COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3248-05
Bill No.: SCS for SB 926
Subject: Economic Development Dept; Revenue Dept; Motor Vehicles; Property, Real and Personal; Business and Commerce
Type: Original
Date: March 19, 2002
FISCAL SUMMARY
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| General Revenue* | (Unknown) | (Unknown) | (Unknown) |
| Highway Funds | $351,912 to (Unknown) | $815,082 to (Unknown) | $1,128,007 to (Unknown) |
| Motor Vehicle Commission Fund | ($376,276) | $0 | $0 |
| Missouri Motor Vehicle Fund | $823,829 | $499,980 | $521,217 |
| PR Fees Fund | $0 | $0 | $0 |
| Total Estimated
Net Effect on All State Funds |
$799,465 to (Unknown) | $1,315,062 to (Unknown) | $1,649,224 to (Unknown) |
*Expected to Exceed $100,000
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Local Government | $203,125 | $365,625 | $487,500 |
Numbers within parentheses: ( ) indicate costs or losses. This fiscal note contains 12 pages.
ASSUMPTION
Officials from the Department of Insurance, Department of Public Safety - Missouri State Highway Patrol, Department of Public Safety - Division of Fire Safety; Office of Administration - Administrative Hearing Commission, Office of State Courts Administrator, Office of the Governor, Office of State Treasurer and the Department of Transportation stated that this proposed legislation would have no fiscal impact on their agencies.
Officials from the Department of Corrections indicate that the fiscal impact to their agency would be $0 or minimal and could be absorbed each year.
Officials from the Office of Prosecution Services indicated that any costs to prosecutors resulting from this proposed legislation could be absorbed.
Officials from the Secretary of State's Office (SOS) assumed the rules, regulations and forms issued by the Missouri Motor Vehicle Board and the Department of Revenue could require as many as 200 pages in the Code of State Regulations. For any given rule, roughly half again as many pages are published in the Missouri Register as in the Code because cost statements, fiscal notes and the like are not repeated in the Code. These costs are estimated. The estimated cost of a page in the Missouri Register is $23. The estimated cost of a page in the Code of State Regulations is $27. The actual costs could be more or less the SOS's estimated cost of $12,300 for FY 2003. The impact of this legislation in future years is unknown and depends upon the frequency and length of rules, filed, amended, rescinded or withdrawn.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.
CREATION OF MOTOR VEHICLE BOARD
SECTIONS 301.550; 301.553; 301.554; 301.557; 301.559; 301.560; 301.564; 324.1240 Through 324.1298 and the removal of 301.561; 301.566; 301.568; and 310.661
According to officials from the Department of Revenue (DOR), this proposal transfers the responsibility for licensing and regulating all types of motor vehicle, boat, and motor vehicle auctions from the Department of Revenue to the Department of Economic Development (DED).
ASSUMPTION (continued)
ADMINISTRATIVE IMPACT - Department of Revenue
Division of Motor Vehicle and Drivers Licensing (DMVDL)
DOR assumes that 10.5 employees and the associated costs and expense and equipments funds will be transferred to the Department of Economic Development.
It is assumed that since this proposal still requires the Department of Revenue to issue manufacturer licenses and all dealer license plates the Department of Revenue will retain 1 Clerk Typist II and 1 Telephone Information Operator to process plates and inquiries. In addition, funds required for the actual plates from the Missouri Vocational Enterprises will also stay within the Motor Vehicle Commission Fund.
The Department currently has in the FY03 Core Budget $318,737 for personal services and $135,396 for expenses and equipment.
Revenue will retain the following:
Telephone Information Operator $19,753
Clerk Typist II $24,346
Equipment & Expenses $ 4,000
Postage $30,000
The department will also retain $213,000 for the actual cost of the plates, from Missouri Vocational Enterprises.
Special Note: This proposal provides for certain Business Licensing registration processes to be transferred to the Department of Economic Development. The licensing processes affected by this bill are any and all combinations of the MV dealers: franchised dealers, used dealers, manufacturers, boat dealers, boat manufacturers, motorcycle dealers, wholesale dealers, public and wholesale auctions.
To effectively facilitate this legislation, it will be necessary for Economic Development to pass electronically the information/data currently required for the following Business License processes; New Business License, Renew Business License, Change Business License, Transfer Business License. DOR will also need electronic updates whenever there are changes to the Business License record(s).
