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Last Updated: 5/7/2010
Budget Issue: Trailer vehicle license fee (VLF) backfill for International Registration Plan (IRP).
Program: Shared Revenues
Finding or Recommendation: Recommend the Legislature eliminate this VLF backfill. This will provide $11.9 million in General Fund relief at the expense of lower funding to realignment programs.
Further Detail

California is a member of the International Registration Plan (IRP), a program intended to faciliate commercial vehicle registration and operation among states and nations and provide a uniform system for the allocation and collection of commercial vehicle operating fees by all member states.   In 1999, in order to continue to collect fees under the IRP, California had to conform its weight fee system and trailer system to the standard adopted by other states.   To that end, the Legislature passed the Commercial Vehicle Registration Act of 2000 (CVRA) which changed the way vehicle license fees (VLF), registration, and weight fees were paid by commercial trucks and trailers. 

The CVRA exempted commercial trailers from having to pay the VLF and thereby reduced the revenue going to cities, counties and realignment programs.  The Legislature made the decision to hold these entities harmless by backfilling the losses with money from the General Fund. In 2003, facing budget difficulties, the Legislature ended the backfill going to cities and counties but maintained the backfill going to health and social services realignment programs. 

The Governor's budget proposes to eliminate the remaining General Fund backfill to realignment programs.

Eliminating the backfill will reduce funding for realignment programs at the same time their revenue have declined from the effects of the recession.  There does not appear, however, to be any legal requirement that the state continue the backfill. In light of the budget situation this year, we recommend the Legislature eliminate the backfill and acheive General Fund savings of $11.9 million.