LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION April 17, 2023 TO: Honorable Terry Canales, Chair, House Committee on Transportation FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB718 by Goldman (relating to the issuance of certain tags, permits, and license plates authorizing the movement of vehicles.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for HB718, Committee Report 1st House, Substituted : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2024$02025$02026$02027$02028$0All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromState Highway Fund6 Probable Revenue Gain/(Loss) fromTx Dept of Motor Vehicles Fnd10 Probable Savings/(Cost) fromTx Dept of Motor Vehicles Fnd10 Probable Revenue Gain/(Loss) fromCounties2024$0$0($24,370,810)$02025($14,202,000)($672,000)($8,757,390)($1,002,000)2026($28,831,000)($1,364,000)($8,474,790)($2,034,000)2027($29,263,000)($1,385,000)($8,474,790)($2,064,000)2028($29,702,000)($1,405,000)($8,607,790)($2,095,000)Fiscal Year Change in Number of State Employees from FY 2023202438.0202542.0202642.0202742.0202842.0 Fiscal AnalysisThe bill would amend Transportation Code, Chapters 502 and 503, to repeal provisions regarding the issuance of dealer's, converter's, and buyer's temporary paper tags and certain temporary permits issued in lieu of registration of a vehicle. The bill would amend Transportation Code, Chapter 503, to require a motor vehicle dealer to issue metal license plates obtained from the Texas Department of Motor Vehicles (TxDMV) for vehicles sold by the dealer and eliminate the issuance of temporary paper buyer's tags. The bill would require TxDMV to ensure that a dealer may obtain in advance a sufficient amount of license plates to continue selling vehicles without an unreasonable disruption of business due to the unavailability of license plates. The bill would require TxDMV to establish rules to set the maximum number of license plates that a dealer may obtain and to monitor the number of license plates obtained by the dealer. The bill would require TxDMV, not later than March 1, 2024, to adopt rules to implement the changes in law provided by this legislation and create a dealer-issued license plate database. This provision would take effect on September 1, 2023. Except as otherwise specified, the bill would take effect on March 1, 2025.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
April 17, 2023
TO: Honorable Terry Canales, Chair, House Committee on Transportation FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB718 by Goldman (relating to the issuance of certain tags, permits, and license plates authorizing the movement of vehicles.), Committee Report 1st House, Substituted
TO: Honorable Terry Canales, Chair, House Committee on Transportation
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB718 by Goldman (relating to the issuance of certain tags, permits, and license plates authorizing the movement of vehicles.), Committee Report 1st House, Substituted
Honorable Terry Canales, Chair, House Committee on Transportation
Honorable Terry Canales, Chair, House Committee on Transportation
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB718 by Goldman (relating to the issuance of certain tags, permits, and license plates authorizing the movement of vehicles.), Committee Report 1st House, Substituted
HB718 by Goldman (relating to the issuance of certain tags, permits, and license plates authorizing the movement of vehicles.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB718, Committee Report 1st House, Substituted : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB718, Committee Report 1st House, Substituted : an impact of $0 through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
2024 $0
2025 $0
2026 $0
2027 $0
2028 $0
All Funds, Five-Year Impact:
2024 $0 $0 ($24,370,810) $0
2025 ($14,202,000) ($672,000) ($8,757,390) ($1,002,000)
2026 ($28,831,000) ($1,364,000) ($8,474,790) ($2,034,000)
2027 ($29,263,000) ($1,385,000) ($8,474,790) ($2,064,000)
2028 ($29,702,000) ($1,405,000) ($8,607,790) ($2,095,000)
2024 38.0
2025 42.0
2026 42.0
2027 42.0
2028 42.0
Fiscal Analysis
The bill would amend Transportation Code, Chapters 502 and 503, to repeal provisions regarding the issuance of dealer's, converter's, and buyer's temporary paper tags and certain temporary permits issued in lieu of registration of a vehicle. The bill would amend Transportation Code, Chapter 503, to require a motor vehicle dealer to issue metal license plates obtained from the Texas Department of Motor Vehicles (TxDMV) for vehicles sold by the dealer and eliminate the issuance of temporary paper buyer's tags. The bill would require TxDMV to ensure that a dealer may obtain in advance a sufficient amount of license plates to continue selling vehicles without an unreasonable disruption of business due to the unavailability of license plates. The bill would require TxDMV to establish rules to set the maximum number of license plates that a dealer may obtain and to monitor the number of license plates obtained by the dealer. The bill would require TxDMV, not later than March 1, 2024, to adopt rules to implement the changes in law provided by this legislation and create a dealer-issued license plate database. This provision would take effect on September 1, 2023. Except as otherwise specified, the bill would take effect on March 1, 2025.