The proposal also requires that the Department of Revenue retain the process for issuing the physical inventory (plates, permits, placards, decals, etc) to these dealers. Consequently, the process for registering the Business and issuance of inventory must be split. In addition, the Field Automated System for Titling and Registration (FASTR) would no longer issue the ASSUMPTION (continued)
Business License Certificate for these businesses.
If the electronic transfer of this information/data is not electronic, then this information will have to be manually entered in the FASTR system and the department will have to retain additional FTE for this type of processing.
The Driver and Vehicle Services Bureau will transfer the following employees and associated E & E to the Department of Economic Development.
Revenue Section Supervisor 1 $ 34,948
Telephone Information Operators 4 $ 79,011
Clerk Typist II 3 $ 73,039
CIT III .5 $ 17,332
Investigator II 1 $ 37,091
Associate Counsel 1 $ 33,217
Total PS transfer: $274,638
Total E & E transfer: $101,638
REVENUE IMPACT- Department of Revenue
DOR assumes that all dealer license plates and manufacturer licensure fees will continue to be deposited to the Motor Vehicle Commission Fund and dealer licensure fees will be deposited into the Missouri Motor Vehicle Board Fund. There would be no impact to the Highway Fund although this proposal does allow for an increase in the dealer plate fees.
Special Note: To implement this legislation, the Department of Revenue will require additional funds. In the past, the programs included in this legislation have been paid for with highway funds. See Mo. Const. Article IV, Section 30(b) and Section 226.200.2, RSMo 2000. This year, however, highway funds may not be available for this purpose as a result of legislation enacted by the General Assembly in 2000 that limits the use of highway funds.
This limitation is found in Section 226.200.3, RSMo. It places a cap on the highway funding available to state departments other than the Department of Transportation. The total amount of highway funds appropriated to these other state departments (including the Department of Revenue) cannot exceed the total amount of their fiscal year 2001 highway appropriations. This cap limits the highway funds that will be available for the implementation of this legislation.
If highway funds are not available, then another source of funding must be identified to pay for the cost of implementing this legislation.
| ASSUMPTION (continued)
Officials from the Department of Economic Development - Division of Professional Registration (DPR) assume that this legislation transfers the powers, duties and functions of the MO Department of Revenue related to the licensing and regulation of motor vehicle dealers, manufacturers, boat dealers, wholesale motor vehicle auctions, public motor vehicle auctions, and wholesale motor vehicle dealers to the Department of Economic Development, Division of Professional Registration. In addition, this legislation establishes state licensure for motor vehicle salespersons, power sport dealers and creates the Missouri Motor Vehicle Board. |
| Since the licensing and regulation of motor vehicle dealers, etc. is already established within the
Department of Revenue, the Division of Professional Registration assumes that the necessary
appropriation amount and funding will be transferred from the Department of Revenue to the
Division of Professional Registration. The division assumes that this appropriation amount will
include, at a minimum, the necessary personal service, expense and equipment and FTE to cover
the following expenses: 1. Staff (FTE) for processing applications, complaints and investigations; 2. Printing and postage; 3. Legal expenses (Attorney General's Office and/or outside counsel); 4. Division and Department overhead; 5. Cash receiving room (renewal and mail processing). DPR assumes that funding will be offset by the licensing fees. DPR assumes there are approximately 18,000 motor vehicle dealerships (new or used, sale or lease) that are currently licensed by the Department of Revenue. They further assume that each establishment has at least 10 salespersons (18,000 x 10 = 180,000). The proposed legislation states that the annual license fee for salespersons can be no less than $25. In addition, a 3% growth rate has been estimated. This would result in annual revenues from salesperson licenses of $4,500,000. It is assumed that the Missouri Motor Vehicle Fund would reimburse PR Fees Fund for all expenses paid by the PR Fees Fund. |
DPR is requesting an additional 16 FTE to carry out duties created by this proposal. The additional employees include a Principal Assistant (1 FTE at $65,000 per year) to serve as senior executive officer of the licensing agency (the proposal requires that the Executive Director (Principal Assistant) be an attorney; a Licensure Technician II (1 FTE at $24,492 per year) to provide technical support directly to the Principal Assistant and to be responsible for processing applications for licensure, as well as responding to any inquiries relating to the licensure law or rules and regulations; 4 Account Clerks II (4 FTE at $23,184 per year) to provide support for the Division's Central Accounting Section and Central Cash Receiving Room; 9 Investigators II (9 FTE at $37,488 per year) to assist in the Central Investigative Unit in conducting investigations and inspections; and 1 Budget Analyst II (1 FTE at $37,488 per year) to assist Division-Administration in the increase in workload for budget, fiscal note and rule preparation.
