Skip to main content

VLF Reform

Local governments have historically derived their revenues from property taxes. In recent years, the state hasexercised control over property taxes. Proposition 13 of 1978 limited property taxation from buildings to 1% of the sales price and placed strict limits on increases. Another form of property taxation has been the property aspect of motor vehicles. If you look at your annual vehicle license bill from the DMV, you will see that a small amount of the vehicle license fee (VLF) is associated with property taxes. Once upon a time, the revenues from that portion of the VLF were distributed to local governments where the vehicles were registered. Of course, the state found ways to glom onto those funds, to the point where the four newest cities, formed between 2006 and 2010, were denied those revenues because the state "needed" the money (i.e. "wanted" it) to balance its budget in response to the recession at the time. After some years and a whole lot of complaining by the four cities who had been cut out from the VLF revenue stream, the Legislature passed a law that let the four cities derive an equivalent amount of revenues from the property taxes on buildings. In its great wisdom, the Legislature determined that no other cities would ever get a revenue stream associated with motor vehicles. California (un)Incorporated was concerned about that. With the help of the League of California Cities, the coalition worked with Assembly Members Ken Cooley (representing Arden Arcade in Sacramento County) and Bill Quirk (representing Castro Valley and Ashland in Alameda County) to get legislation that would enable new cities to have access to the VLF revenue stream just like California's 482 existing cities do. Legislation was thus proposed in 2017/2018 (AB2491) and 2029/2020 (AB818) for that purpose. Each time the bills were approved (big time) by the Assembly Local Government Committee and rejected without analysis by the Assembly Appropriations Committee. It's a story that isn't over yet.