This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0415 - Modifies insurance inspection and registration of motor vehicles
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 1692-04
BILL NO.: SB 415
SUBJECT: Insurance, Automobile; Licenses - Motor Vehicle
TYPE: Original
DATE: February 22, 1999
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Highway | ($174,328) | $28,138,335 | $1,283,768 |
| Insurance Dedicated | $0
to $33,350 |
$0 | $0 |
| General Revenue** | ($Unknown) | ($Unknown) | ($Unknown) |
| Highway Patrol Inspection | $0 | $1,075,000 | $537,500 |
| Total Estimated
Net Effect on All State Funds** |
($140,978)
to ($Unknown) |
$29,213,335
to ($Unknown) |
$1,821,268
to ($Unknown) |
** Additional Costs to Courts are expected to exceed $100,000 per year.
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| None | $0 | $0 | $0 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Local Government | ($55,630) | $8,682,784 | ($173,100) |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 12 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the proposal would require DOR to process an additional suspension type, a court ordered suspension. In FY 98, DOR received 53,266 officer notices from law enforcement in Missouri. Of this total, 25,320 (48%) provided proof of insurance. The DOR has seven (7) FTE that are responsible for editing notice and compliance documents, microfilming and processing reinstatement fees, SR-22 insurance certificate filings, correspondence, etc. Therefore, the provisions of this proposal do not impact this process and DOR must retain the services of these seven FTE. Based on FY 98 data, DOR is assuming an average of 53,266 tickets will be issued for operating a motor vehicle without liability insurance and that 25,567 drivers will be able to present evidence to the court that liability insurance was in effect at the time of the offense. Then, of the remaining 27,698 offenses, DOR expects that 23,778 (80%) will receive a four point conviction and 5,947 (20%) will receive a court ordered suspension. The processing of any additional tickets will be absorbed with existing resources.
The provisions of this proposal would require the DOR to maintain a record of all persons placed on court ordered supervision. Also, this proposal does not clarify if those persons receiving a court ordered suspension are to be afforded an opportunity of an administrative hearing. If the person is to be granted an administrative hearing, as are other suspension types under authority of Chapter 303, DOR would require the services of one additional FTE and associated equipment and expenses to accommodate the additional hearing requests received, conduct administrative hearings, grant continuances, reinstatement fees, etc. However, since the proposal is not clear on this issue, DOR will not request an additional FTE at this time.
The DOR would incur State Data Center costs in the amount of $7,440 to accommodate the computer programming modifications required as a result of this proposal.
The decrease in reinstatement fees due to suspension would result in a revenue loss to DOR. Under current law, reinstatement fees are $200 for first suspension, $400 for second suspension and $800 for third and subsequent suspensions. Based on this proposal, such reinstatement fees would decrease to $20, $200 and $400, respectively, resulting in a revenue loss to the Highway Fund, Cities and County Aid Road Trust Fund (CART).
Officials of the Department of Revenue's (DOR) Motor Vehicle Bureau (MVB) assume their bureau would incur expenses in the amount of approximately $45,000 for programming changes
ASSUMPTION (continued)
and modifications to the FASTR computer system to handle the option of biennial registrations in FY01. MVB would also incur expenses in the amount of $15,016 for policy revisions, forms, fliers and postage in FY01 to notify the field and citizens of the changes regarding registrations, inspections, and personal property tax receipts.
DOR officials project that beginning July 1, 2000, even numbered registrations or vehicles would be given the option of biennially registering their motor vehicle. Every vehicle would have to be safety inspected and registered in FY01. Beginning FY01, DOR officials assumed that of the even numbered vehicles or registrations given the option, approximately 50% would choose biennial registration. Due to this staggered implementation, actual cost avoidance would not be realized until FY02.
DOR's Internal Audit and the Motor Vehicle Bureau estimates there would be a cost avoidance in amount of $728,069 in FY02 and beyond for renewal applications, financial responsibility fliers, envelopes, renewal tabs and postage that would not be required due to biennial registrations.
DOR officials assume that although there would be an increase in revenues in FY01 of $35,410,878 from those individuals who choose to go to biennial registrations at twice the annual registration fee, those same individuals would not have to renew their registrations until FY03. In FY02, the remaining registrants (the odd-numbered vehicles or registrations) would be given the option of biennial registrations at twice the annual registration fee. Again assuming that 50% of those offered would choose the biennial registration, the increased registration fees would offset the 25% reduction in the number of registrants that chose biennial in FY01.