This proposed legislation creates the Missouri Motor Vehicle Board which shall consist of nine members. It is assumed that the board will meet at least four times per year for two days and all ASSUMPTION (continued)
meetings would be held in Jefferson City. This proposal allows for reimbursement of expenses for board members when conducting board business. The proposal does not provide for board member compensation. Associated travel costs (mileage, lodging, & meals) would be $12,274 per year.
DPR estimates printing and postage costs for FY 2002 at $6.19 per licensee, or $1,114,200. DPR has based postage and printing costs for subsequent years on the actual FY 2002 usage for a board of similar size and has estimated costs $100,000 per year. Office and communication expenses and equipment are based on estimated existing costs within the Division and follow Office of Administration guidelines.
DPR assumes there would be 3600 consumer complaints each year. (This estimate is 2% of the total licensee count.) It is estimated that an average complaint would require 5 hours to complete. It is estimated that 15% of the complaints would require an investigation, resulting in 540 investigations, with an average investigation requiring 30 hours of field work. Travel costs to conduct investigations total $137,700.
It is estimated that the Office of the Attorney General (AGO) would provide approximately 60 hours of assistance per year with rules, opinions and meetings. Based on an hourly cost of $60.87, the annual total would be $3,652. Also, it is estimated that 25% of investigations will be forwarded to the AGO for further action (135 cases). It is assumed there would not be any cases
until FY 2005. Based on a cost of $5,400 per case, the annual cost would be $729,000.
| It is assumed by DPR that existing staff would design, program, and implement a computer
licensure program (8 hours x $21.65 per hour = $173.20). In addition, costs have been calculated for EDP costs including maintenance of the division's licensing and optical imaging system. These costs are based on the current 3 year licensee average percentage cost allocation for the division for a total cost of $176,145. A 3% growth rate has been estimated. DPR notes that costs have not been calculated for transition of licensee information between the licensing system from DOR to DPR. |
| Costs have been calculated for the personal services, equipment, and expenses provided to all
boards/agencies within the Division of Professional by the Director's Office. These costs are based on FY 2000 actuals using the current 3 year licensee average percentage cost allocation plan for a total cost of $685,672. |
Oversight assumes, based on information from the Department of Revenue, that there are 6,000 motor vehicle dealerships. Based on information from the National Automobile Dealers Association, there are 553 franchised dealerships in Missouri with approximate 4,840 salespersons. Oversight assumes an average of five salespersons per dealership for the remaining ASSUMPTION (continued)
firms, resulting in approximately 32,100 salespersons subject to licensure. (4,840 + [5,447 x 5]).
At $25 a year for 32,100 salespersons, the annual fee revenue would be $802,500.
Based on the assumption of 32,100 salespersons, Oversight has adjusted DPR projections of income and expenses. It is assumed that Department of Revenue - Driver and Vehicle Services Bureau will transfer 10.5 FTE to DPR. Oversight assumes DPR will need an additional 4 FTE to handle to workload related to salesperson licensure. Printing and postage costs would be $198,699 the first year and $18,000 a year thereafter. Personnel and expenses were calculated only for the four additional FTE to handle the salesperson licensing; it is assumed that revenues from the previous sources would offset the expenses as a result of the transfer. Oversight also assumes DPR would begin duties in 2003, rather than in 2004 and have made adjustments to DPR assumptions accordingly. Oversight did not calculate costs for the additional administrative services. If the administrative workload is increased significantly, the Division and the Department of Economic Development may seek additional funding through the appropriations process.
Consumer complaints are estimated at 642, resulting in 96 investigations for total investigation expense of approximately $8,448. It is estimated that 24 cases would be forwarded to the Attorney General's office for further action, resulting in total case cost of $129,600.
Officials from the Office of Attorney General (AGO) assumed one Assistant Attorney General I would be needed to handle licensing matters arising from this legislation. Oversight assumes that costs relating to the motor vehicle board would be reimbursed by DPR and other costs would be absorbed with existing resources.
