BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 773| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 773 Author: Allen (D) Amended: 6/1/15 Vote: 21 SENATE TRANS. & HOUSING COMMITTEE: 10-0, 4/28/15 AYES: Beall, Cannella, Bates, Gaines, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NO VOTE RECORDED: Allen SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SUBJECT: Vehicles: registration fraud: study SOURCE: Bay Area Air Quality Management District DIGEST: This bill requests the University of California (UC) to conduct a study on motor vehicle registration fraud and failure to register a motor vehicle. ANALYSIS: Existing law: 1)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 state Department of Motor Vehicles (DMV). Registering a vehicle or renewing a vehicle registration is an easy process that a vehicle owner can typically complete quickly on the DMV's Web site by providing SB 773 Page 2 the vehicle's license plate number and paying annual taxes and fees associated with registration. Existing law does not require a person to show proof of a California driver's license in order to register a vehicle. 2)Requires all drivers and motor vehicle owners to carry evidence of financial responsibility, defined primarily as written evidence of valid automobile liability insurance. Existing law requires all insurance companies to report insurance status information to DMV for all private-use vehicles. DMV may suspend, cancel, or revoke the registration of a vehicle if it determines that insurance coverage has been cancelled, evidence of insurance coverage has not been submitted to DMV, or false insurance information has been submitted to DMV. Existing law does not require a person to show proof of a California driver's license in order to obtain auto insurance. 3)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, with some exceptions, including gas-powered vehicles manufactured prior to 1976, alternatively fueled vehicles, and vehicles six model years of age or newer. The Smog Check Program provides, for eligible customers: an opportunity to renew a vehicle's registration even if it does not pass a smog test, provided the owner has spent a certain amount on repairs; up to $500 toward emissions-related repairs; or a voucher in return for "retiring" (scrapping) the vehicle. In order to be eligible for a voucher, the vehicle owner must provide evidence that the vehicle has been registered during the prior two years without a substantial lapse. 4)Requires an owner to register their vehicle within 20 days of accepting employment or establishing residency in California or be subject to specified penalties. Under the Californians Help Eliminate All the Evasive Registration Scofflaws program (CHEATERS), a person who sees an out-of-state license plate may report it anonymously to the California Highway Patrol (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 him or her to properly register the vehicle. This program has SB 773 Page 3 brought in roughly $1 million per year in vehicle registration revenues. This bill: 1)Requests the UC to conduct a study on motor vehicle registration fraud and failure to register a motor vehicle, and to post a report of the study on its Web site by January 1, 2017. 2)Requires the study to include: a) Quantification of the magnitude of the problem. b) The strategies being used by motorists to commit motor vehicle registration fraud. c) The reasons for the behaviors of motorists who commit fraud in registration of, or who fail to register, their motor vehicles. d) The costs to the state and local governments in lost revenues. e) Increases in air pollution. f) Other costs and consequences of those behaviors. g) Recommended strategies for increasing compliance with registration requirements. 3)Requires DMV to enter into an agreement with the UC researchers conducting the study to share vehicle registration information. Requires CHP to share information on its efforts to combat registration fraud, including the CHEATERS program, with UC. Comments Purpose. The author states that drivers who bypass the Smog Check Program by failing to register their vehicle can disproportionately impact air quality. However, California lacks meaningful data on the scope and magnitude of the problem. This bill will enable the state to gain critical information SB 773 Page 4 related to unregistered cars and trucks, as well as policy recommendations on how best to remedy the situation. Along with air quality impacts, registration fraud robs the state and local governments of millions of dollars of revenues needed for transportation projects, law enforcement support, and other programs. Furthermore, it significantly increases insurance costs for law-abiding citizens because unregistered vehicles are rarely insured. How many unregistered vehicles are there? There are no official estimates of how many unregistered vehicles are currently on California roads. The author points to various studies which have found that somewhere between 1% and 8% of California's 35 million cars and light trucks are unregistered. Is smog test failure the culprit? The Bay Area Air Quality Management District, the source of this bill, argues that a primary reason that drivers fail to register their vehicles, or fail to renew registration, is because the vehicle cannot pass a smog test. Although the state offers assistance to vehicle owners whose cars fail smog check, an owner must meet certain eligibility requirements, including providing evidence that the vehicle has been registered for the last two years without a substantial lapse. With just 25% of cars on the road being responsible for 75% of smog-forming emissions from all motor vehicles, tightening vehicle registration could help ensure that high-polluting vehicles are repaired or taken off the road. What about AB 60? AB 60 (Alejo, Chapter 524, Statutes of 2013) requires the DMV to issue an original driver's license to an individual who is unable to submit satisfactory proof of legal presence in the U.S. The DMV began issuing these licenses on January 2, 2015. It is possible that now that many individuals can obtain a legal driver's license who were unable to prior to this year, the state will see an increase in vehicle registration. However, since drivers are not required to show proof of a valid license in order to either obtain auto insurance or register a vehicle, it is unclear whether AB 60 will impact vehicle registration levels. Out-of-state plates. A July 2014 San Jose Mercury News article notes that the average cost of registering a vehicle in California is $143 per year, but registering a new vehicle can cost as much as $400 - more than twice what a driver would pay SB 773 Page 5 in Oregon and most nearby states. Some people are apparently choosing to register their car in a neighboring state in order to avoid California's relatively high registration fees. This negatively impacts a major source of revenue for California and its local governments, which is why existing law requires an owner to register their vehicle within 20 days of accepting employment or establishing residency in California. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: Unknown UC costs, ranging from minor to the low hundreds of thousands in the 2016 calendar year to perform the study. (General Fund) 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) SUPPORT: (Verified5/28/15) Bay Area Air Quality Management District (source) California Air Pollution Control Officers Association California Public Parking Association Metropolitan Transportation Commission OPPOSITION: (Verified5/28/15) None received ARGUMENTS IN SUPPORT: The Bay Area Air Quality Management District, source of this bill, states that a significant number of motorists deliberately avoid the smog check program by either failing to register their vehicles, registering their vehicles in other states, or through other fraudulent schemes. Given SB 773 Page 6 that vehicles which have not passed a smog test produce emissions that are potentially several orders of magnitude greater than the average registered vehicle on the road, the public health impacts of unregistered vehicles can be extremely high. This bill will address this problem by helping to determine both the size of the unregistered vehicle fleet and strategies to increase vehicle registration compliance. Prepared by:Erin Riches / T. & H. / (916) 651-4121 6/1/15 14:06:50 **** END ****