Sen. Cabaldon supports Napa Valley leaders in urging state to keep 'car tax' promise
Sacramento (April 28, 2025) A group of elected leaders invited by Sen. Christopher Cabaldon traveled from Napa Valley to the Capitol last week to urge the state to fulfill a budget promise it made to cities and counties more than 20 years ago.
Sen. Cabaldon joined Napa County Supervisors Belia Ramos and Liz Alessio; Napa City Councilmember Beth Painter; and Calistoga Vice Mayor Irais Lopez-Ortega in pushing for a permanent solution to how the state reimburses local governments for funding they once received from vehicle registration fees before Gov. Arnold Schwarzenegger slashed them in 2004.
In his 2003 campaign to oust Gov. Gray Davis, Schwarzenegger promised to repeal an increase in the 'car tax,' going so far as to drop a wrecking ball on an Oldsmobile to make his point. He made good on that pledge soon after taking office.
At the time, the state agreed to pay local governments the amount they would have received through the Vehicle License Fee had it not been cut. This was accomplished through a complicated “VLF swap” in which the state contributed a greater share of funding for schools – leaving more property taxes for cities and counties.
“When Governor Schwarzenegger proposed significant reductions in the vehicle license fee, this mechanism was created to deal with the severe consequences statewide if every city and county lost all of their vehicle license fee revenue,” Sen. Cabaldon said during a hearing by the Senate Budget Subcommittee on state and local government, which he chairs.
Today though, a handful of districts with declining student enrollment and rising property values no longer receive core state funding for their schools because local property taxes cover the state-guaranteed funding level per student. But cities and counties do still need the VLF replacement funding to support their budgets.
While Napa County and the cities of Napa, American Canyon, Yountville, St. Helena, and Calistoga don’t face a cut this coming budget year, they likely will soon. Napa County could lose $29.3 million – or 15 percent of its general fund budget.
The City of Napa stands to lose $10 million to $12 million – or 9 percent of its general fund. Calistoga would lose 15 percent.
Ramos said the 2004 formula no longer works due to skyrocketing housing values and declining enrollment, but does not mean the community no longer needs funding for roads, mental health care, nutrition programs or other vital services.
Holly Dawson, Napa County’s Deputy CEO for Communications, said without the VLF funding the county and its cities would likely face immediate layoffs, severe reductions to public safety and community services, and other significant cuts simply to remain solvent.
“We are deeply grateful to Senator Cabaldon for his continued partnership and leadership on issues that matter to counties like ours,” Ramos said. “His commitment to resolving the Vehicle License Fee inequity reflects a strong understanding of the long-term impacts these legislative decisions have had.”
Media contact: Mary Lynne Vellinga, marylynne.vellinga@sen.ca.gov