DOR assumes the component of the legislation relating to the electronic transmission of motor vehicle registrations is only enabling legislation and does not require the Director to accept electronic transmission at this time. The direct impact of electronic transmission of motor vehicle registrations is UNKNOWN at this time.
Oversight assumes the component of the proposal relating to the creation of the electronic transmission of motor vehicle registrations is permissive and has not included associated costs in the fiscal impact specifications below.
DOR officials stated that the language, as written, in the proposal relating to motor vehicle inspections causes legal concerns, because it simply deletes the word "annual"; however, it is DOR's understanding that a substitute with the corrected language will be offered.
This proposal also includes language to enable the DOR to create and maintain a motorist insurance identification database to use when verifying compliance with the motor vehicle
ASSUMPTION (continued)
financial responsibility law. The Motor Vehicle Bureau will capture insurance companies' names and policy numbers at the time of application for registration of motor vehicles. The DOR may verify the financial responsibility of any person sampled or reported. If the DOR determines the insurance information provided by an owner is inaccurate, the Director shall notify the owner that proof of insurance must be presented within 15 days. This proposal indicates that the effective date of this legislation will be January first following the year the Director of DOR notifies the revisor of statutes that the motorist insurance identification database is operational. For purposes of this fiscal analysis, the DOR estimates the database will be operational January 1, 2000.
The DOR would incur expenses in the amount of $216,000 for programming costs to modify FASTR to collect insurance information at the time of motor vehicle registration.
Currently, the DOR uses sampling techniques provided for through officer notices. Since this proposal deletes the requirement of officer notices and provides for other variations of sampling; court ordered suspensions, court ordered supervision, convictions or through the insurance database, but does not specify the amount of these actions that should be sampled, DOR cannot determine the number of FTE that would be required. The current sampling staff does not have FASTR workstations; therefore, the current computer workstations would need to be upgraded to FASTR workstations. However, DOR cannot estimate the costs that would be incurred for equipment and expense associated with the FTE.
Oversight assumes the component of the proposal relating to the creation of the insurance database is permissive and has not included associated costs in the fiscal impact specifications below.
Officials of the Department of Public Safety - Missouri State Highway Patrol (MHP) stated that as written, they could not estimate the fiscal impact of this proposal due to the ambiguity of the wording. MHP officials stated that problems arise with the option for an annual or biennial registration (and therefore an annual or biennial safety inspection). DOR has the option to offer biennial registration to the consumers as well has having the option of staggering any biennial inspections.
Therefore, MHP officials assume there are two scenarios which could occur as a result of this proposal:
Scenario 1:
DOR would allow biennial registration and inspections. Furthermore, MHP assumes that the majority of vehicle owners would opt for biennial safety inspections since the annual and biennial inspection prices are the same, $12 per inspection. Additionally, MHP assumes that DOR would then establish rules to regulate the flow of those owners that choose biennial registration and inspections so that roughly half would be in the first year and half in the second year of the first biennial time frame. Based on these assumptions, MHP would realize no drastic change in the fiscal impact. Under these assumptions, half of the vehicles would be inspected per year while each sticker sold for these vehicles would have a doubled fee price.
Scenario 2:
MHP could not estimate the number of vehicles that would be inspected in any given year. This is based on DOR having the option to offer annual or biennial registrations and vehicle owners having the option to elect annual or biennial safety inspections. Under these ambiguous conditions, MHP could not estimate if biennial registrations would be offered and if so, the number of people that would elect annual versus biennial registrations and inspections. Therefore, MHP's impact under these conditions would be unknown.
Oversight assumed for purposes of this fiscal note, that all motor vehicles would have to be inspected in FY01. In FY01, the fee for safety inspection sticker/decals would be increased from $.75 to $1.50, for a $.75 gain for each safety inspection sticker/decal sold. This would result in an increase of $2,150,000 to the Highway Fund and an increase of $1,075,000 to the Highway Patrol Inspection Fund in FY01. Assuming 50% of the even numbered vehicles/registrations given the option by DOR to register their vehicle biennially would choose biennial registration, there would be 25% fewer safety inspections in FY02. However, because the safety inspection sticker fee would be doubled by this proposal, 3,225,000 vehicles would be inspected at the higher fee, resulting in a net gain of $1,075,000 to the Highway Fund and $537,500 to the Highway Patrol Inspection Fund in FY's 02 and beyond.
