LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 15, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 602 Committee on State Affairs By: Armbrister Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB602 ( Relating to the period of validity of and fees for a driver's license or personal identification certificate.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB602-As Introduced Implementing the provisions of the bill would result in a net positive impact of $264,034,000 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would amend the Transportation Code to remove the requirement that driver's licenses and personal identification certificates issued by the Department of Public Safety (DPS) expire on the fourth anniversary of the date of application. It would change the expiration date of a driver's license and personal identification certificate from the fourth anniversary of the date of the application to the 60th birthday of the license or personal identification certificate holder. The bill would require the Department of Public Safety to reissue a license or certificate of a holder who is under 60 years old without charge at 12-year intervals to include changes in the pertinent information shown on the license or certificate, however the bill would not require the license or certificate holder to return to a DPS office prior to the document's expiration if pertinent information remains correct. The bill would also change the license and certificate fee structure. Those at least 18 years old, but younger than 25 years old would pay $85; those at least 25 years old, but younger than 35 years old would pay $75; those at least 35 years old, but younger than 45 years old would pay $60; those at least 45 years old, but younger than 50 years old would pay $40; those at least 50 years old, but younger than 55 years old would pay $20; and those at least 55 years old would pay $16. It would also set the four-year license renewal fee at $16 for those 60 and older, and change the renewal fee of a personal identification certificate to $5 for a person 60 years old or older. Department of Public Safety would also be required to provide, at the request of a license or certificate applicant, an installment payment plan over a one-year period. Currently, the cost of a Class C driver's license is $16 for an original license and $10 for a replacement license. The cost of an identification card is $5 for those 65 years or older and $10 for those younger than 65. The cost for a renewal or duplicate identification card is $10. The bill would take effect September 1, 1997. Methodolgy The bill would partially implement the Texas Performance Review (TPR) recommendation GG17 to authorize the establishment of an extended driver's license program in Texas. The estimate assumes that in fiscal 1998 the DPS would issue 4.7 million Class C driver's licenses and 245,000 renewal or duplicate identification cards. Under current law, the DPS is expected to generate $72.5 million in driver's license fees and renewal and duplicate personal identification fees in fiscal 1998. Based on estimates of driver's licenses obtained from the DPS and population projections made by the Comptroller of Public Accounts, about 20.5 percent of all Class C licenses issued are of the $10 replacement variety. The remaining 79.5 percent are issued as original licenses. Using the 20.5 percent replacement license and 79.5 percent original license ratio, it is estimated the DPS would generate $203.4 million in Class C license fees and renewal and duplicate personal identification fees in fiscal 1998. The Department of Public Safety also issues an estimated 400,000 original personal identification cards in a year, but does not provide data by age group except for those age 65 and older. The fees generated by the proposed change in the law as it relates to original personal identification cards would add some revenue to the General Revenue Fund. The forecasted increase in revenues is based on the Comptroller s estimates for growth rates in the amount of driver's license revenue under the current system as compared to the proposed system. After the four year extended driver's license conversion period, which would conclude in fiscal 2002, the revenue from the issuance of Class C licenses and personal identification cards under the proposed fee structure would be expected to drop, reflecting the elimination of renewals except for those license and card holders aged 60 and above. This estimate attempts to take into account new Texas drivers by subtracting the estimate of Class C licenses issued under the current system in 2002 from the licenses issued in 2001. In addition, this estimate assumes the same 20.5 percent ratio of replacement licenses. During the first four years of establishing the program, DPS would need to augment personnel in three areas: 1) Information Management Service, to rewrite computer programs that designate fees and expiration dates designated by current statue 2) Central Cash Receiving, as an approximated 1,800,000 individuals' installment payments are received and processed for deposit, and 3) the License Issuance Bureau, as that unit traces the status of unpaid installments. Otherwise, DPS's headquarters and field operations would remain static for the next four years as the current renewal cycle is completed. Once the extended driver's license conversion process is complete, a portion of the DPS's $51.3 million driver's license issuance budget could be reduced, depending on reduction in foot traffic at the DPS offices after 2001. It is estimated that traffic into DPS offices would drop by more than 50 percent in 2002. This estimate assumes a 25 percent reduction in the number of employees responsible for driver's license issuance in 2002. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Revenue Probable Change in Number Gain/(Loss) from Savings/(Cost) of State General Revenue from State Employees from Fund Highway Fund FY 1997 0001 0006 1998 $130,910,000 ($4,381,230) 65.0 1998 133,124,000 (3,151,308) 65.0 2000 135,367,000 719,246 50.0 2001 139,973,000 719,246 50.0 2002 (52,268,000) 10,336,000 (500.0) Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $130,910,000 1999 133,124,000 2000 135,367,000 2001 139,973,000 2002 (52,268,000) During the 74th Legislature, Senate Bill 1504 became law and created a program whereby courts that handle traffic offense cases can contract with DPS to deny renewal of the driver's license of a person who fails to appear to answer to a charge of a traffic violation. According to DPS, by 2002, that program is expected to generate approximately $5,000,000 annually to the state's General Revenue Fund. If drivers' licenses were to be issued for the potential number of years that the bill allows, denial of driver's license renewal would cease to be an effective deterrent to failing to appear for traffic summons. The future impact of the bill would change in FY2010. That year will be the beginning of a 4 year period during which DPS would issue free documents to update information at the 12 year intervals specified in the bill. The issuance of the free documents would generate no revenue, but would increase the workload in field driver's license offices and in the License Issuance Bureau. At this point, no driver's license vendor (manufacturer) is willing to guarantee that the license they issue will be durable for 12 years. According to DPS, there could be additional costs associated with any such program if the license and its various components (digital photo, digital signature, magnetic strip) fail to survive the 12 year update period, and DPS is required to replace those licenses without fee. Local Impact The 74th Legislature passed Senate Bill 1504, which allows local courts that adjudicate violations of the state's traffic laws to contract with DPS to deny renewal of a driver's license to a person who fails to appear to answer to charges of traffic law violations. According to DPS, The "Failure to Appear" program, with its database and denial sanctions, is projected to assist local units of government with collections of approximately $37,000,000 annually in fine related revenue by 2002. If driver's licenses were to be issued for the potential number of years that the bill allows, denial of driver's license renewal would cease to be an effective deterrent to failing to appear for traffic summons. Source: Agencies: 304 Comptroller of Public Accounts 405 Department of Public Safety LBB Staff: JK ,JD ,GG ,RS