SOUTH DAKOTA LEGISLATIVE RESEARCH COUNCIL

FISCAL NOTE, 2005 LEGISLATIVE SESSION


FISCAL NOTE 2005-SB175A

SB 175, An Act to provide for the removal of certain noncommercial motor vehicle license plates from a motor vehicle if the ownership of the vehicle is transferred and to make an appropriation to provide for the administration thereof.
    
Senate Bill 175 would change motor vehicle registration laws so that whenever a vehicle is sold, it would become an unlicensed vehicle in South Dakota's motor vehicle registration system. The new owner would have 30 days to register the vehicle and replace its license plates. Whatever plates had been on the vehicle would go with the owner, or have to be removed, destroyed, and replaced by the new owner. Unlike the current system, salvaged vehicles would not retain their license plates indefinitely, and every time a vehicle's ownership changes the license plates would change as well.

It is estimated that Senate Bill 175 would have the following impact on the state's finances during the first fiscal year of implementation:


Agency/Item
  		General Fund
  		Federal Funds
  		Other
Funds  
Total
 
FTE
 
Revenue:                 
Appropriation   $0   $0   $500,000   $500,000    
Excise Tax Revenue   $0   $0   $2,750,000   $2,750,000    
Registration Fee Revenue   $0   $0   $1,250,000   $1,250,000    
Total Revenue   $0   $0   $4,000,000   $4,000,000    
           
Expenses:*   $0   $0   $500,000   $500,000   0.0  
           
Net Impact       $0   $0   $3,500,000   $3,500,000   0.0  

*The Department of Revenue and Regulation estimates it would cost $1,000,000 over two years to rewrite the motor vehicle license and registration system to accommodate this change in the system. The department is already planning to rewrite the system, and the appropriation in this bill would offset half of that in the first year.

There is reason to believe that increased revenue would offset the cost of implementing SB 175. As experienced in North Dakota (one of the 40 states that have the "Plate- With-Owner" law) some vehicles change ownership two or three times a year, which would mean an increase in the revenue stream from this activity. North Dakota has experienced an increase in fee revenue (though not all of it attributable to increased activity) since enacting similar legislation in 1997.

The direct appropriation in SB 175 is the only revenue that can be strictly quantified for this estimate, but assumptions can be made as to additional activity that could increase revenue streams.

Approximately 170,000 vehicles were assessed the excise tax in 2004 when they were titled. This averages to about $324 in excise tax per vehicle. If there was an estimated 5% increase in the number of vehicles titled, or 8,500 more vehicles titled and assessed excise tax, there could be a revenue increase of as much as $2.75 million in excise taxes. Similarly, the amount of revenue realized from registration transfers could also increase. If registrations increased by an estimated 5%, there could be an increase in revenue of as much as $1.25 million in registration fees during the first full year.

The department collected $51.5 million and $55 million in motor vehicle excise taxes for Fiscal Years 2003 and 2004, respectively. In 2003 registration fees revenue was $25.2million, and in 2004 it was $26 million. That revenue is deposited in the Highway Fund.

APPROVED BY:______________________________________ DATE:____________