HOUSE BILL NO. 409 "An Act relating to identification cards; relating to vehicle registration fee rates; relating to changes of address; relating to driver's license fees; and relating to financial responsibility for motor vehicles." 1:36:57 PM CATHY SCHLINGHEYDE, STAFF, REPRESENTATIVE KREISS-TOMKINS, explained that the bill was a House State Affairs Committee bill derived from a combination of recommendations from the Department of Administration finance subcommittee, Legislative Finance Division's indirect expenditure reports, and some statutory clean up ideas submitted by the Division of Motor Vehicles (DMV). She reviewed the sectional analysis (copy on file): Section 1: This section standardizes the age for senior citizen fee waivers by changing the age for a senior citizen identification card from 60 to 65. Ms. Schlingheyde detailed that currently the vehicle registration waiver went into effect when someone turned 65. However, the qualifying age for the senior citizen identification card fee waiver was 60. The bill would standardize the qualifying age to 65 for both. Section 2: This section allows a person to authorize the Division of Motor Vehicles (DMV) to update their address based on the United States Postal Service (USPS) database. Ms. Schlingheyde elaborated that currently if a person updated their address at the post office without notifying DMV, the agency had to send mail to the wrong address, wait for the mail to bounce back, and then seek out the correct address. She explained the process cost money and was inefficient. Section 3: This section removes the vehicle registration fee exemption for amateur radio operators. Section 4: This section raises the vehicle registration fee for municipalities to the standard $100, and raises the vehicle registration fee for charitable organizations to $50. Section 5: This section sets the fee for DMV Knowledge Tests at $5 and raises the fee for DMV Road Tests from $15 to $25. Ms. Schlingheyde elaborated that Section 5 would generate revenue and reduce the no-show rate. Section 6: This section raises the threshold for requiring deposit of security to DMV from $501 to $2,000 to align with the standard for the Department of Transportation (DOT). Section 7: This section raises the threshold for requiring a peace officer to provide written notification about the requirements in the Motor Vehicle Safety Responsibility Act from $501 to $2,000. Section 8: This section raises the threshold for accepting release from liability executed by a parent or legal guardian on behalf of a minor from $501 to $2,000. Section 9: This section raises the threshold for requiring proof of financial responsibility after a traffic offense from $501 to $2,000. Section 10: This section raises the threshold for requiring proof of financial responsibility after an accident from $501 to $2,000. Ms. Schlingheyde expounded that Sections 6 through 10 increased the reporting thresholds for various accidents and crashes. Currently the thresholds were $501 at the DMV and $2,000 at the Department of Transportation and Public Facilities (DOT). The bill would standardize the threshold at the DOT rate of $2,000; the DMV number had not been updated for inflation for 33 years. Section 11: This section requires proof of financial responsibility after a license is suspended for failure to pay a judgement be maintained for three years, rather than the existing lifetime provision. The section also changes the requirement to hold proof of financial responsibility after judgement satisfaction only if the failure to pay was due to driving while uninsured. Ms. Schlingheyde addressed SR-22 insurance, a type insurance required after certain vehicle accidents. Insurance companies were required to submit SR-22 forms to notify DMV if a person's insurance lapsed. The section required SR-22 insurance for a lifetime if a person failed to pay a judgement within 30 days. The bill changed the SR- 22 requirement for failure to pay within 30 days to 3 years and it would only kick in if the person was driving while uninsured. Section 12: This section allows for a second payment plan in installments for people facing license suspension based on outstanding financial judgements. Section 13: This section raises the threshold for showing proof of motor vehicle liability insurance from $501 to $2,000. Section 14: This section removes the requirement to update DMV with address changes if the person has given permission for DMV to update addresses from the USPS database. Ms. Schlingheyde elaborated that Section 14 was statutory cleanup for the post office update. She explained that if a person allowed DMV to update their address based off the post office, they did not have to notify DMV. 1:40:27 PM Representative Kawasaki referred to Sections 6 through 10 and 13 dealing with the inflationary adjustment. He asked what happened in cases where a vehicle was worth less than $2,000. Ms. Schlingheyde responded that the judgement would still have to be paid. The threshold had to be reported to DMV and DOT for certain accidents, but it would not negate the requirement for an insurance company or an individual to compensate for damages. Representative Kawasaki referred to Section 3, which removed an exemption for amateur radio operators. He shared that he had an amateur radio operator in his district. He wondered why the bill would remove the exemption. He asked if the reasoning was because the exemption was infrequently used. Ms. Schlingheyde indicated there were only 44 people in the state who currently had the exemption. Representative Kawasaki asked Ms. Schlingheyde to review Sections 11 and 12. He believed he liked the sections and wondered how they had been brought into the bill that dealt mostly with adjustments and indirect expenditures. Ms. Schlingheyde responded that both sections had been recommended by DMV. She elaborated that DMV had worked with many individuals who had issues with the SR-22. She added that DMV was available for questions. Currently the insurance was required for five years in the case of a DUI and for a lifetime after four DUIs. The section required SR-22 insurance for a lifetime if a person failed to pay a judgement within 30 days, which was disproportionate to the rest of the statute. The bill would bring it in line with the penalty for driving while uninsured or on a suspended license. 