BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 773 (Allen) - Vehicles: registration fraud: study ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 7, 2015 |Policy Vote: T. & H. 10 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 11, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill 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. Fiscal Impact: Unknown UC costs, ranging from minor to the low hundreds of thousands in the 2016 calendar year to perform the study. (General Fund) SB 773 (Allen) Page 1 of ? 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 programs. 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 SB 773 (Allen) Page 2 of ? 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. Staff 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 SB 773 (Allen) Page 3 of ? 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. -- END --