Clunkers are Cities’ Cash Cows

Cash Cow

Cash Cow Clunker?

The media is full of stories recently about how the federal program to subsidize new car sales by assuring owners of older gas guzzling cars that they will get up to $4500 for their old clunker has resulted in a surge of new car sales. It has been reported that some new car dealers are actually running out of new cars to sell. And Congress has rushed to add $2 billion to the $ 1 billion original funding level for the program to keep it going.

Not mentioned amidst this media euphoria about the clunker program however is the surge in sales tax and license fees that these unanticipated sales are sending into the coffers of government. In California it is well known that cities bend over backwards to attract and keep car dealerships, big box stores and other retail businesses because the cities reap a large chunk of the sales tax they generate.

So, as the clunker program produces a surge in car sales, cities benefit from a surge in sales tax revenue (The State will also benefit from vehicle tax and license fees collected, but that is another story).

Many cities are cutting back on public service, including hours of operation, levels of police and fire service coverage, recreation programs and the like because of budget problems. Perhaps this surge in clunker revenues can help offset some of those cuts. Do you know what your city is going to do with this unanticipated clunker revenue?


About Over But Not Out

A retired Orange County employee, and moderate Republican. The editor seriously does not know OBNO's identity as did not the former editor, but his point of view is obviously interesting and valued.