1:42:31 PM Representative Kawasaki referenced Section 4 dealing with vehicle registration fees for municipalities and charitable organizations. He asked for verification that like the state, currently municipalities were exempt from registration fees. Ms. Schlingheyde responded that municipalities currently paid a $10 registration fee, which was a 90 percent discount. Representative Kawasaki asked what charitable organizations currently paid. Ms. Schlingheyde responded that the registration fee for charitable organizations was also $10. Representative Tilton asked whether the post office database provision in Section 1 was optional for individuals. Ms. Schlingheyde confirmed is was optional for individuals and was only based on permanent address changes. A temporary forwarding of mail would not affect a person's registration at DMV. Representative Pruitt asked for verification Section 1 would apply to any mail correspondence with DMV including license and registration renewal. He shared that at one point DMV had sent his registration renewal to his old address. Ms. Schlingheyde responded in the affirmative. 1:44:22 PM Representative Pruitt referred to Sections 6 through 10 and 13 that would increase the threshold [for requiring deposit of security to DMV] from $501 to $2,000. He noted that it was difficult to determine the distinction between $500 and $2,000 damage on a vehicle. He recalled a situation where a police officer had specified that damage to a car did not appear to be over $500; however, the damage had been over $5,000. He had been fortunate that insurance companies had managed the situation. He asked how to determine whether to contact a police officer to have them participate. He continued that having a police officer document that an accident took place and what occurred could be a huge asset to an individual dealing with damage to a vehicle. He asked how individuals should deal with accidents when trying to figure out how to manage going forward. Ms. Schlingheyde responded that the sections in the bill did not address the issue of calling the police, but whether they had to file certain forms with DMV after the accident. Individuals would have time to assess what the damage level was. She deferred to DMV for any additional information. 1:46:18 PM Co-Chair Foster indicated the committee had been joined by the bill sponsor. REPRESENTATIVE JONATHAN KREISS-THOMKINS, SPONSOR, thanked the committee for hearing the bill. Representative Pruitt referenced Section 7 that would increase the threshold for requiring a peace officer to provide written notification about the requirements in the Motor Vehicle Safety Responsibility Act from $501 to $2,000. He stated while it was related to the suspension of an operator's license or driving privileges, it involved a police officer assessing what the damage was. He stated that currently officers could look at the side of caution because $500 was a small amount, but $2,000 was four times that amount. He was concerned about putting an individual in a position where they did not have an officer present to provide credible assistance and determine the damage value that may be needed in a judicial proceeding later. Co-Chair Foster indicated that DMV was available online. Ms. Schlingheyde noted that they did assess $2,000 worth of damage currently for reports to DOT. Currently two thresholds were reported on - $500 to DMV and $2,000 to DOT. The bill would change the reporting requirement to one threshold amount. 1:49:28 PM Representative Pruitt spoke to the requirement of a police officer to assist a person who had been in an accident. With the higher threshold he believed police officers would be less likely to assist and more likely to give a card out because it was difficult to tell how much damage had been done. He believed officers could err on the side of caution when it did not appear significant damage had been done. He stated that with the higher threshold more damage could be done, and it would be easier for an officer to merely hand a card out as opposed to writing a report. He stated a report by a police officer could assist an individual and operate as a credible witness later on. He asked how the threshold would be administered, how a police officer would deal with the reporting, and how the change would impact people involved in an accident. MARLA THOMPSON, DIRECTOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF ADMINISTRATION (via teleconference), spoke about the goal of updating the discrepancy between reporting a person's insurance to DMV for everything at and above $501 and reporting an accident and insurance on the DOT form. The goal was to only have one threshold. Representative Pruitt wondered if the small tweaks did not necessitate an individual to have something put on their record if the damage was less than $2,000. Ms. Thompson agreed. Previously, if a person was in an accident and damage was over $500 they were supposed to report the accident to DMV and provide proof of insurance. The bill would clean up the thresholds; if a person was in an accident they would fill out the DOT report, which included their insurance information - the bill would eliminate confusion by cutting out extra requirements that people did not know they were supposed to do. 1:52:54 PM Co-Chair Foster stated his understanding that currently if an accident involved damages exceeding $500, an individual was required to submit a form to DMV online. He asked for detail about the DOT report