The bill would amend Transportation Code, Chapters 502 and 503, to repeal provisions regarding the issuance of dealer's, converter's, and buyer's temporary paper tags and certain temporary permits issued in lieu of registration of a vehicle. The bill would amend Transportation Code, Chapter 503, to require a motor vehicle dealer to issue metal license plates obtained from the Texas Department of Motor Vehicles (TxDMV) for vehicles sold by the dealer and eliminate the issuance of temporary paper buyer's tags. The bill would require TxDMV to ensure that a dealer may obtain in advance a sufficient amount of license plates to continue selling vehicles without an unreasonable disruption of business due to the unavailability of license plates. The bill would require TxDMV to establish rules to set the maximum number of license plates that a dealer may obtain and to monitor the number of license plates obtained by the dealer.
The bill would require TxDMV, not later than March 1, 2024, to adopt rules to implement the changes in law provided by this legislation and create a dealer-issued license plate database. This provision would take effect on September 1, 2023.
Except as otherwise specified, the bill would take effect on March 1, 2025.
Methodology
The bill would repeal Transportation Code, Sections 502.094 and 502.095, relating to the issuance of one-trip, 30-day, 72-hour, and 144-hour temporary permits beginning on March 1, 2025. The permit fees are $5.00 for one-trip permits; $25.00 for 30-day and 72-hour permits; and $50.00 for 144-hour permits. TxDMV estimates, in fiscal year 2023, 871,269 temporary permits will be issued in fiscal 2023. Of the total: 50,553 will be one-trip permits; 416,301 will be 30-day permits; 132,382 will be 72-hour permits; and 272,033 will be 144-hour permits. TxDMV assumes an annual growth rate of 1.5 percent in subsequent fiscal years for each permit type. Revenue from the base permit fee for each of the four types is deposited to State Highway Fund 0006, or if purchased at a county office, allocated between State Highway Fund 0006 and Fund 0057 County Road and Bridge Fund of the issuing county. However, assuming the maximum allocation for vehicle registration revenue to Fund 0057 will be met, this analysis assumes 100 percent of the temporary permit fees would be deposited to State Highway Fund No. 006. Additionally, a processing and handling (P&H) fee of $4.75 is currently assessed for the issuance of a temporary permit. The fee is retained by the permit issuing entity (either TxDMV or the counties). Based on the information and analysis provided by TxDMV and the Comptroller of Public Accounts, it is assumed elimination of these temporary permits on March 1, 2025, would result in revenue losses beginning in fiscal year 2025 to State Highway Fund 0006, Texas Department of Motor Vehicles Fund 0010, and to the counties in the estimated amounts shown in the table above. Based on the information and analysis provided by TxDMV, it is assumed the department would incur a one-time increase in general issue license plate manufacturing costs of $4,238,000 in fiscal year 2024 (1.3 million plates at $3.26 per plate) and $247,000 for shipping costs ($0.19 per plate) in fiscal year 2025 to ensure a sufficient amount of plates would be available to motor vehicle dealers by the effective date of March 1, 2025; and a one-time increase in metal Dealer license plate manufacturing costs of $234,900 (135,000 plates at $1.74 per plate). Afterwards, the department anticipates its standard operations for license plate manufacturing would be sufficient to maintain the necessary license plate inventory for the counties and motor vehicle dealers. Based on the information provided by TxDMV, it is assumed the creation of a dealer-issued license plate inventory management system would be required to ensure appropriate controls over the distribution and monitoring of license plates obtained by motor vehicle dealers. Based on the TxDMV's known costs of similar systems, the department estimates one-time system implementation costs of $15.0 million in fiscal year 2024 and ongoing annual maintenance costs of $5.0 million in each fiscal year thereafter. Based on the analysis