Shortfall in Car Tax to Hit Home (Local Govts to receive two thirds less) [View All]

http://www.latimes.com/news/local/la-me-backfill9dec09,1,4985399.story?coll=la-home-local

Gov. Arnold Schwarzenegger's promise to protect local governments from losing money as a result of the reduction of the state's car tax is set to fail its first test Wednesday.

Administration officials have notified cities and counties that the state will be $254 million short on the December car-tax payment to local governments, which originally was scheduled to be $381 million and is due midweek.

Moreover, local officials learned Monday that the pain will get worse next month, when payments to the locals go from a third of what they expected to nothing at all. From January through March, state officials plan to divert all remaining car-tax money away from local governments to pay $600 million in refunds owed to drivers who paid the higher car tax this fall.

As a consequence, local governments across the state likely will have to begin cutting programs ranging from fire coverage to libraries, government officials say. Some local governments and the California League of Cities are threatening to sue the state for the money. Other cities already have concluded that they are unlikely to get paid and are considering tax increases.