Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Hanosh

DATE TYPED 02/22/05 HB 201/a HTRC

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

$3,600.0

Similar

Recurring Motor Vehicle Sus-

pense Fund

(Parenthesis ( ) Indicate Revenue Decreases)

(See distribution table below)

Relates to: House Bill 39

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Department of Transportation (DOT)

SUMMARY

Synopsis of HTRC Amendments

House Bill 201 has been amended by the House Taxation and Revenue Committee. The

amended bill would alter the distribution of new administrative fee revenue to the MVD. For

transactions performed by municipal fee agents, the distribution would be lowered from the cur-

rently proposed $1.25 per fee collected to $0.50. For all other transactions, $1.25 is distributed

to MVD. The original bill provided that $1.25 would be distributed to MVD for all transactions.

The amendments also add language so that the listing of various distributions from the Motor

Vehicle Suspense Fund, located in section 66-6-23, contains the distribution of oversize truck

permit fees that is currently contained in section 66-7-413. According to TRD, the conforming

House Bill 201/aHTRC -- Page 2

language is needed to make the list of distributions more complete. Lastly, the amendment pro-

vides an effective date for this bill of July 1, 2005.

Synopsis of Original Bill

House Bill 201 proposes several changes in motor vehicle administration fees and distributions.

It also proposes a new distribution of revenue from royalties for the use of Motor Vehicle Divi-

sion (“MVD”) databases. Lastly, it proposes to allow MVD to retain excess amounts collected

under the Mandatory Financial Responsibility Act to defray operating expenses.

MVD Administrative Fee and Distributions:

House Bill 201 would increase motor vehicle administrative fee on all transactions. Fees, which

are collected to defray the costs the costs of operations, are increased from $0.50 to $2.00.

Revenue from the fee increase would be distributed as follows:

•

Municipalities or counties, other than a class A county with a population exceeding

300,000 (Bernalillo County) or a municipality with a population exceeding three hundred

thousand (Albuquerque) that has been designated as an agent would receive an additional

$1.00 for all transactions executed by municipalities;

•

MVD would receive $1.25 on all transactions (See Technical Issues below); and

•

Remaining amounts would flow under present statutes to the State Road Fund and to lo-

cal governments for road maintenance.

House Bill 201 also increases the disposition of other revenues as follows. The distribution to

municipalities, counties or fee agencies operating a field office increases $2.00 (from $3.00 to

$5.00) for each motor vehicle or motorboat registration, title transaction, or identification card

performed. This increased distribution would come from revenues already collected and depos-

ited in the Motor Vehicle Suspense Fund.

Royalties from MVD Database Use

The Division is permitted to charge a fee for the use of such databases under section 14-3-15.1 of

present law. House Bill 201 creates a new distribution that would transfer amounts paid by com-

mercial users of motor vehicle databases to the Motor Vehicle Suspense Fund for use by MVD to

cover operating expenses.

Retention of Excess Revenue from the Mandatory Responsibility Fund

Under present law section 66-6-6.1, a $2.00 fee is assessed on each registration transaction.

Revenue from the fee is distributed to MVD to enforce the provisions of the Mandatory Finan-

cial Responsibility Act and to implement a multi-language non-commercial driver’s license test-

ing program. House Bill 201 would provide that any revenue remaining after these expenses

have been met would be distributed to MVD to cover operating costs of the Division.

FISCAL IMPLICATIONS

There is no change to the total fiscal impact estimate from the proposed amendments. However,

the distribution of the new fee revenue will change somewhat. The distribution to the MVD is

expected to decrease from approximately $3 million to $2.74 million. The difference will now

be distributed to the State Road Fund (an increase of about $190 thousand) and to local govern-

ments (an increase of about $65 thousand). See the new distribution table below.

House Bill 201/aHTRC -- Page 3

Estimated Impact on Revenues

Recurring or Nonrecurring

Description

FY 2006

Impact

Funds Affected

New administrative fees

$345

Recurring

Municipal fee agents

$2.00 increase per registration, etc.

$460

Recurring

Municipal fee agents

Total

$805

Recurring

Municipal fee agents

New administrative fees

$2,740

Recurring

MVD Operating Budget

Distribution of excess fee revenue*

$400

Recurring

MVD Operating Budget

Royalties from database sales*

$600

Recurring

MVD Operating Budget

Total

$3,740

Recurring

MVD Operating Budget

New administrative fees

$380

Recurring

State Road Fund

$2.00 increase per registration, etc.

($325)

Recurring

State Road Fund

Total

$55

Recurring

State Road Fund

New administrative fees

$130

Recurring

Local Governments

$2.00 increase per registration, etc.

($110)

Recurring

Local Governments

Total

$20

Recurring

Local Governments

$2.00 increase per registration, etc.

($24)

Recurring

Local Government Road Fund

Estimates come from TRD budget department.

Fiscal Implications of Original Bill

This bill is expected to generate approximately $3.6 million to the Motor Vehicle Suspense Fund

in FY06. See the following paragraphs for more information.

Administrative Fees

TRD estimates that approximately 2.4 million motor vehicle-related transactions are performed

annually and that about 345 thousand of these transactions are handled by municipalities that op-

erate field offices (“Municipal fee agents”). The increase of $1.50 per transaction will generate

approximately $3.6 million, with about $345.0 (345,000 transactions times $1 increase in dispo-

sition) of this amount going to the municipalities. The bill, as currently written, would distribute

$1.25 for all administrative transactions to the Motor Vehicle Department, giving the MVD $3

million (2.4 million transactions times $1.25). The residual amount of $255.5, calculated by sub-

tracting the Municipal fee agent and the MVD portions ($3.6 million minus $345.0 and $3 mil-

lion) would be distributed to the State Road Fund (74.65 percent, or approximately $190.0) and

to local governments (24.35 percent, or $65.0) under existing statute.

Vehicle Registration Fee Increase

Municipal fee agents will also receive an additional $2.00 for each motor vehicle or motorboat

registration, title transaction, or identification card performed. TRD estimates 230,000 of these

activities occur per year times the $2.00 totals $460.0.

Since the increased distribution for registrations, titles, and i.d. cards to the municipalities are not

paid for with new money raised, the increased distribution negatively impact various funds. The

State Road Fund forgoes $325.0 (74.56% of ($460.0-$24.0)), which would now be distributed to

municipalities for vehicle registrations. Local governments would forgo $110.5 (25.35% of

($460.0-$24.0)) to pay for vehicle registration, title transactions, or identification cards to the

municipalities. Note, $24.0 subtracted from the calculation above is for the issuance of identifi-

cation cards paid to the municipalities by the Local Government Road Fund.

The following table details the distributions (in thousands of dollars). All distributions in the ta-

ble are from funds deposited in the Motor Vehicle Suspense Fund. Note, the figures in the table

House Bill 201/aHTRC -- Page 4

were provided by DOT. Attachment 1 is a similar distribution table created by TRD, which de-

tails the revenue impacts if the above proposed amendments were adopted (see below).

OTHER SUBSTANTIVE ISSUES

According to TRD, the Motor Vehicle Division (“MVD”) currently faces a chronic budget short-

fall of almost $3 million per year. Inadequate funding has resulted in slower delivery of services,

increased reliance on private agents to provide some MVD services, and inadequate controls and

security. In addition, under-funding of some municipal offices has raised the possibility that the

state will lose these critical partners. HB 201 would enable MVD to resolve its structural deficit

while holding fee increases to a minimum and holding the other beneficiaries of fees largely

harmless.

OPJ/lg