BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 773 (Allen) - Vehicles:  registration fraud:  study
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          |Version: April 7, 2015          |Policy Vote: T. & H. 10 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 11, 2015      |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File. 

          Summary:  SB 773 would request the University of California (UC)  
          to conduct a study on motor vehicle registration fraud and  
          failure to register motor vehicles, and post a report on its  
          website by January 1, 2017.  The bill also requires the  
          Department of Motor Vehicles (DMV) and the Department of the  
          California Highway Patrol (CHP) to share specified information  
          with UC researchers conducting the study. 

           Unknown UC costs, ranging from minor to the low hundreds of  
            thousands in the 2016 calendar year to perform the study.  
            (General Fund)


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           Minor costs to DMV in 2015-16 to provide vehicle registration  
            records. (Motor Vehicle Account)

           Minor costs to CHP in 2015-16 to provide information on  
            registration fraud efforts. (Motor Vehicle Account)

          Background:  Existing law prohibits a person from driving, moving, or  
          parking a motor vehicle on the highway or in a public parking  
          facility unless it is registered with the DMV.  Existing law  
          imposes the following annual fees on non-commercial vehicle  
          registrations: a basic registration fee of $46; an additional  
          $24 fee to support CHP; and a 0.65% Vehicle License Fee (VLF),  
          which is an in-lieu personal property tax based on the taxable  
          value of the vehicle.  Trucks also pay an annual weight fee.   
          Existing law also provides for additional vehicle fees (air  
          quality fees, abandoned vehicle fees, etc.), which are imposed  
          in certain jurisdictions to support specified local and regional  
          Existing law establishes the Motor Vehicle Inspection Program,  
          commonly referred to as the Smog Check Program.  This program  
          generally requires vehicle owners to have their vehicles tested  
          every two years, coinciding with renewal of vehicle  
          registration.  Gas-powered vehicles manufactured prior to 1976,  
          alternatively fueled vehicles, and vehicles six model years of  
          age or newer are exempt from the program.  The Smog Check  
          Program allows eligible persons to renew a vehicle's  
          registration without passing a smog test, provided the owner has  
          spent a specified amount on repairs.  The program also provides  
          cash vouchers for retiring a vehicle that cannot pass a smog  
          test if it has been registered during the prior two years  
          without a substantial lapse.

          Existing law requires a vehicle owner to register his or her  
          vehicle within 20 days of accepting employment or establishing  
          residency in California.  In addition, non-resident owners must  
          register a vehicle based in California or used primarily on  
          California highways.  Under the Californians Help Eliminate All  
          the Evasive Registration Scofflaws (CHEATERS) program, a person  
          who sees an out-of-state license plate may report it anonymously  
          to the CHP website.  If there is sufficient information to prove  
          that the owner or driver of the vehicle is a California  
          resident, CHP sends a compliance letter to the owner requiring  


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          him or her to properly register the vehicle.  This program has  
          generated approximately $1 million per year in vehicle  
          registration revenues.

          Proposed Law:  
            SB 733 requests UC to conduct a study on motor vehicle  
          registration fraud and failure to register a vehicle, and to  
          post a report of the study on its website by January 1, 2017.   
          The study must include the following information:
           Quantification of the magnitude of the problem.
           Strategies used by motorists to commit motor vehicle  
            registration fraud.
           Reasons why motorists commit motor vehicle registration fraud  
            or fail to register their vehicles.
           The costs to the state and local governments in lost revenues.
           Increases in air pollution.
           Other costs and consequences related to this behavior.
           Recommended strategies for increasing compliance with vehicle  
            registration requirements.

          The bill also requires DMV to share its existing database of  
          vehicle registration records with UC researchers conducting the  
          study, and requires CHP to share information on its efforts to  
          combat registration fraud, including the CHEATERS program, with  
          UC researchers.

          Comments:  This bill would examine the magnitude of the problems  
          related to vehicle registration fraud and the failure of vehicle  
          owners to register their vehicles pursuant to the requirements  
          in statute.  Registration fraud can occur when unscrupulous  
          persons steal DMV registration stickers, steal license plates,  
          or counterfeit temporary registration paperwork, while others  
          avoid registration by registering a vehicle out-of-state,  
          providing a false address, or improperly using dealer plates.   
          Many vehicles go unregistered because of an inability to pass a  
          Smock check, while others may attempt to avoid California's  
          relatively higher vehicle registration fees compared to  
          neighboring states.
          According to DMV statistics, there were approximately 33 million  


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          fee-paid vehicle registrations in 2014, so even if a very small  
          percentage of vehicles are avoiding proper registration and Smog  
          Check requirements there could be significant losses of vehicle  
          registration fee revenues and impacts to air quality.  For every  
          100,000 vehicles that avoid registration, there are state and  
          local revenue losses of over $17 million, using DMV's average  
          total fees of $172 per vehicle registration (which doesn't  
          include special local/regional fees).

          The UC would incur costs to conduct research activities and  
          report the results, including study design, coordination with  
          other entities, data analysis, quantification of impacts,  
          formulating recommendations, and drafting a report.  To the  
          extent that the bill's study is consistent with ongoing academic  
          research at UC, costs could be relatively minor, but if it were  
          a multi-campus coordinated effort, costs could be in the low  
          hundreds of thousands of dollars in the 2016 calendar year.  DMV  
          and CHP costs to share information and data are likely to be  
          minor.  The sharing of DMV vehicle registration database  
          information may require a negotiated memorandum of understanding  
          to ensure the confidentiality of personal information. 

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