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Special Fund Revenue
Motor Vehicle Fees: $5.507 Billion
Motor vehicle fees consist of vehicle license, registration, weight, and driver's license fees, and other charges related to vehicle operation. Figure REV-11 displays revenue from these sources from 2005-06 through 2007-08.
The vehicle license fee (VLF) is imposed on vehicles that travel on public highways in California. This tax is imposed instead of a local personal property tax on automobiles and is administered by the Department of Motor Vehicles. Revenues from this tax, other than administrative costs and fees on trailer coaches and mobile homes, are constitutionally dedicated to local governments.
The number of vehicles in the state, the ages of those vehicles, and their most recent sales price affect the amount of VLF raised. The total number of vehicles in California -- autos, trucks, trailers, and motorcycles as well as vehicles registered in multiple states -- is estimated to be 31,816,000 in 2006-07 and 32,655,000 in 2007-08. The forecast assumes that there will be 2.680 million new vehicles in 2007-08.
The VLF is calculated on the vehicle's "market value," adjusted for depreciation. The motor vehicle schedule is based on an 11-year depreciation period; for trailer coaches it is an 18-year period. A 0.65-percent rate is applied to the depreciated value to determine the fee. Prior to 2005, the rate was 2 percent.
Chapter 87, Statutes of 1991, revised the VLF depreciation schedule and required the Department of Motor Vehicles to reclassify used vehicles based on their actual purchase price each time ownership is transferred. Revenue from this base change is transferred to the Local Revenue Fund for state-local program realignment.
Chapter 322, Statutes of 1998, established a program to offset a portion of the VLF paid by vehicle owners at the 2 percent rate. The state paid or "offset" a portion of the amount due and taxpayers paid the balance. This General Fund offset gave taxpayers significant tax relief and compensated local governments. A permanent offset of 25 percent of the amount of the VLF owed became operative in 1999. Chapter 74, Statutes of 1999, increased the offset to 35 percent on a one-time basis for the 2000 calendar year. Chapters 106 and 107, Statutes of 2000, and Chapter 5, Statutes of 2001, extended the 35 percent offset through June 30, 2001, and provided an additional 32.5 percent VLF reduction, which was returned to taxpayers in the form of a rebate. Beginning July 1, 2001, the VLF was reduced by 67.5 percent. As the amount paid by taxpayers decreased, the amount backfilled by the General Fund increased.
The VLF reduction was suspended for a 141-day period beginning July 1, 2003. Executive Order S-1-03, issued November 17, 2003, rescinded the offset suspension and directed the Department of Motor Vehicles to reinstate the offset as soon as administratively feasible. Although vehicle owners received refunds that restored the VLF tax relief, there was a gap in payments to local government. This $1.186 billion loss to local governments was repaid in the 2005 Budget Act.
Chapter 211, Statutes of 2004, eliminated the VLF offset and reduced the VLF tax rate to 0.65 percent so that taxpayers continue to receive the same tax relief they had previously received. Local governments now receive property tax revenues to compensate them for the loss of VLF revenue. In 2004-05 and 2005-06, that replacement revenue was reduced by $1.3 billion to assist the state.
The Department of Motor Vehicles administers the VLF for trailer coaches that are not installed on permanent foundations. Those that are installed on permanent foundations (mobile homes) are subject to either local property taxes or the VLF. Generally, mobile homes purchased new prior to July 1, 1980, are subject to the VLF. All trailer coach license fees are deposited in the General Fund.
In addition to the VLF, commercial truck owners pay a fee based on vehicle weight. Chapter 861, Statutes of 2000, and Chapter 719, Statutes of 2003, revised the fee schedules to conform to the federal International Registration Plan.
CHAPTER HIGHLIGHTS for
Revenue Estimates Back to Top
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Revenue Estimates (pdf * - 231K)
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Provides this entire Revenue Estimates Chapter in pdf format.
SCHEDULE 2 - Summary of State Tax Collections (pdf * - 9K) -
State Tax Collections per capita and per $100 of personal income.
SCHEDULE 3 - Comparative Yield of State Taxes (pdf * - 12K) -
Revenues for Major State Taxes from 1970-71 through 2007-08.
SCHEDULE 8 - Comparative Statement of Revenues (pdf * - 20K) -
Detail of General and special fund revenues by source for the past, current, and budget years within the following categories: (1) major taxes and licenses, (2) minor revenues, and (3) transfers and loans.
ADDITIONAL INFORMATION Back to Top
Board of Equalization
This site provides information about taxes levied on property, sales, fuel, cigarettes, and alcoholic beverages. The Board prepares an annual report which can be located using that site's search function.
Franchise Tax Board
This site provides information about taxes levied on personal income and on corporations. The Board prepares an annual report which can be located using that site's search function.
Tax Expenditure Report
The Department of Finance annually updates this report on major tax exemptions, exclusions, and credits. This report is posted on Finance's website within the "Financial and Economic Data" page.
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