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BILL # HB 2055 |
TITLE: MVD; third party reimbursement |
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SPONSOR: Cooley |
STATUS: House Engrossed |
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REQUESTED BY: House |
PREPARED BY: Bob Hull |
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FISCAL YEAR
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2001 |
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2002 |
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2003 |
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EXPENDITURES |
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State
Highway Fund |
$-0- |
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$1,781,400 |
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$1,781,400 |
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The House Engrossed bill would have an annual cost of $1,781,400 to the State Highway Fund beginning in FY 2002 for ADOT’s increased reimbursement of authorized third parties. There would be an additional annual cost of $1,727,800 to local governments beginning in FY 2002 due to decreased Highway User Revenue Fund (HURF) distributions for increased reimbursement of authorized third parties. These estimates are speculative, however, as we lack hard data for some key components of the fiscal impact.
For several years ADOT has been allowed to authorize third parties to perform certain title and registration, motor carrier licensing and tax reporting, dealer licensing and driver license functions. In August 1998 ADOT began reimbursing third parties for certain of these functions. The House Engrossed bill would require ADOT to pay third parties for an expanded list of services, for those transactions where customers choose to use third parties to provide the services instead of dealing directly with ADOT. The following table shows the current reimbursed services, and the expanded list of reimbursed services under the House Engrossed bill.
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Third Party Fees |
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Service Performed |
Current |
HB 2055 House Engrossed |
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Registration |
$1 |
$1 (no change) |
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Title |
$1 |
$1 (no change) |
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Vehicle License Tax (VLT) |
2% of VLT |
2% of VLT or $4,
whichever is greater 1/ |
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Driver license, ID license or permit |
--- |
$4 |
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Overweight or excess size registration or permit |
--- |
2% of fee or $1,
whichever is greater |
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Motor vehicle record |
--- |
$1 |
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Tax report filing |
--- |
$5 |
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____________ 1/ Has the effect of increasing payments when
VLT is less than $200. |
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(Continued)
Assumptions (Continued)
Vehicle License Tax (VLT) - Increased annual payments to third parties for VLT
collection are estimated at $472,100.
ADOT reports that third party registrations totaled 944,200 for FY
2000. Currently, third parties are paid
2% of the VLT collected for vehicle registrations. The House Engrossed bill would pay third parties either 2% of VLT
or $4 per registration, whichever is greater.
This would have the
effect of increasing payments to third parties when the VLT is less than $200. ADOT could not provide us with a breakdown
by VLT level for third party VLT collections, other than an overall average VLT
of $206 collected by third parties. In
the absence of any hard data from ADOT in this area and given an overall
average third party VLT of $206, we have arbitrarily assumed that half of the
944,200 vehicles registered by third parties would have an average VLT of
$150. This would increase ADOT’s
payments to third parties for these transactions, which would fall below the
$200 threshold for the $4 minimum payment.
Under current law, ADOT would pay the third parties, $3,899,300 for
collecting $194,966,500 of VLT. Under
the House Engrossed bill the 472,100 vehicles with an average VLT of $150 would
produce annual payments to third parties of $1,888,400 instead of $1,416,300,
for an increased annual cost of $472,100 to the State Highway Fund.
Driver License - ADOT reports 10,640 third party driver license
transactions in FY 2000, including 79% Internet transactions such as issuing
duplicate driver licenses, and 21% by driving schools. The Internet third party provider currently
performs driver license transactions as a service to the public for which they
receive no fee. The driving schools
also currently receive no fee for performing driver license transactions, but
they might have considered this when establishing their customer rates. ADOT reports that third party driver license
transactions accounted for only 1% of total third party transactions in FY 2000. The House Engrossed bill would create a new
reimbursement to third parties of $4 for each driver license or identification license. It is assumed that the number of annual third
party driver license transactions would no more than double to 21,280 in
response to the new $4 fee, since both the current number of third parties
handling driver license transactions and their volume of driver license
transactions are very small. It is
assumed that ADOT would make total annual payments of $85,200 from HURF monies,
including costs of $36,500 to the State Highway Fund and $48,700 to local
governments.
Excess Size Permit - ADOT reports that approximately 90,000
over-dimensional permits are issued annually by the department, at fees ranging
from $15 to $600 per permit. The House
Engrossed bill would create a new reimbursement to third parties of 2% of each over-dimensional
permit fee or $1, whichever is
greater. Third parties would
receive $1 for over-dimensional permit fees up to $50, and 2% of permit fees above $50. ADOT could not provide us with a breakdown
by fee level of the over-dimensional permits that they issued, other than that
over-dimensional permit fees averaged
$32.56 in FY 2000. This $32.56 average
fee would fall below the $50 threshold for the $1 minimum payment. In the absence of any hard data from ADOT in
this area, we have arbitrarily assumed that third parties would receive at
least the minimum $1 fee for each over-dimensional permit they would
issue. It is assumed that third
parties, such as trucking associations, will handle 25% of over-dimensional
permits beginning in FY 2002, since third parties currently handle about 31% of
title and registration transactions. It
is assumed that ADOT would make total annual payments of $22,500 from HURF
monies, including costs of $12,900 to the State Highway Fund and $9,600 to
local governments.
Motor Vehicle Record - ADOT estimates a total of 2,919,900 motor vehicle records are issued annually by third parties, including 2,896,700 issued to electronic access customers (mostly insurance companies) and 23,200 issued to third party walk-in customers. The House Engrossed bill would create a new reimbursement to third parties of $1 for each motor vehicle record for a total cost of $2,919,900 ($1,250,400 to the State Highway Fund and $1,669,500 to local governments).
Tax Report Filing - ADOT reports that 7,560 tax reports are filed annually with the department. Currently ADOT does not charge customers for filing their tax reports. The House Engrossed bill would create a new reimbursement to third parties of $5 for each tax report filing. Third parties do not currently handle tax report filings. It is assumed that third parties, such as trucking associations, would handle 25% of tax reports filed beginning in FY 2002, since third parties currently handle about 31% of title and registration transactions. It is assumed that ADOT would pay third parties $9,500 annually from State Highway Fund monies.
The following table shows
third party payments for FY 2000, and the estimated annual cost to the State
Highway Fund beginning in FY 2002, assuming a general effective date for the
bill.
Assumptions
(Continued)
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Third Party
Services |
FY 2000 Cost |
HB 2055 Annual Cost Increase |
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Registration |
$ 944,200 |
--- |
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Title |
685,000 |
--- |
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Vehicle License Tax |
3,899,300 |
$ 472,100 |
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Driver license, ID license or permit |
--- |
36,500 |
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Overweight or excess size registration or permit |
--- |
12,900 |
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Motor vehicle record |
--- |
1,250,400 |
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Tax report filing |
--- |
9,500 |
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Total |
$5,528,500
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$1,781,400
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Annual revenue to local governments would decrease a total of $1,727,800 from HURF distributions beginning in FY 2002, including decreases of $921,700 to cities, $574,200 to counties, and $231,900 for controlled access highways in Maricopa and Pima counties.
The House Transportation Committee amendment would add a $4 payment to third parties for nonoperating identification licenses.
4/16/01