Declaring that California is running on fiscal fumes, state finance officials "pulled the trigger" Friday to raise the vehicle license fee for at least a year to ease a staggering budget deficit.

"California is broke," said Steve Peace, director of Gov. Gray Davis' finance department. "This is the first time that we've been in a position where we actually have none of our own money. We are operating as of today totally on borrowed cash."

The long-awaited increase prompted Republicans to launch a campaign to abolish the fee, taxpayer groups to promise court challenges, and the Department of Motor Vehicles to prepare for mass confusion as drivers learn of the fee hikes and attempt to determine whether it applies to them.

The move means that California drivers whose vehicle registration expires on Oct. 1 and thereafter will pay triple the fees drivers now pay, or an average $160 more per car, officials said.

The department will begin mailing out bills that reflect the higher fees in August -- 60 days before registration renewals come due.

Paying early, officials stressed, will not get drivers off the hook.

"Even if they pay the fee early that's due in October, they will be assessed a higher rate," said Ken Miyao, DMV's deputy director for vehicle registration.

Officials also cautioned residents against flocking to neighborhood DMV branches to try to beat the hike.

"Nothing will be served by showing up at a DMV office and attempting to pay those fees early," said Bill Cather, DMV's legislative director. "The lines are plenty long already."

The triggering of the politically unpopular fee hike comes as lawmakers are locked in a battle over a state budget plan with 10 days left before the start of the new fiscal year.

Advocates for cities and counties cheered the fee increase because the revenues from the annual charge on vehicles registered in California are distributed to cities and counties.

"Vehicle license fees contribute significantly to city and county budgets -- and play a particularly important role in providing public safety services," according to a statement issued Friday by a coalition of local government groups.

Others, including taxpayer advocates and Republican lawmakers, blasted the increase.

"It's a horribly regressive and unnecessary tax," said Jon Coupal, president of the Howard Jarvis Taxpayers Association, which plans to file a lawsuit challenging the fee hike. "It is a tax that hits low-and middle-income Californians the hardest."

State Sen. Tom McClintock, R-Simi Valley, immediately submitted paperwork to begin collecting signatures for a pair of ballot measures to wipe out the tax hike. One measure would change state law to set the tax permanently at $1 per year. The other would change the state's constitution to abolish the tax.

Friday's action follows months of speculation when, or if, Davis' finance staff would determine that the state's fiscal woes dictated an increase in the fee.

The 1998 budget signed by Republican Gov. Pete Wilson phased in a gradual lowering of the license fee, but it included a provision allowing it to be restored if the state has "insufficient moneys."

With the state facing its deepest-ever shortfall, Davis built his May budget around the assumption that the fee hike would infuse $4 billion into a state treasury facing a $38 billion deficit.

As of 9 a.m. Friday, when a large payment to state investors came due and after a series of tests of the state's fiscal fortitude, Peace, the state finance director, made the call that no one in California government seemed to want to make.

"The law is the law is the law," Peace said, announcing the increase to a roomful of reporters from Los Angeles via speakerphone. "I'm compelled to follow the law whether the Legislature likes it or the governor likes it or anybody else."

The law directs the state controller in times of "insufficient moneys" to transfer funds from the state's main budget into the Department of Motor Vehicle account used to repay cities and counties for the lost revenue. If there is not enough to repay local governments, the law says, the fee is automatically adjusted.

Peace and state Controller Steve Westly have said that a recent $11 billion loan secured by state officials will last only until August and that the state will be unable to pay its bills unless lawmakers have approved a budget.

Westly, who also has sought to distance himself from the decision to raise the car fee, agreed that the state's cash shortage meets the threshold.

"If this doesn't meet anybody's test of insufficient money," he said, "God knows what would.