Officials from the Department of Transportation (DHT) assume there would be an initial increase in revenue from changing annual registrations to biennial registrations and a decrease in revenue in subsequent years from lowering the driver's license reinstatement fees. Except for the lowering of the reinstatement fees which DHT assumes will not be effective until January 1, 2001, the rest of the proposal affecting the Road Fund will be effective July 1, 2000. This legislation provides owners of vehicles the option of biennial registration of a motor vehicle other than commercial motor vehicles licensed in excess of 12,000 pounds and doubles the registration fee collected at the time of a biennial registration. Similarly, those vehicles which are registered biennially will only require a vehicle inspection biennially with the inspection fees being doubled. The proposal also lowers the reinstatement fees. The total estimated fiscal impact on the Road Fund for FY 01 will be an increase in revenue of $36,490,000. A decrease will subsequently result mainly from lowering the reinstatement fees for FY 02 and FY 03 estimated at $980,000 and $962,000, respectively. The estimated increase to the cities and counties would be $5,323,000 for FY 01; $359,000 for FY 02; and $376,000 for FY 03.
The DHT did not provide documentation to support the above fiscal impact amounts. Oversight
ASSUMPTION (continued)
derived fiscal impact amounts from information supplied by DOR.
Officials from the Office of State Courts Administrator (CTS) assume the proposed legislation would have a definite impact on the workload of the courts. The proposal would require an officer to issue a citation to an operator who fails to show proof of insurance, whereas presently, a citation is permissive. The proposal would also add a new clerk responsibility, requiring the clerks to forward a report of conviction or orders of supervision to DOR within 10 days of such actions. Finally, the proposed legislation would shift the burden for suspension to the court and create a new responsibility for the court, court-ordered supervision for convictions under the new law. Last year, DOR received 53,266 notices of failure to have insurance, and of those, 25,567 did provide proof of insurance. Therefore, if officers are required to issue a citation, the number of cases could increase significantly. Thus, total caseloads will definitely increase, as will the workload of the clerks and courts. This could easily increase misdemeanor caseloads by 100,000 cases, with many of them requiring a second hearing to reinstate driving privileges after they secure insurance. Many of the defendants will appear without counsel, which will increase court time in handling the cases. Clerks will have to spend time with defendants outside the time in court. At an hour per case, CTS estimate approximately 100,000 hours, or about 56 FTE (based on 1800 hours/FTE), with resulting costs of approximately $1.5 million, exclusive of judge time and supervision costs.
Oversight assumes additional costs to CTS could exceed $100,000 per year. CTS will make specific budget requests as they acquire experience with this program.
Officials from the Department of Insurance (INS) assume the proposed legislation could result in an increase in revenue of up to $33,350 for one year, due to a potential increase in insurance companies refiling policy forms. The proposal would require insurance companies to write an auto policy for a minimum period of three months. Most insurance companies already do this; however, those that do not would need to refile their policy forms. The forms would then need to be reviewed by INS. Additionally, insurance companies may incorporate the revised point schedule in this proposed legislation in their underwriting guidelines, which would have to be refiled with INS. There are currently approximately 320 private passenger insurers and 347 commercial auto insurers in Missouri. Not all of these insurance companies will be affected by these changes and some of these companies may be writing both types of auto insurance and may
be counted twice. Therefore, INS is submitting a range for fiscal impact. It is anticipated that current appropriations and staff will absorb the work responsibilities for this single proposal. However, if additional proposals are approved during the legislative session, INS may need to request an increase in appropriations due to the combined effect of multiple proposals.
Officials of the Department of Natural Resources (DNR) stated that 1984, the safety and
ASSUMPTION (continued)
emission inspections have been conducted together in the St. Louis area. They follow the same annual inspection schedule as mandated by statute. A motor vehicle receives one safety/emission sticker once the vehicle has passed. Currently a separate sticker for an emission inspection does not exist.
DNR officials assume this proposal would change the inspection period from every year to the preference of every year or every two years. The fee for the safety inspection would be increased from $7 to $12. However, the fee for the emission inspection remains unchanged at $10.50 per
RSMo 307.366, so the total revenue for the State and inspection stations could be reduced by half for emission inspections in Franklin County.
