Gov. Gray Davis on Tuesday said he supports an effort by Assembly Democrats to raise personal income taxes and undo the vehicle license fee increase.

Lawmakers are crafting legislation that would wipe out the tripling of the car fee that is to go into effect Oct. 1. Instead, the bill would add two new top income tax brackets and bump up taxes on cigarettes.

"If we can find a legal way to reduce the car tax while raising the taxes that I proposed in my budget in January, I would support it," Davis said. "I never intended for this burden to fall solely on the motorists of California."
The Davis administration triggered the license fee hike in June after determining that the state was too cash-strapped to repay local governments revenues lost from an earlier reduction in fees.

The budget approved by the Legislature two weeks ago relies on $4 billion in yearly revenue generated by the license fee increase. Republicans successfully blocked an array of other tax increases this year by withholding the votes required for the two-thirds approval needed in the Legislature to pass a tax hike.

But the bill's author, Assemblyman Darrell Steinberg, contends the Legislature can approve the new plan with a majority vote -- a threshold that can be achieved in both legislative chambers without GOP votes -- because the swap does not create a net increase in state revenues.

"The constitution itself says that there is a two-thirds vote requirement if you are raising taxes for the purpose of raising revenues," said Steinberg, D-Sacramento. "That's the key phrase."

At least one key Democrat and several Republican lawmakers are criticizing the plan.

Senate Majority Leader Don Perata, D-Alameda, said the Senate should focus instead on reforming the state's workers' compensation laws.

"I don't quite understand what the purpose of that would be -- to say, 'We were wrong, and we're sorry?' " he asked. "I would hope we don't occupy ourselves excessively with things like that, because it takes all our collective energy these days to just get one or two things done."

Republican leaders, meanwhile, called the swap an end-run around the California Constitution in an attempt to abolish a politically unpopular tax that could harm Davis in an Oct. 7 recall election.

State Sen. Tom McClintock, a candidate to replace Davis on the recall ballot, is leading a lawsuit against the fee increase. However, he issued a statement Tuesday blasting the proposed swap as "just another shell game by the big-spending Democrats."

Lt. Gov. Cruz Bustamante, who also is running in the recall election, has endorsed the idea of switching the taxes.

Davis in January proposed a budget that would raise taxes on top earners, smokers and shoppers but would not have raised the car fee.

In May, after the size of the deficit grew and some Democratic leaders called for a boost in license fees to spare cuts to cities and counties, Davis agreed to the vehicle license fee increase.

"When I proposed my budget, I did not want the car tax to go up," Davis said. "I do not think it's fair that ordinary Californians bear the full burden of the budget crisis."

The move increased fees that drivers pay by an average of $160 more per car.