BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 244 (Bonilla) - Veterans license plates. Amended: August 12, 2013 Policy Vote: VA 7-0; T&H 11-0 Urgency: No Mandate: No Hearing Date: August 19, 2013 Consultant: Mark McKenzie This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 244 would require the Department of Veterans Affairs (DVA) to sponsor a veterans specialized license plate program. The Department of Motor Vehicles (DMV) would establish the program only after DVA receives at least 7,500 applications and submits the applications and fees to DMV, as specified. Fiscal Impact: DVA costs of approximately $45,000 for 1/2 PY of staff time in 2014-15 to collect the initial 7,500 applications and fees for the establishment of the plate program (General Fund). These costs could continue into 2015-16 if the requisite applications and fees are not collected within the first year. DMV implementation costs of approximately $470,000, likely in 2015-16, partially offset by pre-paid application fees of $375,000, leaving a net cost of approximately $95,000 (Motor Vehicle Account). These net costs would be reimbursed in the following fiscal year by registration renewal fees from holders of the veterans plates. All ongoing costs thereafter would be fully offset by fees from renewals and issuance of new veterans plates. Unknown revenues, likely in the range of $150,000 to $250,000 annually, for deposit into the Veterans Service Office Fund (based on 7,500 plates after subtracting DMV administrative costs). These funds are distributed to county veterans service offices. Unknown, likely relatively minor revenue gains, to the extent that applicants wish to have personalized AB 244 (Bonilla) Page 1 "environmental" plates (Environmental License Plate Fund). Background: Existing law, AB 84 (Leslie), Chap 454/2006, authorizes any state agency to sponsor a special interest license plate, and apply to DMV to establish a new license plate program after collecting at least 7,500 applications and accompanying fees and submitting them to DMV. The applications must be collected within one year, with an option to extend that timeframe by an additional year under specified conditions. The new specialized license plate must have a design or contain a message that publicizes or promotes a state agency, or the official policy, mission, or work of the agency. A sponsoring agency may not spend more than 25 percent of its license plate fees for administrative, marketing, and promotional costs associated with the plate. Existing law authorizes any registered vehicle owner to apply to DMV for veterans' organization license plates. Veterans' organizations plates bear a distinctive design that includes the words "honoring veterans" along the bottom of the plate and a decal on the left side of the plate for one of over 100 sponsoring veterans' organizations, such as the American Legion, 101st Airborne Division, or the National Guard. In addition to standard registration fees, a vehicle owner must pay the following fees related to veterans organization plates: $50 for the initial issuance of the plates and decals; $40 annually to renew the plates and decals; $15 for transfer of the plates to another vehicle; $35 for replacement of damaged plates; $10 for replacement of damaged decals; and $78 to personalize the plates. Revenues derived from the veterans' organization plates, less costs incurred by DMV in administering the program, are deposited into the Veterans Service Office Fund for distribution to county veterans service offices by the Department of Veterans Affairs, upon appropriation by the Legislature. From 1993 through 2010, DMV offered a special license plate to all registered vehicle owners with the word "veteran" along the bottom of the plate and space for a decal on the left side of the plate for one of over 100 sponsoring veterans' organizations, such as the American Legion, 101st Airborne Division, or the National Guard. To broaden the appeal of this specialty plate program, AB 1908 (Cook), Chap 166/2010, replaced the "veteran" plate with an "honoring veterans" plate. Although AB 244 (Bonilla) Page 2 neither plate was limited strictly to veterans of military service, proponents believed this change would encourage more vehicle owners to purchase the specialized plate and increase revenues to county veterans services offices. Proposed Law: AB 244 would require DVA to apply to DMV to sponsor a veterans license plate program, and require DMV to issue license plates and decals that are identical to those issued prior to 2010 for that program if DVA meets the requirements specified in existing law. The fees for the new "veterans" plate would be the same as those that apply to the current "honoring veterans" plate. After deducting administrative costs, DMV would deposit additional fee revenue into the Veterans Service Office Fund. Staff Comments: DMV indicates that as of December, 2012 there were 29,995 sets of veterans' organization plates issued to registered vehicles. In the 2011 calendar year, DMV incurred $105,584 in costs to administer this specialized license plate program, which was fully covered by fees collected, and deposited the remaining $667,281 in veterans license plate fee revenue into the Veterans Service Office Fund. Staff notes that with the enactment of this bill, and assuming DVA collects the requisite number of applications and accompanying fees, DMV would offer two separate license plates associated with veterans. Any registered vehicle owner would be eligible to purchase a license plate with either a message "honoring veterans" or "veteran" along the bottom of the plate. The revenues generated from both plates, after paying DMV's administrative costs, would benefit county veterans services offices. Neither plate would be restricted to veterans of military service. The Committee may wish to consider whether the creation of a second specialized license plate that benefits the same population as the existing plate would represent a highest and best use of DMV resources. The programming and administration costs associated with establishing a new plate program detract from DMV's core mission and goals.