LOS ANGELES –- California RACs are vigorously lobbying for state legislation that would permit them to collect a transaction fee to offset the upcoming vehicle license fee hike. With the fee hike, the car rental industry's annual cost of registering vehicles in the state would otherwise increase from $45.9 million to $142.6 million, according to state estimates. "For our industry, this fee increase just cannot be justified," said Joe Knight, organizational chair of the California Coalition of Independent Car Rental Operators. "Our industry has been caught in a short-sighted blind political game. If left to go forward unchecked, it can do our industry tremendous harm on several levels." Knight is executive vice president of business development for Fox Rent A Car in Los Angeles. California's car rental industry has thrown its support behind proposed legislation (AB 118/SB 849) that would permit a pass-through fee to offset the 2% state licensing fee. The Senate Appropriations Committee on Monday referred AB 118 to the Senate Rules Committee. The bill, introduced by Assemblyman Dario Frommer (D-Hollywood/Burbank), would permit collection of a 5% transaction fee. The monies collected would ultimately reimburse operators for 80% of the amount of the hike. The remaining funds would benefit the state's Transportation Congestion Relief Fund. If passed, the bill would take effect only after the license fee hike became active.
The fee hike, which faces legal challenges from Republican leaders, is set to take effect in October. The state's vehicle license fee was previously 0.65%. The new hike will as much as triple the cost of registering a car in the state. The state imposed the controversial DMV fee raise administratively rather than by a legislative vote. The fee hike is a key component of the state budget that Gov. Gray Davis signed on Aug. 2. Davis faces a recall election on Oct. 7. For more information about the California Coalition of Independent Car Rental Operators' grassroots lobbying efforts, contact Knight by e-mail at joe@foxrentacar.com.

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