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

SPONSOR Moore

DATE TYPED 3/15/05

HB 277/aSPAC

SHORT TITLE Department of Motor Vehicles Act

SB

ANALYST Rosen

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Public Safety (DPS)

Taxation and Revenue Department (TRD)

No Responses Received From

Governor’s Office

SUMMARY

Synopsis of SPAC Amendment

Senate Public Affairs Committee amendment to House Bill 277 makes technical changes to cor-

rectly reference the number of divisions in relevant agencies and provides for the new Depart-

ment of Motor Vehicle Secretary to appoint deputy division directors who are covered by the

Personnel Act.

Synopsis of Original Bill

House Bill 277 creates the Department of Motor Vehicles (DMV) to establish a single, unified

department for administration and enforcement of laws and exercise of functions concerning mo-

tor vehicles currently administered, exercised and enforced by TRD’s Motor Vehicle Division

(MVD) and DPS’ Motor Transportation Division (MTD); provides for a secretary appointed by

the governor to serve in the executive cabinet; creates three divisions with respective directors

House Bill 277/aSPAC -- Page 2

for motor vehicles, motor transportation and administration; defines the secretary’s powers and

duties; and amends various statutes related to TRD, DPS and the motor vehicle code to reconcile

this re-organization.

PERFORMANCE IMPLICATIONS

Indeterminate.

FISCAL IMPLICATIONS

All appropriations to MVD and MTD are directed to DMV. It is impossible at this time to esti-

mate the additional fiscal impact but TRD notes that a significant portion of MVD administrative

support is provided for in other areas of TRD’s budget, as described below in Administrative

Implications.

DPS has 1,317.1 FTE and an operating budget of $139,748.5 for FY05. DPS’ administrative

support division has 82 employees and an operating budget of $11,079.3 for FY05. The effec-

tive ratio of administrative support to agency is roughly 1 FTE to 16 FTE or 6%.

TRD has 1,010.7 FTE and an operating budget of $65,912.3 for FY05. TRD’s administrative

support division has 212 FTE and an operating budget of $19,753.7 for FY05. The effective ra-

tion of administrative support to agency is roughly 1 FTE to 5 FTE or 20%.

DPS’ MTD has 254 employees and an operating budget of $12,154.4 for FY05. TRD’s MVD

has 281 employees and an operating budget of $16,292.8 for FY05. Simply combining MTD

and MVD would result in 535 employees. If no efficiencies at all are assumed this DMV combi-

nation might require administrative support of 32 FTE using the DPS ratio or 107 FTE using the

TRD ratio.

ADMINISTRATIVE IMPLICATIONS

According to TRD, a significant portion of MVD administrative support is provided for in

TRD’s budget. These functions include administrative services, information systems, revenue

distributions, personnel, legal and the inspector general. In addition, the Revenue Processing

Division provides operational services in the areas of data entry, citation entry, microfilming and

revenue processing. Separately supporting these functions in DMV would require more funding

than is indicated by MVD’s budget. In addition, splitting these functions from TRD will involve

creating some duplication of services for TRD and DMV. The current configuration of these

services within TRD achieves cost savings because of the significant amount of overlap in re-

sponsibilities between TRD and MVD.

OTHER SUBSTANTIVE ISSUES

MTD estimates the trucking industry has been underreporting its taxable activity within the state

by about $7 million per year. Weight-distance tax permits and revenues were flat from 200 to

2004 and port of entry revenue decreased by 54% even though heavy commercial daily vehicle

miles traveled through New Mexico increased by 19% from 200 to 2003. Moving MTD out of

DPS and into an executive agency focused solely on motor vehicle issues may help to address

this issue.

House Bill 277/aSPAC -- Page 3

Several states have reorganized to combine the functions of motor vehicle and motor transporta-

tion divisions in one executive department. These decisions to change organizational structure

are made in order to centralize business functions, more effectively use enforcement officers,

combine activities relating to certificated and permitted carriers, enhance quality control and

planning, and streamline the structure of management related to motor vehicle issues and func-

tions.

TRD indicates it does not have good, prior information on which is the best organizational form

for MVD. However, TRD believes the proposed changes are likely to disrupt the work of the

MVD, at least in the near term, and implementing these changes by July 1, 2005, would be very

difficult.

ALTERNATIVES

TRD and DPS conduct a detailed cost benefit analysis of the proposed reorganization, including

analysis of all direct and indirect costs for MVD and MTD currently and potential administrative

support costs under the proposed DMV structure.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

Status quo

POSSIBLE QUESTIONS

Does DPS use of MTD vacancy savings to pay for State Police operating expenses impair

MTD’s ability to fulfill its duties and obligations under the current organizational structure.

Would MTD be more effective operating within the proposed DMV.

Why do many TRD employees believe the proposed re-structuring of MVD and MTD into a new

cabinet agency is best for all agencies involved.

Would TRD be more effective in collecting weight-distance taxes from the trucking industry

with the help of a DMV.

JR/sb:njw:lg