Legislature(1997 - 1998)
04/23/1997 01:10 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 175 - PRIVATE MOTOR VEHICLE LICENSING/TESTING Number 118 CHAIRMAN WILLIAMS announced the committee would take up HB 175, "An Act relating to issuance of motor vehicle registrations and titles, and to licenses and permits to operate a motor vehicle." Number 170 CHAIRMAN WILLIAMS called for a brief at ease at 2:00 p.m. Number 170 CHAIRMAN WILLIAMS called the meeting back to order at 2:04 p.m. Number 175 REPRESENTATIVE AL VEZEY stated this bill would be a move towards the privatizing of motor vehicle services. He had been to a symposium by the American Association of Motor Vehicle Administrators, on the subject of privatization and passed out their survey. He stated that the majority of states are moving towards the direction of privatization although there are different degrees to the level of privatization. He stated that most jurisdictions agree that the most difficult part to implementing a privatization program was the resistance from the state employees. He stated that the consensus of experience seems to be that out- sourcing was successfully implemented when the jobs of the public employees were reasonably addressed, in that they did not lose their jobs. New Jersey had the greatest problems in that toll collectors were making $65,000 a year. He stated that Alberta and Arizona found employment for all its employees after the privatization. He stated that Massachusetts is moving towards out- sourcing, the lines at the Department of Motor Vehicles are so bad that an industry of professional line men have formed, to wait in line. Number 381 REPRESENTATIVE VEZEY stated that there is a technical amendment which is to change the Department of Public Safety to the Department of Administration. He stated that the administration has full authority within the confines of existing contracts to out-source the Department of Motor Vehicle services. He stated that car dealers are excited about this prospect, however, their employees are virtually unilaterally opposed to it. He stated that the employees see this as more work without additional pay. He stated that this really isn't the case. The incentive for this is coming from the top and not from the employees of the car dealers. He stated that there is a natural resistance from the public employees as they feel threatened that they are going to lose their jobs, and it is the role of the legislature to allay those concerns. Number 528 REPRESENTATIVE COWDERY asked if the same amount of revenue that goes to the state or to the Department of Motor Vehicles will go to privatization. Number 539 REPRESENTATIVE VEZEY replied the Department of Motor Vehicles would not have as many expenses in collecting it but the fees are identical, there are no cuts taken by the vendor. He stated that this varies across the states, most do not structure how much their vendors can charge for services. He stated that the charges range from a five dollar charge to a forty dollar charge. Number 573 REPRESENTATIVE COWDERY asked if this would allow more remote areas to receive more service. Number 586 REPRESENTATIVE VEZEY replied that the jurisdiction that has lead the country in this area is Saskatchewan, which is a big providence with a small population that has not been able to provide this service with government officers. He stated that they have 226 vendors who provide this service. Number 607 REPRESENTATIVE COWDERY asked if it would diminish the quality of the driver's license test. Number 617 REPRESENTATIVE VEZEY replied that no standards would change and the Department of Motor Vehicles would maintain a quality assurance responsibility. Number 628 REPRESENTATIVE COWDERY asked if anyone could get a free notary service as most state offices offer a free notary service. Number 667 REPRESENTATIVE VEZEY replied that many vendors will do this as a customer service and some will do it as a business for a profit. He stated that most have a set fee that vendors can charge, however some of the bigger programs don't regulate it at all. Number 686 REPRESENTATIVE ELTON stated that he does not understand why there needs to be the contract language with the third party vendor involved. He stated that the state can sometimes be defined as a single entity but having the contract in law assumes the need of every person who wants to be a third party vendor is exactly the same. He felt that this assumption should not be made. Number 723 REPRESENTATIVE VEZEY replied that this does not have to be done, but the administration is not taking the lead so as a legislative body we are pushing the administrative branch of government to do business in a different way. He stated that the contract does have flexibility although it is more rigid than the Department of Motor Vehicles would like. He stated that it is an equitable contract that grants rights to the vendors and to the Department of Motor Vehicles. He stated that the Department of Motor Vehicles insisted that the legislature narrow the department's authority to terminate a contract with the vendor. Number 770 REPRESENTATIVE ELTON stated that the provision of the contract provides that either party can get out of the contract with a 60- day notice to the other. He asked what happens if a third party vender wants to negotiate a 45-day notice, then the legislation would have to be amended. Number 792 REPRESENTATIVE VEZEY replied that whenever two parties agree mutually they can do as they chose. Number 810 REPRESENTATIVE MASEK asked why the amendment is being changed from the Department of Public Safety to the Department of Administration. Number 830 REPRESENTATIVE VEZEY replied that Executive Order 98 went into effect in April. Number 857 MS. HENSLEY stated that the department has had third party contractors for 60 years. She stated that there are 13 commissioned agents in various locations, they are paid on a transaction based commission. She stated that the program has been expanded to where the state does not have to pay some of the contracted third party contractors, such as the tour bus and school bus contractors. She stated that there are two car dealers that have come on line with the department to do their own titling. She stated that these are simple transactions that have been out- sourced. She stated that in Fairbanks and Anchorage, the Department has offered the emission testing stations to be contracted out to do registration renewal. This does not cost the department anything as the third party is required to pay the up front cost. Last year 81,000 renewal registrations where processed this way. The department is looking at having the simple transactions out-sourced. The department is currently giving the public both options of vendors and the department. Number 1235 MS. HENSLEY stated that the division would like more control because of the audit functions but at the same time do not want a rigid contract in statute and need the flexibility to take an agreement back at any time, in the case of violations. She stated that the department feels they have that. She stated that she is the chair of the International Working Group to study this privatization and referred to the results of the survey. She thought the division needs to work with the legislature more on this bill. Number 1240 REPRESENTATIVE COWDERY asked what is the largest use of the department by the public. Number 1252 MS. HENSLEY replied that 63 percent of the public participates in the mail registration program. She stated that the title transactions and the issuance of drivers' licenses require the public to come into the office. Number 1383 REPRESENTATIVE ELTON asked if a third party contractor is in violation the department would not be able to cancel the contract unless given the 60 day notice. Number 1413 MS. HENSLEY replied that there is a provision in the statute that the department could take action and there would be a due process period. She stated that the third party would remit the fees to the state every 30-days whereas, the department makes deposits on a daily basis. Number 1468 REPRESENTATIVE ELTON stated that it is his understanding that Alaska can privatize at any time and the department does not need this bill to accomplish this. MS. HENSLEY replied that is correct. Number 1508 REPRESENTATIVE COWDERY asked if his understanding was correct that the private contracts that are in existence have not reduced the number of employees employed by the department. Number 1535 MS. HENSLEY replied that the department has not reduced the number of employees as a result of the third party contracts. She stated that the division can not handle the work load as it is. She stated that people are paying for services that the Department of Motor Vehicles is not allowed to give them. She stated that they bring in $37 million dollars but their budget is $8.1 million. Number 1615 REPRESENTATIVE COWDERY made a motion to accept Amendment 1. Number 1621 CHAIRMAN WILLIAMS asked if there was an objection, hearing none it was so ordered. CHAIRMAN WILLIAMS stated that it was his intention to put this bill into a subcommittee with Representative Cowdery as chair, with Representative Hudson and Representative Elton. He asked Representative Cowdery to keep his office informed as to when the meeting is held.
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