BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1454 (La Malfa) - Eight-character specialized license plates
Amended: April 11, 2012 Policy Vote: T&H 9-0
Urgency: No Mandate: No
Hearing Date: May 24, 2012 Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 1454 would authorize the issuance of
eight-character specialized license plates upon payment of
additional fees and direct all fee revenues to a new special
fund to support open-space subventions, assistance to California
fairs, and programs administered by the Department of Parks and
Recreation (DPR).
Fiscal Impact:
Unknown major one-time Department of Motor Vehicles (DMV)
costs to update all department systems and databases that
contain license plate information to add the additional
field (Motor Vehicle Account). Also potential costs and
delays on DMV's current Information Technology Modernization
Project related to the addition of an eighth license plate
field.
Likely minor one-time DMV costs to update its website and
revise relevant forms, publications, and signs when existing
supplies have been depleted.
Unknown fee revenue losses to the Environmental License
Plate Fund (ELPF) to the extent vehicle owners with current
specialized plates change to 8-letter plates. If one-half
of one percent of current specialized plate holders
(approximately 5,000) opt for an 8-letter plate in 2013-14,
ELPF revenue losses would be $190,000.
Unknown fee revenue gains to the Natural and Agricultural
Open Space and State Recreational Support Fund (created by
the bill). If 10,000 vehicle owners purchased 8-letter
plates in 2013-14, revenue gains would be $480,000,
providing $160,000 in the following year for each of the
purposes identified in the bill.
SB 1454 (La Malfa)
Page 1
Background: Currently, DMV issues California license plates
with seven characters. Existing law requires that license
plates, other than those for motorcycles, be a rectangle that is
12 inches long and 6 inches wide. Each character must have a
minimum height of 2 inches and a minimum width of 1 inches.
Existing law requires a minimum space of 5/16 inches between
characters.
Existing law establishes a basic vehicle registration fee of $46
and a $23 surcharge for the California Highway Patrol, and
provides for other locally-imposed vehicle surcharges. Upon
registration and payment of additional fees, a vehicle owner may
request an environmental license plate (ELP), commonly referred
to as a "personalized" or "vanity" plate, which contains a
combination of up to seven characters selected by the vehicle
owner. Existing law specifies additional ELP fees of $48 for
issuance, $38 for renewal, $38 for duplicates, and $38 for
transfer of the plates. Revenue derived from these fees are
deposited in the California Environmental License Plate Fund,
which supports numerous environmental programs and projects that
are included in the Environmental Protection Program.
Proposed Law: SB 1454 would authorize DMV to issue 8-letter
license plates. Specifically this bill would:
Reduce the minimum character width and spacing between
characters on a license plate by 1/16 of an inch.
Require applicants for an 8-letter plate to pay an initial fee
of $48 and $38 for renewals, duplicate plates, and transfers
to another vehicle.
Require DMV to deposit all revenues derived from 8-letter
plates into the Natural and Agricultural Open Space and State
Recreational Support Fund (created by the bill).
Require equal allocation of the revenues, upon appropriation
by the Legislature, for: (1) subventions for open-space land
programs; (2) assistance to the Department of Food and
Agriculture for California fairs; and (3) support of the
Department of Parks and Recreation.
Dedicate up to $0.50 of the fees collected from each applicant
for purposes of increasing public awareness of the 8-letter
plate program, upon appropriation.
Require DMV to provide a link to information on ordering an
8-letter plate on its website, and to update forms,
publications, and signs, when existing supplies are depleted,
SB 1454 (La Malfa)
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to include information on the 8-letter license plates and
procedures to apply for the plates.
Staff Comments: DMV indicates that virtually every program and
database in the department would need to be upgraded to
accommodate the extra license plate character field. Costs are
indeterminable at the time of this analysis, but likely major.
DMV is currently engaged in a $208 million multi-year
Information Technology Modernization project to replace its
aging proprietary IT systems. This project will incrementally
upgrade DMV core systems with new equipment and new system
hardware and software. Project closeout is scheduled for June
30, 2013. SB 1454 would likely delay final completion of this
project and require DMV to perform significant upgrades to work
that has already been completed at an unknown cost.
The bill could also impose costs on other state, local, and
private entities that interface with DMV systems and databases
that include license plate information, if there is a need to
perform IT upgrades to accommodate the expanded license plate
field. Affected entities could include the California Highway
Patrol, the Administrative Office of the Courts, the Department
of Justice, local law enforcement, toll authorities, parking
authorities, automated enforcement (red light camera) operators,
local governments, vehicle dealers, participants in DMV's
Business Partner programs, insurance companies, and other inlets
that have direct access to DMV records.
There are currently just over one million holders of ELP license
plates. For the 2010-11 fiscal year, DMV remitted $41.3 million
in personalized license plate fees to the ELP fund, after
deducting its administrative costs. Demand for the new 8-letter
license plate authorized by this bill is unknown, but some small
population of ELP holders will likely exchange their current
plates for 8-letter plates. This activity would represent a
shift of revenues from the ELPF and the environmental programs
it supports to the Natural and Agricultural Open Space and State
Recreational Support (NAOSSR) Fund to support open-space
subventions, California fairs, and state parks. Any additional
demand from vehicle owners who do not currently hold specialized
license plates would result in fee revenue gains for the
purposes identified in the bill. For illustrative purposes, if
5,000 current holders of specialized plates switch to an
8-letter plate, and another 5,000 holders of standard plates opt
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for an 8-letter plate in 2013-14, there would be a revenue loss
of $190,000 to the ELPF, and fee revenue gains of $480,000 to
the NAOSSR fund in the first year. Staff notes that, although
demand for the new plate is unknown, the costs to implement SB
1454 are likely to significantly exceed the benefits provided to
the programs that would be supported by the new fee revenues for
the foreseeable future.
This bill requires all revenues derived from eight-character
specialized plates be deposited in the NAOSSR fund. Staff notes
that, unlike the ELP specialized license plate program, there is
no provision for DMV's administrative costs to be deducted from
fees collected prior to depositing revenues into the new fund.
SB 1454 requires that up to $0.50 from the fees collected from
each applicant be set aside for purposes of increasing public
awareness of the new 8-letter license plate program, upon
appropriation of those funds by the Legislature for that
purpose. It is unlikely that sufficient revenues will be
collected to conduct an effective public information campaign.
Staff notes that the bill provides for the issuance of an
8-letter license plate for motorcycles. It is unclear whether
the motorcycle license plate can accommodate eight characters.
Proposed amendments would require DMV to receive applications
and fees for 7,500 pre-ordered plates prior to initiating
issuance of 8-letter license plates. The proposed amendments
would also authorize DMV to recover administrative costs from
fee revenues collected prior to deposit in the new fund.