provided by TxDMV, it is assumed the department would require 5.0 additional full-time equivalent (FTE) positions in fiscal year 2024 to support system development, architecture, data management, quality assurance and testing (2.0 Programmer III at $72,789 annual salary for each; 1.0 Programmer V at $77,862 annual salary; 1.0 Database Administrator III at $77,862 annual salary; and 1.0 Systems Analyst V at $77,862 annual salary); and 4.0 additional FTEs beginning in fiscal year 2025 to manage user access and security (3.0 Systems Support Specialist III at $47,388 annual salary each; 1.0 Systems Analyst IV at $68,047 annual salary). Based on the analysis provided by TxDMV, it is assumed the department would require 20.0 additional Compliance Analyst I FTEs ($51,985 annual salary each), 2.0 Compliance Analyst III positions ($68,047 annual salary each), 1.0 Compliance Analyst IV ($77,862 annual salary), 4.0 Investigator IV positions ($51,985 annual salary each), 1.0 Investigator VI position ($68,047 annual salary), and 2.0 Program Specialist I positions ($47,688 annual salary each) to support audits of inventory controls and security measures in place for license plate inventory storage at over 20,000 county tax offices and vehicle dealer locations across the state, one additional Administrative Assistant III FTE ($37,914 annual salary) to support the additional program staff, and 27 additional fleet vehicles ($30,000 each or $810,000 in fiscal year 2024). Annual additional fleet maintenance costs are estimated to be $24,000. Estimated costs for the additional 42.0 FTE positions identified above include the following: salaries and wages costs of $2.2 million in fiscal year 2024 (38.0 FTEs) and $2.4 million per year in following fiscal years (42.0 FTEs); employee benefits costs of $677,444 in fiscal year 2024 and $741,474 each fiscal year thereafter (30.33 percent of salary cost); agency payroll contribution costs for retirement and group insurance of $33,504 in fiscal year 2024 and $36,670 each fiscal year thereafter (1.5 percent of salary cost); one-time office furniture and computer equipment costs of $345,800 in fiscal year 2024 and $36,400 in fiscal year 2025 and $133,000 in fiscal year 2028 for replacement/refresh of computer equipment; and $148,884 in fiscal year 2024 and $172,956 each fiscal year thereafter for supplies, travel, training, telecommunications, and other recurring operating expenses. This analysis assumes all costs to TxDOT would be paid from the Texas Department of Motor Vehicles Fund 0010.
The bill would repeal Transportation Code, Sections 502.094 and 502.095, relating to the issuance of one-trip, 30-day, 72-hour, and 144-hour temporary permits beginning on March 1, 2025. The permit fees are $5.00 for one-trip permits; $25.00 for 30-day and 72-hour permits; and $50.00 for 144-hour permits. TxDMV estimates, in fiscal year 2023, 871,269 temporary permits will be issued in fiscal 2023. Of the total: 50,553 will be one-trip permits; 416,301 will be 30-day permits; 132,382 will be 72-hour permits; and 272,033 will be 144-hour permits. TxDMV assumes an annual growth rate of 1.5 percent in subsequent fiscal years for each permit type. Revenue from the base permit fee for each of the four types is deposited to State Highway Fund 0006, or if purchased at a county office, allocated between State Highway Fund 0006 and Fund 0057 County Road and Bridge Fund of the issuing county. However, assuming the maximum allocation for vehicle registration revenue to Fund 0057 will be met, this analysis assumes 100 percent of the temporary permit fees would be deposited to State Highway Fund No. 006. Additionally, a processing and handling (P&H) fee of $4.75 is currently assessed for the issuance of a temporary permit. The fee is retained by the permit issuing entity (either TxDMV or the counties). Based on the information and analysis provided by TxDMV and the Comptroller of Public Accounts, it is assumed elimination of these temporary permits on March 1, 2025, would result in revenue losses beginning in fiscal year 2025 to State Highway Fund 0006, Texas Department of Motor Vehicles Fund 0010, and to the counties in the estimated amounts shown in the table above.
