BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: SB 94
Author: Committee on Budget and Fiscal Review
As Amended: April 15, 2011
Consultant: Brian Annis
Fiscal: Yes
Hearing Date: May 2, 2011
Subject: Vehicle License Fee Law: vehicle registration.
Summary: This bill contains necessary changes to the
Department of Motor Vehicles (DMV) vehicle registration
process to facilitate solutions contained in the 2011-12
budget package.
Background: The DMV collects fees annually from the owners
of motor vehicles for registration that support the
operation of the DMV and the California Highway Patrol,
among other departments. As part of the vehicle
registration collection, the DMV also collects the Vehicle
License Fee (VLF) which is an in-lieu local property tax
based on the value of the vehicle. The VLF rate was set at
2.0 percent of a vehicle's value for a 50-year period
ending in 1998. The VLF rate was reduced over time to a
new base rate of 0.65 percent, and the State General Fund
backfills revenue loss to local governments of
approximately $6 billion annually. Legislation enacted in
2009 (AB X3 3, Chapter 18), increased the VLF rate to 1.15
percent for a period ending June 30, 2011, after which the
rate returns to 0.65 percent. The temporary rate increase
provides approximately $1.4 billion to the State General
Fund, including about $500 million to support local law
enforcement programs.
Current law directs DMV in the administration of vehicle
registration. Among other requirements, the DMV is
directed to bill vehicle owners at least 60-days in advance
of the payment due date for registration and the VLF.
The Governor's January Budget proposed to maintain the
current 1.15 percent VLF rate for an additional five-year
period to support his state-local realignment proposal.
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Within the realignment proposal is the continuation of
about $500 million in funding for local law enforcement
grants. This budget proposal was adopted by the Budget
Conference Committee, but to-date has not been approved by
the full Legislature.
Proposed Law: As part of the Governor's Budget, this
budget trailer bill was proposed to provide DMV additional
administrative flexibility as the budget is deliberated and
the VLF rate is set for 2011-12. With these
administrative flexibilities, DMV will be able to avoid
erroneous billing, multiple billing, or other confusion.
This bill includes the following provisions:
1.Requires the DMV to make changes to its procedures
related to car registration for a limited period ending
January 1, 2012.
2.Suspends the existing statutory requirement that requires
notification of registration renewal 60-days prior to the
payment due date.
3.Requires DMV to waive late payment penalties, for
payments received within 30 days after the due date.
4.Delays vehicle registration expiration enforcement to
instead begin on the first day of the second month after
the vehicle's registration due date.
5.Prohibits any early payment of car registration and VLF
until the bill is mailed by the DMV.
Fiscal Effect: No budget augmentation is associated with
this bill; however, if this bill is not enacted and future
legislation extends the current VLF rate, the DMV could
incur additional cost from double-billing and additional
programming costs. This bill appropriates $1,000 from the
General Fund to the DMV to comply with the requirement of
Proposition 25 for a budget trailer bill.
Support: Unknown
Opposed: Unknown
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Comments: The Administration indicates this proposal
represents the best option for car owners to avoid
erroneous billing, double billing, or other confusion. All
the provisions of this bill are temporary, and the
current-law provisions for car registration would be
re-established on January 1, 2012.
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