the federal government finally got serious about shutting down obsolete military bases, it conducted a comprehensive review and closed 90 of them, saving $20 billion—and the military was stronger for it.

For six years, I have proposed the same review mechanism for California's obsolete and inefficient bureaucracies—and last month that reform was killed on a party line vote for the sixth year in a row.

Thomas Jefferson once said that a little revolution every now and then is a healthy thing to prevent despotism from taking root—as the royal governor of California is about to discover.