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F I S C A L I M P A C T R E P O R T

SPONSOR Leavell

ORIGINAL DATE

LAST UPDATED

1/29/08

HB

SHORT TITLE Motor Vehicle Suspense Fund Distributions

SB 392

ANALYST Earnest

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08*

FY09

FY10

$85.8*

$1,029.9

$1,040.2 Recurring Municipal Fee

Agents

($64.1)*

($768.8)

($776.5) Recurring State Road Fund

($21.8)*

($261.1)

($263.7) Recurring Local Govt (66-

6-23.1)

(Parenthesis ( ) Indicate Revenue Decreases)

Source: TRD

* The Fiscal Year 2008 impact results from the July 1, 2008, effective date of the bill, making the fee

agent distribution change apply to the July 2008 distribution of June 2008 tax receipts. Motor vehicle fee

revenues are accrued on a 30-day modified accrual basis (one month prior to cash transfers to a recipient).

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Department of Finance and Administration (DFA)

Department of Transportation (DOT)

SUMMARY

Synopsis of Bill

Senate Bill 392 increases the supplemental distribution from the Motor Vehicle Suspense Fund

made to a municipality, county or fee agent operating a motor vehicle field office that conducted

10,000 or more transactions in the preceding fiscal year from $1.00 for each driver’s license,

identification card, motor vehicle registration, motorboat registration or title transaction

performed to $5.00 for each transaction performed. The bill carries an effective date of July 1,

2008.

Senate Bill 392 – Page

2

FISCAL IMPLICATIONS

According to TRD, FY07 distributions of the current $1 amount to 9 municipal fee agents that

processed 10,000 or more transactions (those specified in the bill) totaled $228,271. This FY07

amount is assumed to grow by 1% per year for 2 years to derive an estimate of FY09

transactions. In addition, two new recipients are projected to reach the 10,000 transaction

threshold (Tijeras and Kirtland AFB). These totals were multiplied by $4 (i.e., the increase from

$1 to $5 proposed in this bill) to obtain the fiscal impact. The $4 per transaction is paid out of

the Motor Vehicle Suspense Fund balance. This suspense fund is distributed to the State Road

Fund (74.65%) and Local Government (25.35%) entities pursuant to Section 66-6-23.1 NMSA

1978.

A table of the 11 fee agents impacted by this bill is below:

CURRENT

FISCAL IMPACT

$1 Distrib Additional $4 Distrib

Fee Agent

FY2007

Full Year (FY2009)

Eddy Co / Artesia

19,254

78,564

Lovington

20,824

84,970

Hobbs

40,110

163,665

Sunland Park

30,282

123,563

Bloomfield

23,670

96,583

Aztec

22,085

90,116

Deming

28,056

114,480

Rio Rancho

31,614

129,998

Bernalillo

12,376

50,499

Tijeras

none

40,552

Kirtland AFB

none

57,916

TOTAL Local Govt Fee Agents 228,271

1,029,905

Source: TRD

SIGNIFICANT ISSUES

Several municipal field agent offices, including Hobbs and Rio Rancho, have raised concerns

that the reimbursements for running the MVD office do not adequately cover the costs. This bill

seeks to rectify that by increasing reimbursements to the municipalities to cover their costs.

This bill continues to exclude a class A county with a population exceeding 300,000 or a

municipality with a population exceeding 300,000 from the supplemental distribution. Bernalillo

County is the only county and Albuquerque is the only municipality that meets these parameters.

Senate Bill 392 – Page

3

DOT notes this particular bill, in order to enhance revenues for MVD fee agents, alters fee

distribution in a way that reduces the revenues to NMDOT. A solution may require some

increase to the fees to the public, which an agency requiring additional revenue may have to

propose as opposed to taking from a sister agency. Under the Alternatives section of this

analysis, NMDOT proposes other means for MVD to achieve its revenue needs while holding

NMDOT revenues neutral.

TECHNICAL ISSUES

TRD notes the following technical Issues:

Under this bill’s proposed distribution of revenue, the amount of money disbursed in

connection with a four-year driver’s license transaction (65 percent of all licenses issued by

MVD are for four years) exceeds the money collected on the transaction.

•

Money collected is $18 -- $10 License Fee + $3 Enhanced DL Fee + $3 Driver Safety Fee +

$2 Admin Fee.

•

Money distributed would be $19 -- $12.50 to Fee Agents ($6 for fee agent processing + $5

extra per this bill + $1.50 Admin Fee) + $ 3 Enhanced DL Fee to MVD + $3 to Driver Safety

+ $0.50 remaining portion of Admin Fee distributed through Section 66-6-23.1 to the State

Road Fund and Local Governments.

In the case of a one-year Vehicle Registration, the fee agent would receive $11.50 -- $5 for fee

agent processing + $5 extra (per this bill) + $1.50 Admin Fee). The $10 fee agent

reimbursement (apart from normal administrative fees) would amount to approximately 19% of

an average vehicle registration fee of $53.

BE/bb