LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 111
STATE OF NEW JERSEY
218th LEGISLATURE
DATED: JUNE 12, 2018
SUMMARY
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Synopsis: |
Authorizes special Combat Action Badge license plate program. |
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Types of Impact: |
Increased State Cost and Revenue |
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Agencies Affected: |
New Jersey Motor Vehicle Commission (MVC), Department of Military and Veterans’ Affairs (DMAVA) |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Year 1 |
Thereafter |
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State Cost Increase |
$65,700 |
Indeterminate |
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State Revenue Increase |
$50,000 |
At least $15,700 |
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· The Office of Legislative Services (OLS) finds that the bill will likely produce annual State revenue and expenditure increases that will largely offset one another. The OLS cannot quantify the annual increases because it is unclear how many applications for the new specialty license plate the New Jersey Motor Vehicle Commission (MVC) will receive. The OLS notes, however, that the implementation of the bill is conditioned upon the receipt by the MVC of a minimum of 500 applications for the new specialty license plate.
· The bill establishes the Combat Action Badge license plate program in such a manner that the MVC may fully recover the expenses incurred in administering the program. The MVC has identified its initial cost of designing and establishing a new license plate series as $62,000, which is largely attributable to computer system changes, and approximately $3,750, which is attributable to the per plate cost of an initial 550 plate run at $6.60 per license plate, for a total cost of approximately $65,700.
· The bill requires MVC to receive a $50 Combat Action Badge license plate application fee in addition to a $10 annual renewal fee. Initial fee collections are to reimburse the MVC for the expenses it incurs in administering the program. In addition, the MVC is to receive an initial payment of up to $25,000 and a minimum of 500 license plate applications for a total of $50,000 to offset initial costs before license plate production begins. The MVC will then be permitted to retain additional fee amounts until its costs are fully reimbursed.
· After the MVC’s cost recovery, indeterminate excess application and renewal fee collections are to be appropriated to the Department of Military and Veterans Affairs (DMAVA) for programs benefitting combat veterans.
BILL DESCRIPTION
This bill authorizes special Combat Action Badge license plates. The license plate is to display the words, "Combat Action Badge" and the Combat Action Badge emblem. An application to obtain Combat Action Badge license plates is to include satisfactory proof that the applicant received the Combat Action Badge. In addition to the required motor vehicle registration fees, there is an application fee of $50 and an annual renewal fee of $10 for the Combat Action Badge license plates. After deducting the cost of producing and publicizing the plates, the additional fees collected will be deposited into the “Combat Action Badge License Fund” and the funds will be appropriated annually to DMAVA for programs to benefit combat veterans.
The Chief Administrator of the MVC is required to annually certify the average cost of producing, issuing, and publicizing the availability of the specialty license plates. If the average cost per plate exceeds $50, the chief administrator may discontinue the license plate program.
The bill provides that no State or other public funds may be used by the MVC for the initial cost to implement the Combat Action Badge license plate program. The bill authorizes DMAVA to receive funds, in an amount not to exceed a total of $25,000, as well as 500 completed applications from private sources to be used to offset the initial costs incurred by the MVC for designing, producing, issuing, and publicizing the availability of the license plates.
The provisions of the bill are to remain inoperative until the MVC receives the initial funds.
FISCAL ANALYSIS
EXECUTIVE BRANCH
The Executive has not submitted a formal, written fiscal note for this bill. However, in response to an OLS Discussion Point in the FY 2017-2018 Department of Transportation and Motor Vehicle Commission Budget Analysis the MVC indicated that its upfront cost was $65,700 to set up a license plate program, which includes computer changes and the initial print run of 550 plates.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill will likely produce annual State revenue and expenditure increases that will largely offset one another. The OLS cannot quantify the annual increases because it is unclear how many applications for the new specialty license plate the MVC will receive.
The bill establishes the combat action badge license plate program in such a manner that the MVC may fully recover the expenses it incurs in administering the program. But the MVC may also, at its discretion, operate the program at a net cost. If the number of license plate applications is below 500 and the $25,000 fee is not received within the first 12 months following the effective date, the bill will expire without the creation of the license plate program. Conversely, if the number of initial applications is equal to or greater than 500, the MVC will likely be able to recover its costs within no more than three years of the creation of the program.
Before the MVC begins designing and producing the license plates, an entity designated by DMAVA is required to provide up to $25,000 and pre-register 500 applicants for the license plates. This requirement helps to ensure that the MVC will be able to recover its initial costs in producing the license plates, and if the funds are not provided, the MVC will not be required to produce the license plates. The payment of up to $25,000 is required to come from private sources so the amount is not expected to be a State or local cost.
Upon production of the license plates, the MVC may still discontinue the program if the production cost exceeds $50 per license plate, which is the initial fee that the MVC will collect for each plate. This ensures that the MVC will not experience any net costs in the administration of this license plate program. The current cost per plate to the MVC is $6.60 so it is unlikely that the MVC will experience any net cost in the administration of the program.
The MVC indicated in response to an FY 2017-2018 OLS Discussion Point that it faced an upfront cost of $65,700 to implement a license plate program, which includes computer changes and the initial print run of 550 license plates. The requirements of the bill provide the MVC with the first $50,000 of those costs through the initial $25,000 payment and the first 500 license plate sales. The remaining $15,700 will be recovered through the sale of additional combat action badge license plates and by retaining collections from the $10 annual fee. In the event that there were no additional license plate sales, the MVC will still be able to fully recover its costs within the first three years through the annual renewal fee.
The bill prevents the MVC from realizing net revenues in administering the program because the bill requires the MVC to deposit all program fees into a special fund to be appropriated to DMAVA to support programs for combat veterans, once the MVC has subtracted its costs in administering the program. The combination of guaranteed fee collection for the MVC and the limit on retaining any fees greater than its cost creates a scenario where there is likely to be no long run net fiscal impact to the MVC in the administration of this license plate program.
The dedication of the remaining funds to DMAVA for combat veteran programs will either increase the amount of State funding for combat veteran programs or offset existing appropriations. In either case, fund balances will represent additional State revenue, and may or may not represent an increase in net expenditures by DMAVA.
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Section: |
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Analyst: |
Lead Fiscal Analyst |
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Approved: |
Frank W. Haines III Legislative Budget and Finance Officer |
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).