LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 469

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: DECEMBER 3, 2019

 

 

SUMMARY

 

Synopsis:

P.I.C.K. Awareness Act; authorizes issuance of special support recovery license plates.

Types of Impact:

Annual State revenue and expenditure increases.

Agencies Affected:

New Jersey Motor Vehicle Commission;

Department of Human Services.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Year 1

Thereafter

 

State Cost Increase

$65,700

Indeterminate

 

State Revenue Increase

$50,000

At least $15,700

 

 

 

 

         The Office of Legislative Services (OLS) finds that the bill will 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 support recovery 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 the per-plate cost of an initial 550 plate run as $6.60, for a total cost of $65,700.

 

         The MVC will receive a $50 application fee for each support recovery license plate in addition to a $10 annual renewal fee. Initial fee collections will reimburse the MVC for the expenses it incurs in administering the program. In addition, the MVC will have 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 MVCs cost recovery, indeterminate excess application and renewal fee collections will be appropriated to the Department of Human Services (DHS) for sober living housing.

 

BILL DESCRIPTION

 

This bill authorizes the MVC to issue special support recovery license plates.

In addition to all fees otherwise required by law for the registration of a motor vehicle, there is an application fee of $50 and an annual renewal fee of $10 for the support recovery license plates. After deducting the MVCs cost of designing, producing, issuing, renewing, and publicizing the plates and of any computer programming changes that are necessary to implement the license plate program, in an amount not to exceed $150,000; the additional fees will be deposited into a special non-lapsing fund known as the Support Recovery License Plate Fund. Fund proceeds are to be annually appropriated to the Division of Mental Health and Addiction Services within the DHS to be used to secure permanent sober living housing for individuals who have completed substance abuse treatment or temporary sober living housing for individuals waiting to be placed in a substance abuse treatment program.

 

State or other public funds are not to be used for the initial cost to establish the support recovery license plate program. Accordingly, the MVC is not required to implement the program if the following conditions are not met in the first 12 months following the date of enactment: (1) an individual or entity designated by the DHS has contributed non-public moneys, not to exceed $25,000, to offset the MVCs initial cost to establish the program; and (2) the MVC has received a minimum of 500 completed applications for the specialty license plates. Once the two conditions are met, the MVC has six months to implement the program.

 

Upon program implementation, the MVC is required to annually certify the average cost of producing, issuing, renewing, and publicizing the availability of the specialty license plates. If the average cost per plate exceeds $50 in two consecutive fiscal years, the MVC may discontinue the program.

 

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 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 support recovery 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 in 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 applications is equal to or greater than 500, the MVC will 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 the DHS is required to provide up to $25,000 and pre-register 500 applicants for the license plates. This requirement ensures that the MVC will be able to recover its initial costs in producing the license plates, and if enough 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 set up a license plate program, which includes computer changes and the initial print run of 550 license plates. The requirements of the bill would 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 would either be recovered through the sale of additional support recovery license plates or by retaining collections from the $10 annual fee. The first 500 plate sales will generate $5,000 per year from the $10 annual renewal fee. So in the event that no other plates were purchased under the program, the MVC would largely recover the remaining costs after three years of collecting the annual 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 by the DHS for sober living housing, 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 net fiscal impact to the MVC in the administration of this license plate program.

The dedication of the remaining funds to the DHS for sober living housing will either increase the amount of State funding for sober living housing or offset existing appropriations therefor. In either case, fund balances will represent additional State revenue and spending.

 

 

Section:

Authorities, Utilities, Transportation and Communications

Analyst:

Patrick Brennan

Principal Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).