Beginning July 1, 2000, owners of motor vehicles other than commercial motor vehicles licensed in excess of 12,000 pounds will have the option of biennial registration, the department may not be impacted by this provision if everyone opted for annual registrations (meaning annual safety and emission inspections).
The provisions of this proposal would be effective July 1, 2000. Since the enhanced vehicle emission inspection/maintenance program per RSMo 643.300 is scheduled to begin April 1, 2000, which replaces the emission inspection program in RSMo 307.366 in the St. Louis area the emission inspection provisions could only potentially impact Franklin County.
DNR officials assume that Franklin County will not have 100,000 in population by the next census in year 2000, Franklin County will have the emission inspection program per RSMo 307.366. For fiscal years 2001 and thereafter, the estimated revenues would be $28,125 (annual revenues of $56,250 - 75,000 vehicles x .75 - divided by 2 (revenue cut in half. ) Therefore, DNR officials estimated the reduction in revenues for the state would be between $0 and approximately $28,125 assuming everyone in Franklin County opted for biennial registrations.
Oversight noted that the enhanced vehicle emission inspection/maintenance program is scheduled to being April 1, 2000, which replaces the emission inspection program in 307.366 RSMo in the St. Louis area. Franklin County would still be utilizing the BAR-90 inspection. Subsection 2 of Section 1 of this proposal states that "The vehicle owner shall present all documentation otherwise required by law for vehicle registration" be presented at the time of registration. After conferring with DOR officials, Oversight assumes in Franklin County, if a registrant chose to have their vehicle registration biennially, at the time of registration those residents would be required to present documentation of one safety inspection and two emission inspections for that period (one for each year). Therefore, Oversight assume the Missouri Air Pollution Control Fund would not be fiscally impacted by this proposal.
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (6 Mo.) | |||
| HIGHWAY FUND | |||
| Income - Department of Revenue (DOR) | |||
| Increased registration fees | 0 | $26,558,159 | 0 |
| Income - Missouri Department of Transportation (DHT) | |||
| Increased safety inspection fees | 0 | $2,150,000 | $1,612,500 |
| Savings - DOR | |||
| Reduced fliers, envelopes, etc. | 0 | 0 | $728,069 |
| Costs-DOR | |||
| Computer Programming Costs | ($7,440) | $0 | $0 |
| Costs - DOR | |||
| Forms, fliers, programming | 0 | ($60,016) | 0 |
| Loss-DOR | |||
| Reinstatement Fee Decrease | ($166,888) | ($509,808) | ($519,301) |
| Loss - DHT | |||
| Reduced number of safety inspections | 0 | 0 | ($537,500) |
|
ESTIMATED NET EFFECT | |||
| ON HIGHWAY FUND | ($174,328) | $28,138,335 | $1,283,768 |
| HIGHWAY PATROL | |||
| INSPECTION FUND | |||
| Income-Missouri State Highway Patrol | |||
| Increased safety inspection fees | 0 | $1,075,000 | $806,250 |
| Loss-Missouri State Highway Patrol | |||
| Reduced number of safety inspection | 0 | 0 | ($268,750) |
|
ESTIMATED NET EFFECT ON | |||
| HIGHWAY PATROL INSPECTION FUND | 0 | $1,075,000 | $537,500 |
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (6 Mo.) | |||
| INSURANCE DEDICATED FUND | |||
| Income-Department of Insurance (INS) | |||
| Refiling Fees | $0 | ||
| to | |||
| $33,350 | $0 | $0 | |
| $0 | |||
|
ESTIMATED NET EFFECT |
to | ||
| ON INSURANCE DEDICATED FUND | $33,350 | $0 | $0 |
| GENERAL REVENUE FUND | |||
| Costs-Office of State Courts Adm. (CTS) | |||
| Increased Court Cases | ($Unknown) | ($Unknown) | ($Unknown) |
|
ESTIMATED NET EFFECT | |||
| ON GENERAL REVENUE FUND** | ($Unknown) | ($Unknown) | ($Unknown) |
| ** Costs are expected to exceed $100,000 | |||
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (6 Mo.) | |||
| LOCAL | |||
| Income-Cities | |||
| Increased Registration Fees | $0 | $5,311,632 | $0 |
| Income-CART | |||
| Increased Registration Fees | $0 | $3,541,088 | $0 |
| Loss-Cities | |||
| Reinstatement Fee Decrease | ($33,378) | ($101,962) | ($103,860) |
| Loss-County Aid Road Trust Fund | |||
| Reinstatement Fee Decrease | ($22,252) | ($67,974) | ($69,240) |
|
ESTIMATED NET EFFECT | |||
| ON LOCAL GOVERNMENT | ($55,630) | $8,682,784 | ($173,100) |
| FISCAL IMPACT - Small Business | |||
| Small businesses could have a direct fiscal impact as a result of this proposal. Businesses that utilize vehicles to carry out business activity would need to ensure strict compliance with the motor vehicle financial responsibility requirement and could be penalized if they were not in compliance. Additionally, reinstatement fees would be decreased. | |||
This proposal could affect the workload of stations that perform vehicle safety inspections.
