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F I S C A L I M P A C T R E P O R T
SPONSOR Heaton
DATE TYPED 01/24/05 HB 39
SHORT TITLE Increase Motor Vehicle Administration Fees
SB
ANALYST Padilla-Jackson
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
$863.0
Similar Recurring
Municipal Fee
Agents
$212.0
Similar Recurring
State Road Fund
$150.0
Similar Recurring Local Governments
($24.0)
Similar Recurring Local Government
Road Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to: HB201
Conflicts with: HB201
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
Department of Transportation (DOT)
SUMMARY
Synopsis of Bill
House Bill 39 increases motor vehicle administrative fees collected by the Taxation and Revenue
Department. Administrative fees, which are collected to defray the costs of operations, are in-
creased from $0.50 to $1.00. The fee is distributed to municipalities conducting the transactions
and to the State Road Fund and to local governments. House Bill 39 also increases the disposi-
tion of fee revenues as follows. With respect to distributions to a municipality, county or fee
agency operating a motor vehicle field office, the bill increases the distribution for driver’s li-
pg_0002
House Bill 39 -- Page 2
cense fees from $6.00 to $8.00 and from $3.00 to $5.00 per identification card or motor vehicle
or motorboat registration or title transaction performed.
Also with respect to the disposition of fees, the bill increases the administrative costs from $0.50
to $1.00 for each administrative service fee remitted to the Taxation and Revenue department for
a municipality or county, other than a class A county with a population exceeding 300,000 (Ber-
nalillo County) or a municipality with a population exceeding three hundred thousand (Albu-
querque) that has been designated as an agent.
The effective date of this bill is August 1, 2005.
FISCAL IMPLICATIONS
Impact of Administration Fees
TRD estimates that the administration fee increase of $0.50 will generate a total of $1.2 million.
This estimate assumes that motor vehicle-related transactions total 2.4 million. Approximately
345 thousand of these transactions are handled by municipalities that operate field offices (“Mu-
nicipal fee agents”). Therefore, $172.5 of the $1.2 million would be distributed to municipali-
ties. The remaining amount would be split between the Road Fund and local governments. Spe-
cifically, 74.65 percent of the remaining 2.055 million transactions times the $0.50 increase
would be distributed to the Road Fund, which equals $767.0. The residual, of $260.5 gets dis-
tributed to local governments.
Changes to Distributions
In addition to receiving the $0.50 increase in administrative fee revenue, municipalities would
receive an additional $2.00 for each motor vehicle or motorboat registration, title transaction, and
identification card that they conduct. These amounts would come from revenues already col-
lected and deposited in the Motor Vehicle Suspense Fund. TRD estimates that the municipalities
issue 115,000 drivers licenses and 230,000 vehicle registrations. This would generate approxi-
mately $230.0 for the drivers licenses (115,000 times $2.00) and $460.0 for the vehicle registra-
tions (230,000 times $2.00), for a total of $690.0.
Since the increased distribution for drivers license, registration fees, and identification cards to
the municipalities are not paid for with new money raised, these changes in distribution nega-
tively impact various funds. The State Road Fund forgoes $230.0, which would now be paid to
the municipalities for drivers licenses. Additionally, the State Road Fund would forgo $325.0
(74.56% of ($460.0-$24.0)), which would now be distributed to municipalities for vehicle regis-
trations. Local governments would forgo $110.5 (25.35% of ($460.0-$24.0)) to pay for vehicle
registration to the municipalities. Note $24.0 subtracted from the calculation above is for the
issuance of identification cards paid to the municipalities by the Local Government Road Fund.
pg_0003
House Bill 39 -- Page 3
The following table details the fiscal impact for each fund:
New administrative fees
$173 Recurring
Municipal fee agents
Municipal fee agents
Total
$863 Recurring Municipal fee agents
$2.00 increase/drivers
license, registration, etc.
$690 Recurring
State Road Fund
$2.00 increase/drivers
license, registration, etc.
($555) Recurring
State Road Fund
New administrative fees
$767 Recurring
State Road Fund
Total
$212 Recurring
Local Governments
$2.00 increase/drivers
license, registration, etc.
($111) Recurring
Local Governments
New administrative fees
$260 Recurring
Total
$150 Recurring
Local Government
Road Fund
Estimated Revenue
Impact FY 2006
Recurring or
Nonrecurring
Impact
Funds Affected
$2.00 increase/drivers
license, registration, etc.
($24) Recurring
Local Governments
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
House Bill 39 is similar to House Bill 201 in that they both increase motor vehicle administrative
service fees and modify the distribution of fees. However House Bill 201 includes more exten-
sive revisions in this area.
TECHNICAL ISSUES
According to the Taxation and Revenue Department, the effective date for modifying distribu-
tions in the bill is not the same as the effective date of the modified fee schedules. Since the
state now uses a full accrual basis of accounting, the two effective dates should be the same.
OTHER SUBSTANTIVE ISSUES
According to the TRD, The Motor Vehicle Division (“MVD”) currently faces a chronic budget
shortfall of almost $3 million per year. Under-funding has reportedly slowed service delivery
and increased reliance on private agents to provide some MVD services. The proposed bill con-
tinues the current practice by which none of the revenue raised by motor vehicle administration
fees is distributed to MVD. This practice contributes to the division’s growing structural deficit.
pg_0004
House Bill 39 -- Page 4
According to the DOT, the following issues are worth noting:
•
Section 66-6-19 NMSA 1978 imposes a fee of $3.00 for vehicle title or registration trans-
actions and ID cards, yet the bill proposes to give Fee Agents $5.00 for performing those
transactions. The net effect of this is to distribute portions of state vehicle registration
fees that currently benefit the State Road Fund (primarily) to the fee agents (about $460
thousand).
•
The fee for issuing a Drivers License is $10. Municipal and Fee Agents would receive 80
percent of that fee under the bill’s provisions. This increased revenue to the fee agents
comes entirely out of the State Road Fund (about $230 thousand). However, the State
Road Fund impact is positive overall due to the increase in administrative fees
•
The fee for issuing an ID card is $5.00. Municipal and Fee Agents would receive 100 per-
cent of that fee under the bill’s provisions. This increased revenue to the fee agents comes
entirely out of the Local Governments Road Fund (about $24 thousand).
•
The language revising the distribution of oversize and overweight permits to the State
Road Fund (page 4, line 19 of the bill) is strictly a technical fix for the convenience of
MVD administration. That revenue is already distributed to the State Road Fund within
Section 66-7-413 NMSA 1978.
OPJ/lg:yr