Fiscal Note - SB 0043 - Revises Mandatory Auto Insurance Laws
L.R. NO. 0153-02
BILL NO. SB 43
SUBJECT: Motor Vehicles: Insurance
TYPE: Original
DATE: January 20, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Highway Fund ($1,261,925) ($1,508,310) ($1,508,310)
Total Estimated
Net Effect on All
State Funds ($1,261,925) ($1,508,310) ($1,508,310)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government ($418,975) ($502,770) ($502,770)
FISCAL ANALYSIS
ASSUMPTION
No significant fiscal impact would be expected on the budget of the
Department of Insurance (INS).
Officials of the Department of Revenue (DOR), Motor Vehicle Bureau (MVB),
stated the additional reject notices are expected due to the applicant not
forwarding the insurance identification card to the Motor Vehicle Bureau at
the time of registration. During FY96, the MVB Central Branch processed
57,700 registrations which would be affected by this legislation. MVB
estimated that approximately 80% of these would be rejected the first year,
40% in FY99, and 30% in FY2000 with a 2 % growth rate in the total number of
transactions each year.
Based on the current production standard for a Clerk Typist II, MVB would
require three (3) Clerk Typists IIs for 100% of the time in FY98, two (2) in
FY99, and one (1) in FY2000.
MVB anticipates that 1% of the 4.6 million registration applicants will call
Central Office with questions regarding registration applications.
Therefore, MVB requests two (2) additional telephone information specialists
(TIS) the first year and would reduce the TIS to one (1) for each year
thereafter. DOR request a forms destructing cost in the amount of $49,800
for FY98 in order to accommodate the recordation of the declaration.
Oversight assumes that DOR's estimate of the percentage of registrations
which would be rejected annually as a result of this legislation is high
based on the assumption that currently, instructions, forms, etc., are mailed
to applicants explaining what documents are required. Oversight would not
anticipate an appreciable increase in rejects due to this legislation,
therefore Oversight has not reflected costs for additional FTE and related
expenses in this fiscal note.
Oversight assumes the current forms inventory could be allowed to deplete,
resulting in very little excess printing costs, and that a supplemental form
could be inserted temporarily or current forms could be stamped if needed at
a cost of $5,000.
Should workloads increase more than Oversight anticipates, DOR could request
additional resources through decision items in the normal budget process.
REVENUE IMPACT
This proposal deletes the mandatory insurance requisite reinstatement fee of
$200, $400, or $800 and replaces it with a $20 fee. This will result in a
loss to the Highway Fund, Cities, or County Aid Road Trust Fund. The
methodology used by DOR to determine the amount of loss is as follows:
Sampling Process
In FY95 there were 2,922 $200, 130 $400, and 0 $800 reinstatement fees
received.
2,922 x $180 ($200 - $20) = $525,960
130 x $380 ($400 - $20) = $ 49,400
$575,360
Mandatory Insurance and Security Suspension Process
In FY95 there were 17,638 MI and Security Suspension reinstatement fees
received.
17,638 x 41% compliance rate = 7,231 $200 reinstatement fees received
17,638 x 2% compliance rate = 353 $400 reinstatement fees received
7,231 x $180 ($200 - $20) = $1,301,580
353 x $380 ($400 - $20) = $ 134,140
$1,435,720
$1,435,720 + $575,360 = $2,011,080
FY98
$2,011,080/12 = $167,590 x 10 months = $1,675,900
$1,675,900 x 75% = ($1,256,925) Highway Fund
$1,675,900 x 15% = ($ 251,385) Cities
$1,675,900 x 10% = ($ 167,590) CART
FY99 and FY2000
$2,011,080 x 75% = ($1,508,310) Highway Fund
$2,011,080 x 15% = ($ 301,622) Cities
$2,011,080 x 10% = ($ 201,108) CART
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
Highway Fund
Cost - Department of Revenue (DOR)
Expense and Equipment ($5,000) $0 $0
Cost - DOR ($5,000) ($0) ($0)
Loss - Department of Revenue (DOR)
Reinstatement Fees ($1,256,925) ($1,508,310) ($1,508,310)
ESTIMATED NET EFFECT ON
HIGHWAY FUND ($1,261,925) ($1,508,310) ($1,508,310)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
Local Funds
Cities ($251,385) ($301,662) ($301,662)
Counties ($167,590) ($201,108) ($201,108)
ESTIMATED NET EFFECT ON
LOCAL FUNDS ($418,975) ($502,770) ($502,770)
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of
this proposal.
DESCRIPTION
The proposed legislation would require the Department of Revenue to provide
notice 30 days prior to motor vehicle registration renewal that an insurance
ID card must be presented at the time of registration. Vehicle owner must
sign a declaration that insurance coverage will be maintained. The motor
vehicle owner or operator who has his or her motor vehicle liability
insurance cancelled must notify the Department of Revenue. Reinstatement
fees of $200, $400, and $800 would be reduced to $20.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Revenue
Department of Insurance
This Fiscal Note is not an official copy and should not be quoted or cited.