VEHICLE TITLE ISSUES
SECTIONS 301.610; 301.620; 310.630; 310.640; 301.660; 306.405; 306.410; 306.415; 306.420; 306.430; 306.440
Officials with the Department of Revenue- Division of Motor Vehicle and Drivers Licensing (DVMDL) assume this proposal requires all liens to be mailed to the owners versus the current practice of mailing the lien to lienholders. It is estimated that because of the lien being mailed to the owner of the vehicle versus the lienholders that there will be an increase in duplicate titles that will be required due to the owner misplacing, losing, etc. the lien. The number of duplicate titles issued will increase from 10% for FY03, to 15% for FY04 and finally 20% for FY05. The longer an owner has the title the more likely that the title will be misplaced/lost. The division of motor vehicle and drivers licensing anticipates mailing approximately 1,000,000 titles per year to owners.
ASSUMPTION (continued)
Revenue Impact
FY03
83,333 (1,000,000x10% = 100,000/12 x 10mos = 83,333)
Duplicate application fee = 83,333 x $8.50 = $708,331
25% quick title fee = 83,333 x $5 = $104,116
FY04
150,000 (1,000,000 x 15%)
Duplicate application fee = 150,000 x $8.50 = $1,275,000
25% quick title fee = 150,000 x $5 = $187,500
FY05
200,000(1,000,000 x 20%).
Duplicate application fee = 200,000 x $8.50 = $1,700,000
25% quick title fee = 200,000 x $5 = $250,000
The DVMDL assumes they would require two (2) Revenue Licensing Tech II the first year (FY03) to process duplicate requests. This includes receiving, examining, rejecting, key entering, and mailing duplicate requests. This division would also need two (2) additional Revenue Licensing Tech II for FY04 and one (1) additional Revenue Licensing Tech II for FY05 based on the anticipated number of duplicate requests. The division would require associated costs for equipment and expenses for the additional FTE.
DMVDL also assumes they will need two (2) Telephone Information Operators (TIO) beginning FY03 to ensure that all calls anticipated from owners, dealers and lienholders are answered and appropriate responses are given. The DMVDL would also incur cost in the amount $146,038 for FY03, $106,632 for FY04 & $132,045 for FY05 for forms, policies, procedures, and postage required to implement this proposal
This proposal also would require the department to implement a lienholder assignment registry. This would require extensive major programming and systems modifications. This portion of the proposal has a significant unknown fiscal impact. It would require several new TIO's and Clerk II's plus equipment, floor space and expenses. The TIO's and Clerk II's will be required to answer inquires and conduct record searches.
The Information Technology Bureau assumes it would require $7,142 for programming costs to modify existing systems to implement this proposal. Programming costs will also be required in the amount of $950 for FY03 to convert and key current child support lien information to DOR's website. The current contract vendor for Field Automated System for Titling and Registration ASSUMPTION (continued)
(FASTR) has indicated that this proposal will require 107 hours of programming to FASTR. Contract rate of programming is $150.00 per hour. (107 x $150 = $16,200.00).
| FISCAL IMPACT - State Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| GENERAL REVENUE | |||
| Loss - Department of Revenue | |||
| Temporary Titles* | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE |
(UNKNOWN) |
( UNKNOWN) |
( UNKNOWN) |
| * Expected to Exceed $100,000 | |||
|
HIGHWAY FUNDS |
|||
| Revenue- Department of Revenue | |||
| Duplicate title application fees | $609,373 | $1,096,875 | $1,462,500 |
| Cost- Department of Revenue | |||
| Lienholders registry implementation* | (Unknown) | (Unknown) | (Unknown) |
| Salaries | ($70,640) | ($122,208) | ($145,559) |
| Fringe Benefits | ($25,437) | ($44,007) | ($52,416) |
| Equipment and Expenses | ($161,384) | ($115,578) | ($136,518) |
|
Total Cost - DOR |
($257,461) to (Unknown) | ($281,793) to (Unknown) | ($334,493) to (Unknown) |
| ESTIMATED NET EFFECT ON HIGHWAY FUNDS | $351,912 to
(Unknown) |
$815,082 to
(Unknown) |
$1,128,007 to
(Unknown) |
| *Expected to exceed $100,000
|
|||
| MOTOR VEHICLE COMMISSION FUND | |||
| Transfer Out - To Dept of Economic Development - Professional Registration | |||
| Personal Services | ($274,638) | $0 | $0 |
| Expense and Equipment | ($101,638) | $0 | $0 |
|
Total Transfer Out |
($376,276) |
$0 |
$0 |
| MISSOURI MOTOR VEHICLE FUND | |||
| Income - Professional Registration Licensure Fees/Renewals |
$802,500 |
$826,575 |
$852,372 |