Based on the information and analysis provided by TxDMV, it is assumed the department would incur a one-time increase in general issue license plate manufacturing costs of $4,238,000 in fiscal year 2024 (1.3 million plates at $3.26 per plate) and $247,000 for shipping costs ($0.19 per plate) in fiscal year 2025 to ensure a sufficient amount of plates would be available to motor vehicle dealers by the effective date of March 1, 2025; and a one-time increase in metal Dealer license plate manufacturing costs of $234,900 (135,000 plates at $1.74 per plate). Afterwards, the department anticipates its standard operations for license plate manufacturing would be sufficient to maintain the necessary license plate inventory for the counties and motor vehicle dealers.
Based on the information provided by TxDMV, it is assumed the creation of a dealer-issued license plate inventory management system would be required to ensure appropriate controls over the distribution and monitoring of license plates obtained by motor vehicle dealers. Based on the TxDMV's known costs of similar systems, the department estimates one-time system implementation costs of $15.0 million in fiscal year 2024 and ongoing annual maintenance costs of $5.0 million in each fiscal year thereafter. Based on the analysis provided by TxDMV, it is assumed the department would require 5.0 additional full-time equivalent (FTE) positions in fiscal year 2024 to support system development, architecture, data management, quality assurance and testing (2.0 Programmer III at $72,789 annual salary for each; 1.0 Programmer V at $77,862 annual salary; 1.0 Database Administrator III at $77,862 annual salary; and 1.0 Systems Analyst V at $77,862 annual salary); and 4.0 additional FTEs beginning in fiscal year 2025 to manage user access and security (3.0 Systems Support Specialist III at $47,388 annual salary each; 1.0 Systems Analyst IV at $68,047 annual salary).
Based on the analysis provided by TxDMV, it is assumed the department would require 20.0 additional Compliance Analyst I FTEs ($51,985 annual salary each), 2.0 Compliance Analyst III positions ($68,047 annual salary each), 1.0 Compliance Analyst IV ($77,862 annual salary), 4.0 Investigator IV positions ($51,985 annual salary each), 1.0 Investigator VI position ($68,047 annual salary), and 2.0 Program Specialist I positions ($47,688 annual salary each) to support audits of inventory controls and security measures in place for license plate inventory storage at over 20,000 county tax offices and vehicle dealer locations across the state, one additional Administrative Assistant III FTE ($37,914 annual salary) to support the additional program staff, and 27 additional fleet vehicles ($30,000 each or $810,000 in fiscal year 2024). Annual additional fleet maintenance costs are estimated to be $24,000.
Estimated costs for the additional 42.0 FTE positions identified above include the following: salaries and wages costs of $2.2 million in fiscal year 2024 (38.0 FTEs) and $2.4 million per year in following fiscal years (42.0 FTEs); employee benefits costs of $677,444 in fiscal year 2024 and $741,474 each fiscal year thereafter (30.33 percent of salary cost); agency payroll contribution costs for retirement and group insurance of $33,504 in fiscal year 2024 and $36,670 each fiscal year thereafter (1.5 percent of salary cost); one-time office furniture and computer equipment costs of $345,800 in fiscal year 2024 and $36,400 in fiscal year 2025 and $133,000 in fiscal year 2028 for replacement/refresh of computer equipment; and $148,884 in fiscal year 2024 and $172,956 each fiscal year thereafter for supplies, travel, training, telecommunications, and other recurring operating expenses.
This analysis assumes all costs to TxDOT would be paid from the Texas Department of Motor Vehicles Fund 0010.
Technology
TxDMV anticipates technology costs including an estimated one-time cost of $15.0 million in fiscal year 2024 to implement an inventory management system, ongoing annual costs of $5.0 million for maintenance of the system, computer equipment acquisition and maintenance costs related to the additional personnel.
Local Government Impact
Based on the information provided by TxDMV, it is assumed county tax assessor-collector offices would incur costs or require additional resources to implement the provisions of the bill.
Source Agencies: b > td > 300 Trusteed Programs Within the Office of the Governor, 304 Comptroller of Public Accounts, 608 Department of Motor Vehicles
300 Trusteed Programs Within the Office of the Governor, 304 Comptroller of Public Accounts, 608 Department of Motor Vehicles
LBB Staff: b > td > JMc, AAL, GDZ, TG
JMc, AAL, GDZ, TG