Update on Proposed

Processing and Handling Fee

Prepared for the

House Committee on Transportation

Whitney Brewster
Executive Director, Texas Department of Motor Vehicles

May 25, 2016

May 25, 2016

Table of Contents
Background .......................................................................................................................................2
Processing and Handling Fee ..............................................................................................................3
Remaining Rule Proposals ..................................................................................................................9
Conlusion9

May 25, 2016

Legislative Background and History

When the Texas Department of Motor Vehicles (TxDMV) was created through passage of HB 3097 in 2009 by
the 81st Legislature, the intent was to promote greater efficiency and accountability for Texans when receiving
vehicle related services. In 2011, the 82nd Legislature passed HB 2017 requiring the TxDMV to create
standards for uniformity and service quality for Tax Assessor-Collectors (TACs) and those operating under
them.
In 2013, the 83rd Legislature approved HB 2202 which provided the TxDMV Board the authority to implement
a processing and handling fee to cover the costs associated with vehicle registration renewal and to establish
deputy classification types and fees by administrative rule. Deputies are entities that counties can enter into
contract with to perform motor vehicle transactions that would normally be performed at the county tax
assessor collector office. In addition, HB 2202 created the TxDMV Fund to shift the method of finance for the
department from the state highway fund to this new fund through administrative fees and other revenue
collected by TxDMV. In addition, the legislation dedicates the entire county road and bridge fee to the deposit
of the counties. Prior to HB 2202, 3% (or $.30 of the $10 county road and bridge fee) of each fee collected was
deposited to the credit of the State Highway Fund. This has resulted in additional county road and bridge funds
to be collected by the counties of over $13.7 million since Fiscal Year 2014 as highlighted in Table 7 (page 8).
However, the TxDMV Fund was not included in the 83rd Legislatures funds consolidation bill, HB 6, which
resulted in the fund being abolished.
The 84th Legislature recreated the TxDMV Fund effective September 1, 2016 to provide for the envisioned
accountability and transparency in funding department operations. The TxDMV collected revenues identified
in statute for deposit to the fund do not generate enough to cover the departments needs to provide
registration and titling services. The establishment of the processing and handling fee is to be set at a rate to
generate the remaining budget needs to cover these costs as well as those realized by the counties in
providing registration services. Without the establishment of the processing and handling fee by the TxDMV
Board, the fund will be short approximately $70 million in covering the departments needs over a biennium as
noted in the chart below.

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After the passage of HB 2202 in 2013, the department began evaluating the needs for establishing a processing
and handling fee sufficient to cover the costs associated with providing vehicle registration and titling services
by counties and the state. TxDMV acquired the services of the Texas A&M Transportation Institute (TTI) to
analyze the costs of processing registrations and titles by counties. TTI reviewed a sampling of counties
representing small, medium and large populations to help identify county funding needs. Their research
provided data to TxDMV to assist with the development of a processing and handling fee structure to cover
the costs of counties and the state to provide registration and titling services.
On April 7, 2016, the Texas Department of
Rules proposed on April 7, 2016:
Motor Vehicle (TxDMV) Board met to
consider a package of rule proposals that 1. Processing and Handling Fee: With the greatest impact
on Texas motorists, this rule will simplify the fee
include components of the above mentioned
structure for registration renewals regardless of
statutory directives.
This rule package
method: mail-in, walk-in, or online. This fee will
represents a significant effort to modernize
promote efficiency and modernization in service
and streamline service delivery when it
delivery; and self-fund the agency as intended by the
comes to the registration and titling process
Legislature.
in Texas, and the department coordinated 2. Deputy Classifications: Deputies are private businesses
that provide title and registration services utilized by
with several stakeholder groups in the
some counties through a contractual agreement to
development of these rules as outlined in
assist with meeting constituent demands. This rule will
Table 8 (page 8). The rules were posted in
identify the various deputy types, services offered, and
the April 22, 2016 edition of the Texas
establish a uniform fee for such services.
Register, with the public comment period 3. Performance Quality Recognition Program for TACs:
closing at 5:00 PM on May 23, 2016. Once
This voluntary program will allow TACs the opportunity
to be acknowledged by TxDMV for providing premier
all comments have been received and
customer service.
addressed, it is anticipated the TxDMV Board
will consider final adoption of these
proposed rules at their next meeting, currently scheduled to take place at 9:30 AM on Monday, June 27, 2016
in Austin.

