Car tax reduction not linked to welfare increase
By Julia Cheever, Bay City News Service
February 17, 2007
SAN FRANCISCO (BCN) - A state appeals court in San Francisco
ruled Friday that Gov. Arnold Schwarzenegger's reduction in the
state's vehicle license tax in 2003 did not trigger an increase
in welfare benefits for indigent families.
The Court of Appeal by a 2-1 vote overturned a 2004 decision
in which San Francisco Superior Court Judge James Warren ordered
a 3.5 percent cost-of-living adjustment in a welfare program called
CalWORKs, formerly known as Aid to Families for Dependent Children.
The adjustment, which never went into effect while the state
appealed, would have increased a family of three's monthly payment
from about $700 to $725 and would have cost $120 million per year
Schwarzenegger's reduction of the car tax was a campaign issue
and was his first official act after being elected in November
2003 in a recall contest in which voters ousted Gov. Gray Davis
He reduced the tax from 2 percent of a vehicle's value - a level
put in place by Davis in June 2003 - to 0.65 percent. The change
was estimated to cost the state $4 billion a year in revenue.
At the time, any reduction in the tax was tied by a state law
to a cost-of-living adjustment in the CalWORKs program.
Clare Pastore, a lawyer for three mothers in the program, said
the law in effect from 2000 to 2003 was intended to take cost-of-living
increases out of the rest of the budget process.
Pastore said, "The Legislature was saying, 'If motorists
can get a break, we can afford to give needy families a break.'"
The appeals court majority, ruling in a lawsuit filed by the
three mothers, said Warren misinterpreted the complex law defining
reductions in the car tax. It said the tax had not been reduced
from the previous fiscal year because the increase put into effect
by Davis was refunded to car owners.
Court of Appeal Justice William McGuinness wrote, "As a
result of Governor Schwarzenegger's order and the refunds, motorists
did not experience a true increase in tax relief in 2003."
Pastore said, "We think the ruling is very, very disappointing
and legally incorrect." She said the welfare mothers are
likely to appeal to the state Supreme Court.
If the recipients win an appeal, the increase for 2003 would
be added to their current benefits, Pastore said.
The lawsuit was made into a class action on behalf of CalWORKs
The three original plaintiffs are Juana Guillen of San Francisco,
the mother of 8- and 9-year old daughters; Tina Howerton of San
Leandro, a college student with a 9-year-old daughter; and Regina
Jefferson of Los Angeles, who has sons aged 10 and 16.
Pastore said CalWORKs recipients received a 2.7 cost-of-living
adjustment in December 2004 under a new state law that did not
tie increases to the car tax. The current law also bars any cost-of-living
adjustments in the 2005-06 and 2006-07 fiscal years.
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