California Gov. Arnold Schwarzenegger has signed an executive order rolling back a recent increase in the vehicle license fee, media outlets reported.

The vehicle license fee – for both cars and big rigs – dropped in 1998 after the General Assembly passed a law that cut the payments made by vehicle owners subject to California registration, according to a letter from Ken Reed, chief of the state’s IRP office. However, the same bill, Reed wrote, required the fee to return to its previous, higher level when California’s general fund did not have enough money to pay for the “offset,” or reduction.

California is in the midst of a significant budget crisis and faces large deficits. That meant the 1998 law, requiring the fees to go up, was triggered; the higher fees went into effect Oct. 1.

The fee is based on a percentage of a truck’s value. On a $100,000 rig, the fee last year would be $650. After Oct. 1, the fee on that hypothetical truck went up to its former level, roughly $2,000. The average car fee increased at that time from $76 a year to $234.

The fee goes to local governments to pay for such services as police and fire protection.

The increase had pumped $4 billion into state coffers, The San Francisco Chronicle reported. It is unclear how the state, already pressed for cash, would make up the lost revenue.

According to The Chronicle, Schwarzenegger’s order overturning the increase said the state was in error in allowing the increase to take place because officials, in determining that the state did not have money to pay for the offset, "did not take into account funds available to the state through borrowing."

A spokeswoman for the League of California Cities told The San Jose Mercury News that city and county officials in the state were apprehensive about the order, which will take literally billions out of their budgets. Many cities are already considering measures to make up the lost revenue.

While Schwarzenegger’s order did reduce the amount truckers will pay to the state, they will still pay significantly more than they did last year. In October, then-Gov. Gray Davis signed a bill into law increasing weight-based IRP fees in the state starting in 2004.

That bill, SB1055, increased the fees 21 percent for the first year. However, if the new law does not bring in as much revenue as the state expects, then the fees could go up within a year to 34 percent higher than their current level in 2005. And the law contains a clause that would increase the fee along with California ’s rate of inflation.