Processing and Handling Fee

The Legislature initiated the standardization and simplification of registration fees in 2009 when legislation
was approved to collapse the number of registration fee categories in the state from 1,745 to nine weight
classifications. The processing and handling fee continues to build on the Legislatures goal of providing
Texans with easy and appropriate pricing when it comes to vehicle registration and also advances TxDMVs
goal to provide faster, more convenient and cost effective service to motorists.
In addition, the establishment of the processing and handling fee as proposed is designed to cover the costs
associated with processing registrations, without providing such compensation from the registration fee itself
as it occurs under the current statutory structure. The processing and handling fee allows the entire
registration amount of $50.75 to be dedicated to the State Highway Fund for transportation purposes, which
will result in an additional $47 million or more annually to the State Highway Fund (see Table 9, page 9).
The proposed rule seeks to establish a processing and handling fee of $5.00 per registration transaction
processed in person in a county office or through the mail to cover the costs associated with registration
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services. The cost for renewing registration online would be cheaper under the new proposal in an effort to
incentivize online registration renewal. There is a real need to reduce the number of walk-in registration
transactions at county brick-and-mortar tax offices as Texas approaches 24 million registered vehicles, which is
anticipated to continue to grow. A reduction in wait times at county offices can be realized and county
personnel can focus on providing better service to those who must complete in-person transactions through
increasing online activity. Below you will find a table outlining all registration transaction types while
comparing current fees to those being proposed.
Current Fee Structure without $5
Processing and Handling Fee

Proposed Fee Structure with $5

Processing and Handling Fee

Online $54.75

Online $54.50 (includes a $1.25

discount from
processing)

other

types

for

Walk-In $51.75

Walk-In $55.75

Mail-In $52.75

Mail-In $55.75

Limited Service, Inspection, and

Dealer Deputies $52.75

Limited Service, Inspection, and

Dealer Deputies $55.75

Full Service Deputies $56.75

Full Service Deputies $59.75

The current fee structure includes a

statutory $1.00 automation fee assessed
on every registration currently for TxDMV
automation projects. Texas Transportation
Code, Section 502.356 authorizes the
TxDMV Board to set this fee between $.50
and $1.00. The rule proposes setting this
fee at a reduced rate of $.50 to keep the
cost of the process and handling fee low
and for the agency to avoid accumulating a
balance in the TxDMV Fund. Statutorily,
this fee can be used for enhancements to
the registration and titling system and
agency infrastructure needs.

The current compensation provided to a tax assessor collector (TAC) is $1.90 or $2.90 per transaction
depending upon the transaction method used. Texans currently pay additional fees of $1.00 for mail-in
renewals plus another $2.00 for online renewals if they choose not to renew their registration in person at
their local TAC office. This compensation structure encourages Texans to use the least efficient method for
processing transactions walk-in registration renewal. With the processing and handling fee, the proposed
TAC compensation would change to $2.30 for walk-in (currently the largest percentage of transactions
processed) and mail-in registration renewals, and $.25 for renewals processed online.
The rule proposal also includes cost saving measures for both the state and counties. This includes centralizing
fulfillment of online registration renewals by the TxDMV, which is currently the responsibility of county TAC
offices. The shift in fulfillment of online registration renewals will reduce the burden on and expense to TACs
to process such transactions and also free up county staff to focus on reducing traffic and wait times for
customers in their offices. In addition, the statewide vendor can guarantee next day processing of the online
transactions as well as customer self-service online tracking of a registration through the process. Service Level
Agreements with the vendor with financial penalties for missing agreed upon service deadlines will be part of
the contract. The vendor also provides redundancy in services through an alternate, out-of-state location to
provide continuity of services in the event of any disruption. In addition, the department can offer registration
services to county residents in the event there may be a disruption in service at the county level.
The TxDMV can pass along the savings to the customer by offering a discount for customers completing their
registration transaction online in the proposal because the state can perform this function at a significantly
reduced cost. In addition, the discount for online renewal will encourage customers to process transactions in
the most efficient manner with cost savings passed on to them. It will be cheaper for customers to renew
online than it is today under this rule proposal as shown in the chart above.
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Moreover, the department is proposing a modification to the existing license plate renewal cycle. Currently
license plates are automatically provided to registered vehicle owners for free every seven years regardless of
necessity. However approximately 2% of all vehicles in Texas maintain the same license plate for more than
seven years. This is because most Texans do not keep vehicles beyond seven years, and current statute
requires vehicles traded at an auto dealer to obtain new registration and license plates. TAC offices will no
longer bear the responsibility of mailing plates resulting in cost savings and decreased workload. In the rule
proposal, plates will only be replaced if they are lost, stolen, damaged; or if the customer seeks to replace
them for cosmetic reasons by eliminating the renewal cycle. In each of the aforementioned instances, a $6
replacement fee will be imposed.
Tables 1 6 on the next few pages detail the current registration fee structure including county compensation
amounts along with the proposed registration fee structure including what would be the new county
compensation amounts. Tables 7-9 provide additional detail on the other items referenced in the testimony.

