BILL ANALYSIS Ó AB 516 Page 1 Date of Hearing: May 20, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 516 (Mullin) - As Amended April 20, 2015 ----------------------------------------------------------------- |Policy |Transportation |Vote:|16 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: Requires vehicles sold or leased without a permanent license plate to be affixed with a temporary license plate (TLP). Specifically, this bill: AB 516 Page 2 1)Requires the DMV, by January 1, 2017, to develop or contract with a private industry partner to develop a TLP system to be used by the DMV, dealers, and first-line service providers, as of that date, to issue TLP's at the time a vehicle is sold. 2)Permits a vehicle to operate with TLPs until either (a) the permanent license plates and registration card are received by the vehicle owner, or, (b) 90 days have lapsed from the vehicle's selling date, whichever occurs first. 3)Authorizes a first-line service provider to charge a two dollar ($2) transaction fee to cover the cost of processing TLPs for a vehicle, and authorizes a dealer to charge the TLP transaction fee to a customer or lessee of the vehicle. 4)Increases the document processing charge a dealer under the Business Automation Program (BPA) may charge a customer from $80 to $95. 5)Requires BPA motor vehicle dealers to affix, at the time of sale, a TLP to a motor vehicle sold without a permanent license plate. 6)Extends the existing felony penalty-punishable by up to 16 months, two years, or three years in state prison or up to one year in county jail-for counterfeit or forgery of licenses, to AB 516 Page 3 include such actions with regard to TLPs, 7)Requires TLPs to be affixed to the front and rear of the vehicle and requires the owner to remove TLPs upon receipt of permanent plates. FISCAL EFFECT: The DMV estimates first-year costs of $1.75 million and ongoing costs of $309,000. The department indicates this is related to design and development to create the TLP process, modification of the vehicle registration database, programming the identification and authentication process, and creating an interface between the database and the department. There will also be staff time associated with developing and coordinating programming requests, developing business rules, developing privacy threshold and impact assessments, and updating memos, manuals, brochures, and other related departmental publications referencing vehicle registration information. Ongoing costs are associated with maintenance of the TLP database, data center costs, and staff time. It should be noted that these cost are several times higher than the department's cost estimate for a similar bill last year (about $300,000), which assumed a first-line business partner would develop the system under contract to DMV. COMMENTS: 1)Background. At the time of retail sale, the vehicle dealer is responsible for applying to DMV for the registration of a new AB 516 Page 4 vehicle and the transfer of registration for a used vehicle. SB 46 (Polanco)/Chapter 127, Statutes of 2001, established the electronic vehicle registration (EVR) program, whereby motor vehicle dealers may enter into contracts to act as DMV business partners for vehicle registration and titling purposes. A business partner dealer communicates electronically with DMV, either directly or through a "first-line service provider", to register a vehicle it has sold and then mails license plates, registration cards, and registration stickers to the buyer. AB 1215 (Blumenfield), Chapter 329, Statutes of 2011, implemented significant changes to the vehicle registration process including, requiring new car dealers to participate in the EVR program, reducing the period a vehicle may operate a vehicle with a report-of-sale notice to 90 days, and requiring license plates to be attached upon receipt by the vehicle owner. The implementation of AB 1215 has resulted in industry stakeholders indicating that vehicle owners are now receiving permanent license plates between 14 to 30 days on average. 2)Purpose. This bill proposes to develop a statewide TLP system to ensure purchased vehicles are identifiable to law enforcement and toll operators during the period between the point of sale and when permanent license plates are received by the purchaser. Proponents argue that a TLP system will assist law enforcement and also help toll agencies mitigate deliberate toll evaders. For example, in fiscal year 2013-14, the Bay Area Toll Authority generated approximately $690 million in toll revenues however experienced a $7 million loss in revenue tied to vehicles with no license plate. The author asserts that this legislation will "improve public safety by enabling law enforcement to identify vehicles involved in traffic violations, hit-and-run accidents, and other criminal activity. In support, the California New Car Dealers Association, which AB 516 Page 5 was opposed to last year's version of this bill (see below), believes that the $2 increase provided in the document processing charge is sufficient to compensate dealers for the added burden on dealers to comply with the TLP requirements. 3)Opposition. Consumers for Auto Reliability and Safety (CARS) argues the bill will penalize buyers who, through no fault of their own, do not receive their permanent license within 90 days, which CARS asserts still happens due to dealers going out of business or dealer or DMV errors. CARS also objects to the increased processing charge 4)Prior Legislation. AB 2197 (Mullin) of 2014, which was similar to this bill, was held on this committee's Suspense file. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081