DESCRIPTION
This proposal would make various changes to the current laws affecting registration, inspection and insuring of motor vehicles.
This act would allow the Director of Revenue to accept and renew vehicle registrations by electronic means. The documents required for registration; personal property tax receipt, insurance card, safety and/or emissions inspection may be verified by electronic means.
The proposed legislation would provide for the court to convict a person of driving without insurance and either enter an order of supervision, suspend the driving privileges or assess four points against the license in accordance with Section 302.302.
Whenever a court convicts a person of a violation of Section 302.025, or enters an order placing on supervision the person charged with the violation, the clerk of the court would be required within ten days, to forward a report of the conviction or order of supervision to the Director of Revenue.
If the operator of a motor vehicle would fail to exhibit an insurance identification card, the officer or inspector would be required to issue a citation to the operator.
When a person's driver's license has been suspended, reinstatement fees would be reduced. If a person's driving record shows no prior failure to maintain the required financial responsibility, the reinstatement fee would be $20, rather than the current $200. If a person's driving record shows one prior suspension for failure to maintain the required financial responsibility, the reinstatement fee would be $200, rather than the current $400. If a person's driving record shows two or more
prior suspensions for failure to maintain the required financial responsibility, the reinstatement fee would be $400, rather than the current $800.
Every motor vehicle liability policy would be required to be issued for a minimum term of three months. Each policy payment collected would be required to cover a period of at least one
DESCRIPTION (Continued)
month.
The provisions of this proposal would become effective January 1, 2000.
This proposal would prohibit the issuance of a motor vehicle license registration from the Department of Revenue or a property tax receipt from a county or township collector until all taxes, including all delinquent taxes currently due, are paid.
This proposal would require the complete fuel system of a motor vehicle, not just the fuel tank, to be inspected on an official state inspection.
The maximum period for suspending or revoking an inspection station or an inspector's permit, for not complying with inspection regulations, would be increased from one to 3 years. Official inspection station permit holders would be responsible for the conduct of their business and for any employee who was in violation of motor vehicle safety inspection laws or regulations.
Owners of vehicles with defects would have 20 days instead of the current 15 days to correct the defects. The maximum fee for an official motor vehicle inspection would be increased from $7 to $12, and from $6 to $10 for the inspection of a motorcycle or trailer. The fee charged by the Missouri State Highway Patrol for certificates of inspection, stickers, seals, or other devices issued by the official inspection stations would be increased from $.75 to $1.50. Of these fees collected, $1.00 instead of the current $.50 would be credited to the state Highway Fund and $.50 instead of the current $.25 would be credited to the Highway Patrol Inspection Fund.
Beginning July 1, 2000, this proposal would allow DOR to give owners of motor vehicles other than commercial motor vehicles licensed in excess of 12,000 pounds the option of a biennial registration. DOR would also be allowed to stagger the registration period of all motor vehicles which could be registered biennially.
This act would allow the Department of Revenue to create a database to verify compliance with the motor vehicle responsibility laws.
Bus inspections cannot be done more than 60 days prior to operating the vehicle during the school year.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
This legislation would affect Total State Revenues.
SOURCES OF INFORMATION
Department of Revenue
Department of Public Safety - Missouri State Highway Patrol
Department of Transportation
Office of State Courts Administrator
Department of Insurance
Department of Natural Resources
Jeanne Jarrett, CPA
Director
February 22, 1999