TABLE 1: County & Deputy Compensation Overview

Current

January 2017 (Proposed)

Compensation assumes discontinuance of plate replacement mailing

2

New compensation for online transactions reflects centralized online fulfillment by TxDMV
3

The entity issuing the temporary permit retains the entire amount of the P&H fee

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TABLE 2: Walk-In Transaction

Current

January 2017 (Proposed)

Estimated percentage of total registration transactions (initial and renewal)

2

Funding to support county equipment is included in the TxDMV Compensation

TABLE 3: Online Transaction

Current

January 2017 (Proposed)

Estimated percentage of total registration transactions (initial and renewal)

2

Funding to support county equipment is included in the TxDMV Compensation

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TABLE 4: Mail-In Transaction

Current

January 2017 (Proposed)

Estimated percentage of total registration transactions (initial and renewal)

2

Funding to support county equipment is included in the TxDMV Compensation

TABLE 5: Limited Service, Inspection and Dealer Deputy Transactions

Current

January 2017 (Proposed)

Percentage of total registration transactions (initial and renewals) processed by limited service deputy
2

Funding to support county equipment is included in the TxDMV Compensation

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TABLE 6: Full Service Deputy Transactions (Currently offered in Six Counties)

Current

January 2017 (Proposed)

Estimated percentage of total registration transactions (initial and renewal)

2

Funding to support county equipment is included in the TxDMV Compensation

TABLE 7: County Road and Bridge Fund Deposits from Additional 3% Retention

TABLE 8: Stakeholder Outreach

Governor, Lt Governor and Speaker Offices
Senate and House Transportation Chairs
Other Key Legislative Members and Staff
Tax Assessor Collector Association Board
Texas Association of Counties
Texas Conference of Urban Counties
Texas Automobile Dealers Association
Texas Independent Automobile Dealers Association
Representatives from the Salvage, Lienholder, Insurance, industries
Representatives of Full and Limited Service Deputies
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TABLE 9: Total Annual Increase to the State Highway Fund

Remaining Rule Proposals

The second rule proposal will further define deputy services related to the processing of registrations and titles
on behalf of TACs. In addition, a new Inspection Deputy will be created allowing local TACs to authorize
inspection stations to process registration renewals upon passing a vehicle inspection. This approach will help
customers have one-stop convenience when complying with the Two Steps, One Sticker (also known as Single
Sticker) program requiring a passing inspection to continue with registration renewal.
In addition to incentivizing a more cost-effective method of renewal, TxDMV is proposing other rules that seek
to create additional efficiencies. The third proposed rule describes the procedures and general criteria the
department will use to establish and administer TAC performance standards through a voluntary program
called the Performance Quality Recognition Program. Standards drive efficiencies, which are projected to
lower operating costs while also improving customer service. As TACs make improvements and realize lower
costs over time, TACs can redirect their cost savings to other improvement initiatives or other locally
determined needs.

Conclusion
TxDMV has been working over these past few years to gather research, data, and input from our stakeholders
groups, state officials and our partners in registration and title processing to develop a model better fitting the
needs of todays motorists. The streamlined approach to providing these services as proposed in the rules will
help Texas move forward with modern service delivery options and provide more value for motorists. These
rule proposals are about creating efficiencies, driving down costs, utilizing more modernized processes and
most importantly providing better service to the citizens of Texas.

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