requirement. Ms. Thompson responded that the DOT report was a crash report that individuals were required to fill out (the report was often filled out by police officers at the crash site). The report also included the individual's insurance information. Co-Chair Foster summarized that under the legislation if a person had a crash they did not have to submit a report to DMV if they believed damages were under $2,000. However, if the person believed the damages exceeded $2,000 they contacted a police officer. He asked for clarification. Ms. Thompson responded that $2,000 was a substantial number and most of the time the police would fill out the report; if the officer did not fill out the report, they tell the individual what to fill out. The report included a person's insurance information, meaning they only had to fill out one report, which was shared with DOT. Vice-Chair Gara stated that in 2017 there had been a bill on Real ID; in the later stages of the bill the license fee had been increased substantially in his view. He recalled the fee was significantly higher than the cost of administering the license. He asked Ms. Thompson if she remembered the proposed license fee and the fee that had ultimately been adopted. He wondered what fee level (in the current legislation) would be cost neutral. Ms. Thompson reported that the fee was $20, which had been changed in the end. She believed DMV's original request had been $10 and then $5. The cost neutral amount was approximately $5. 1:55:48 PM Vice-Chair Gara asked for verification that the $20 was in addition to the regular driver's license. Ms. Thompson replied in the affirmative. Vice-Chair Gara asked for the total Real ID license cost. Ms. Thompson answered that a regular driver's license was $20, and a Real ID was $15. Vice-Chair Gara asked for verification that the Real ID license cost $40. Ms. Thompson responded that the cost was $40, but the extension had increased from 5 years to 8 years. Representative Wilson stated that several years back a bill contained a provision allowing people to pay an additional $25 for vehicles older than eight years, meaning the owner did not have to buy another registration until the car was sold. She asked if the sponsor would be amenable to the deletion of AS 28.10.155, which would remove the exemption. Representative Kreiss-Tompkins responded that he had reviewed the indirect expenditure report. He stated that it was a substantial indirect expenditure and he had been let down to find that the anticipated cost of the expenditure had not yet been calculated by the Legislative Finance Division. He recalled when the exemption had been passed and he would be amenable to the change, which he believed created further reduction of indirect expenditures. 1:57:53 PM Representative Wilson explained that the exemption had been automatic for individuals in an unorganized area, whereas organized areas had to vote on the exemption. Anchorage did not take the exemption because it utilized a different tax on vehicles. She noted that Fairbanks took the exemption; she did not have detail on other locations. Part of the reason the exemption had been passed was because the state had money and DMV was making more money than it needed. She did not believe the state was in the same position any longer. She thought it was time to remove the exemption. She reasoned her 10-year-old car probably wore on the road as much as 3-year-old vehicles. Representative Kawasaki asked Ms. Thompson for the approximate vehicle registration costs. Ms. Thompson answered that she would follow up with the information. She detailed that the rates had not been increased recently. There were things like $15 for a road test that DMV was trying to increase to $25 to cover costs. Representative Kawasaki noted Section 4 of the bill would raise registration rates from $10 to $50 for a vehicle owned by a charitable organization and from $10 to $100 for vehicles owned by municipalities. He wondered if the state would suddenly be making money rather than breaking even. He understood it was difficult to suss out the total cost because of the various work done by the agency. He was trying to come up with a reasonable amount. Ms. Thompson replied that in the fiscal note showed the registration changes with the difference in municipalities and charities separately. 2:00:38 PM Representative Guttenberg asked if the division had a way to parse out how long it took when individuals got a vehicle registration or a license, had difficulty getting registration, or did not have sufficient information. He was interested in how long each of the items took separately and where the cost drivers resided. He provided various examples of different things individuals came to DMV for. Ms. Thompson answered that she tracked the wait and transaction times across the state. The average transaction time was about seven minutes. Representative Guttenberg stated that when he went to DMV he observed that some people were having significant difficulty. He stated that he typically had basic and simple business to conduct; however, he did not think seven minutes was the average time it took when he went in to renew something. He wondered about the time it took for someone with an out-of-state license to get an Alaska license in comparison to other items. Ms. Thompson replied that she could probably come up with some averages on registration and driver's licenses. She did not know whether she could parse down to the level Representative Guttenberg was looking for, but she offered to come up with some figures. Representative Guttenberg clarified that he did not need the figures, but was trying to determine how easy it was for DMV to come up with the data. 2:04:04 PM Representative Kreiss-Tompkins followed up on an earlier question by Representative Wilson. He explained when the initial authorizing legislation that created the permanent vehicle registration passed