| Transfer In - Dept of Revenue - Motor Vehicle Commission Fund |
$376,276 |
$0 |
$0 |
|
Cost - Transfer to PR Fees Fund |
($354,947) |
($326,595) |
($331,155) |
| ESTIMATED NET EFFECT TO MISSOURI MOTOR VEHICLE FUND |
$823,829 |
$499,980 |
$521,217 |
| PR FEES FUND | |||
| Income- DPR | |||
| Transfer from Missouri Motor Vehicle Fund | $354,947 | $326,595 | $331,155 |
| Costs - DPR | |||
| Personal Service (4 FTE) | ($83,681) | ($102,928) | ($105,501) |
| Fringe Benefits | ($30,134) | ($37,064) | ($37,991) |
| Expense and Equipment | ($238,480) | ($53,351) | ($54,411) |
| Other Costs - AGO | ($3,652) | ($133,252) | ($133,252) |
| Total Costs - DPR | ($354,947) | ($326,595) | ($331,155) |
| ESTIMATED NET EFFECT TO PR FEES FUND |
$0 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| LOCAL GOVERNMENT | |||
| Revenue- Cities | |||
| Duplicate title application fee | $121,875 | $219,375 | $292,500 |
| Revenue- Counties | |||
| Duplicate title application fee | $81,250 | $146,250 | $195,000 |
| ESTIMATED NET EFFECT ON LOCAL GOVERNMENT |
$203,125 |
$365,625 |
$487,500 |
FISCAL IMPACT - Small Business
Small businesses would be affected by costs to dealerships that would pay for salesperson licensure.
DESCRIPTION
This proposed legislation transfers many regulatory duties over motor vehicle dealers, boat dealers, power sport dealers, and recreational vehicle dealers from the Department of Revenue to the Missouri Motor Vehicle Board within the Department of Economic Development Division of Professional Registration. Regulation of manufacturers will remain with the Department of
Revenue. The Missouri Motor Vehicle Board is created and is responsible for licensing of all motor vehicle dealers, boat dealers, recreational vehicle dealers, wholesale motor vehicle auctions, public motor vehicle auctions and wholesale motor vehicle dealers.
The Missouri Motor Vehicle Board is vested with rulemaking authority and the following powers: establishing qualifications for applications, examining and licensing applicants, establishing fees for licensure and renewal, discipline of licensees, investigating
complaints, and establishing committees. The Missouri Motor Vehicle Board Fund is created and provisions for its use are established.
It shall be unlawful for persons to act as a dealer without a license. Such violations may be reported to the county prosecuting attorney for investigation and prosecution. Licenses will be issued for either 12 or 24 months. The Board will administer an examination for new licensees. Current licensees are grandfathered. Once licensed a dealer or auction may not cease business
unless they provide at least 30 days notice to the Board. The Board may promulgate regulations concerning additional training.
DESCRIPTION (continued)
This proposal sets requirements for applications and multi- location permits. Guidelines for the amounts of license and renewal fees are provided. Provisions relating to the issuance of Dealer license plates are revised. Dealers will be limited on the number of dealer plates they may have by the number of cars they have sold and the number of employees they have. It is unlawful to use or permit the use of a dealer's license plate on any vehicle for which there is no automobile liability insurance coverage.
Complaints will be heard by the administrative hearing commission and disciplinary actions, procedures and penalties are specified.
This proposal creates advertising standards for dealers.
Provisions are created for dealers to sell a motor vehicle "as is" in certain circumstances.
This proposed legislation also eliminates lienholder possession on motor vehicle certificates of title. The owner of the motor vehicle is required to list the lienholder on the application for title and failure to do so is a Class C felony. The process for perfection of and releases of liens for lienholders and subordinate lienholders is specified.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements. This proposal will increase state revenue.
SOURCES OF INFORMATION
Department of Economic Development
Division of Professional Registration
Department of Public Safety
Missouri State Highway Patrol
Fire Safety
Office of State Courts Administrator
Office of Administration
Administrative Hearing Commission
Department of Insurance
Office of Secretary of State
Administrative Rules Division
Office of Attorney General
Office of the Governor
Department of Corrections
Office of Prosecution Services
Department of Transportation
Department of Revenue
Office of State Treasurer
Office of Senate Administration
Mickey Wilson, CPA
Acting Director
March 19, 2002