BILL ANALYSIS Ó AB 1215 Page 1 Date of Hearing: May 18, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1215 (Blumenfield) - As Amended: May 10, 2011 Policy Committee: TransportationVote:14-0 Judiciary 9-0 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill makes changes to new vehicle registration procedures, the timeframe within which a vehicle purchaser must affix a license plate, and vehicle sale documentation fees. Specifically, this bill: 1)Requires a dealer of new motor vehicles to register electronically with the Department of Motor Vehicles (DMV)) a vehicle sold by the dealer, for which the dealer may charge the purchaser a fee equal to the dealer's electronic registration costs, not to exceed $29. Currently, use of such electronic registration is at the dealer's discretion. 2)Reduces, from six months to 90 days, the time following a vehicle sale during which the vehicle may be driven without license plates. 3)Changes, to amounts unspecified, the current document preparation fee a dealer is authorized to charge for new car purchases ($55) and leases ($45). 4)Prohibits a dealer from selling a new motor vehicle, as of July 1, 2012, unless the dealer is a private industry partner of the DMV. FISCAL EFFECT 1)One-time costs to DMV in 2011-12 to register approximately 600 new private industry partners in the Business Partner Automation Program. (Special fund.) These costs would be AB 1215 Page 2 fully covered by fees paid by those registering with the program. 2)Unknown savings to DMV, potentially in the millions of dollars, as resources are freed from having to manually process new motor vehicle transactions. (Special fund.) 3)Potential costs to consumers of an unknown amount, but collectively in the millions of dollars, depending upon the amount of the document preparation fee, which the bill has yet to specify. COMMENTS 1)Rationale . The author contends that increasing electronic vehicle registration will streamline and improve DMV operations by reducing paperwork and automating processes and decreasing the time it takes for a vehicle purchaser to receive license plates. This quicker plate delivery time, the author adds, enables the bill's provision requiring attachment of plates within 90 days of sale, which will assist law enforcement and reduce toll evasion. 2)Background. a) DMV's Business Partner Program. Statute authorized DMV to enter into contracts with qualified private industry partners for the purpose of processing vehicle registration and titling transactions. In response, DMV established the Business Partner Automation (BPA) Program. Statute 1685 required the Department to establish regulations necessary to support the BPA Program, in which business partners are authorized to process and issue validated registration cards, full year registration stickers and automobile and commercial vehicle license plates. b) Electronic Vehicle Registration . In 2001, DMV established the Electronic Vehicle Registration (EVR) program, which allows a new auto dealer who is a DMV business partner to, at the dealer's discretion, register electronically with DMV new auto sales. Industry representatives estimate that more than half of auto dealers participate in the program and only about 40% of new cars are registered electronically. DMV regulations allow dealers participating in the EVR program to levy an AB 1215 Page 3 optional consumer charge of up to $29 per registration. c) License Plates and Toll Evasion . Allows newly sold vehicles to be operated without license plates until the plates are received or until the end of a six-month period after the date of sale, whichever occurs first. Some toll operators report millions of dollars in lost toll revenue from vehicles without license plates blowing through tolls without paying. d) Document Preparation Fees. Currently law allows dealers to charge a document preparation fee of $55 for new cars and $45 for lease vehicles. The fee is to cover costs the dealer entails in complying with state laws. Such fees have been raised numerous times over the years and are controversial because some feel the state should not build a business expense into a government-sanctioned fee. Previous versions of this bill increased the document preparation fee to $75. However, the latest version of the bill deleted the specific dollar amount and inserted blanks in their place, reflection contentions between the bill's proponents and opponents of the documentation fee increase component of the bill. 3)Support. This bill is supported by the California New Car Dealers Association and CarMax Auto Stores. 4)Opposition. The bill is opposed by Consumers for Auto Reliability and Safety, who contest the bill's documentation fee increase. Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081