it had not contained a provision from an earlier version that gave blanket statewide applicability in the fiscal note where the cost had been estimated at $20 million per year. The exemption had been tightened up since that time. He noted it could be a little complicated to eliminate the exemption because permanent vehicle registration was at a higher rate than normal vehicle registration. He thought there may need to be an accommodation or transition incorporated if the permanent vehicle registration was eliminated. Representative Wilson explained that the permanent vehicle registration cost the typical two-year fee plus an additional $25. She explained that individuals with the exemption would have to be grandfathered in. She explained [the removal of the exemption] would stop the bleeding and bring in a portion of the $20 million. She reported she would work with the sponsor on an amendment but would not hold the bill up in committee. Co-Chair Foster OPENED and CLOSED public testimony. 2:06:52 PM Representative Kawasaki MOVED to ADOPT conceptual Amendment 1 on page 2, line 22. The amendment would maintain the current $10 vehicle registration fee for charitable organizations instead of the proposed $50 fee. Representative Wilson OBJECTED. She asked about the impact and queried the number of charitable organization licenses. Co-Chair Seaton pointed to the third paragraph on page 2 of the fiscal note that specified there were 2,657 vehicles registered to charitable organizations. The new $50 fee would generate an additional $106,280. Due to the two-year registration cycle the additional yearly revenue for FY 19 and FY 20 would be $53,140. Representative Wilson did not believe $25 per year [$50 for two years] was drastic. She remarked that the bill did not increase the fee as high as it could have (to $100). 2:08:52 PM Representative Kawasaki noted there had been discussion the previous day about the public, private, and nonprofit sectors. He stated the nonprofit sector worked closely with Alaska's public sector. He elaborated that the nonprofit sector thrived and fell based on the state's economy. He reasoned nonprofits provided more services. At a time where the public sector was trying to find money, the nonprofit sector was also trying to scrape by. He reported the senior center in his district that ran the Meals on Wheels program probably took advantage of the $10 registration. He did not believe $40 would break the bank for the nonprofits, but it did not seem right to add to their burdens. He supported deferring their burdens longer. Representative Grenn provided some context as the Department of Administration finance subcommittee chair. The Legislative Finance Division indirect expenditure report noted that the discount had started in 1978. When the discount was first offered only a few hundred vehicles were eligible, compared to the current number of close to 6,000. Representative Wilson MAINTAINED her OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Guttenberg, Kawasaki, Foster OPPOSED: Thompson, Tilton, Wilson, Gara, Grenn, Ortiz, Pruitt, Seaton The MOTION to adopt conceptual Amendment 1 FAILED (3/8). 2:11:28 PM AT EASE 2:13:10 PM RECONVENED Representative Wilson MOVED to ADOPT conceptual Amendment 2: Delete 8-year-old car exemption in Sec. 28.10.155. Permanent motor vehicle registration. Except for anyone who already has a permanent registration and the permanent registration expires when the owner transfers or assigns the owner's title or interest in the vehicle. Co-Chair Seaton OBJECTED for discussion. Representative Wilson explained that the amendment would remove the 8-year-old car permanent registration exemption under AS 28.10.155. She explained that currently someone could pay a fee plus $25, which exempted their vehicle [from another registration fee] until they sold the vehicle. She elaborated that when the vehicle was sold the new owner had to reregister and pay the fee. Co-Chair Seaton asked for verification that when a new owner purchased a car that had previously been under the exemption, they would pay the regular registration fee. Representative Wilson replied in the affirmative. There would no longer be an exemption; therefore, individuals would pay a two-year registration fee like everyone else. Co-Chair Seaton WITHDREW his OBJECTION. Representative Thompson OBJECTED. He stated that a person over the age of 65 could get a permanent vehicle registration. He asked for verification the exemption addressed by the amendment was separate. Representative Wilson answered that Representative Thompson was referencing a different statute. She clarified that individuals over the age of 65 were allowed a permanent vehicle registration for one vehicle. Representative Thompson WITHDREW his OBJECTION. There being NO further OBJECTION, Conceptual Amendment 2 was ADOPTED. 2:15:49 PM Representative Kawasaki stated that he had planned to offer a separate conceptual amendment dealing with municipalities. He detailed that the fee for municipalities would increase from $10 to $100. He remarked that the legislature had done numerous things in the past couple of years to harm municipal governments, including school bond debt reimbursement, reduced revenue sharing, reduced capital budget, and reduced education. He thought the increased fee would add an additional burden to municipalities at a time when they were having trouble making ends meet. He appreciated the bill and would not be offering the amendment. 2:16:21 PM Vice-Chair Gara reviewed the previously published fiscal impact note from the Department of Administration, DMV. There was no cost. The change in revenue was $815,300 per year starting in FY 19. He believed an updated fiscal note would follow. Co-Chair Seaton MOVED to report CSHB 409(FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 409(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN1 (ADM). 2:17:37 PM AT EASE 2:20:25 PM RECONVENED