SB0609: REVISED SUMMARY OF INTRODUCED BILL IN COMMITTEE (Date Completed: 10-13-17)

CONTENT

Senate Bills 609, 610, 611, 612, 614, and 615 would amend the Michigan Vehicle Code to discontinue the assessment of, and liability for, driver responsibility fees (DRFs) on or after October 1, 2018, as follows:

Senate Bill 609 provides that, beginning September 30, 2018, no outstanding DRFs could be collected, and a person whose operating privileges were suspended for nonpayment of DRFs would be eligible to reinstate his or her driver license.

Senate Bill 610 would require the Department of Treasury to create a program to educate individuals whose DRF obligations were affected by changes in the law; and would appropriate $1.0 million to the Department for fiscal year 2017-18 for this purpose.

Senate Bill 611 would make a person's obligation to complete community service, as an alternative to paying a driver responsibility fee, subject to the discontinuation of outstanding DRFs beginning September 30, 2018.

Senate Bill 612 would discontinue the assessment of DRFs beginning October 1, 2018, rather than October 1, 2019, for a person who accumulated seven or more points on his or her driving record.

Senate Bill 614 would waive the DRFs for a person whose participation in a DWI/sobriety court program ended on or after October 1, 2018.

Senate Bill 615 provides that, for a person who entered into a DRF installment payment plan before the bill's effective date, any outstanding DRFs could not be collected, and a person whose operating privileges had been suspended for nonpayment would be eligible to reinstate his or her license.

Senate Bill 613 would amend the Enhanced Driver License and Enhanced Official State Personal Identification Card Act to delete the assessment of DRFs from licensing sanctions that may be imposed on the holder of an enhanced driver license.

Each of the bills would take effect 90 days after it was enacted.

Senate Bill 609

The Vehicle Code requires the Secretary of State to assess a range of driver responsibility fees for violations of the Code, subject to a schedule that phases out the fees between October 1, 2015, and October 1, 2019. A person who accumulates seven or more points on his or her driving record within two years must be assessed a DRF of $100, plus $50 for each point above seven. A DRF of $1,000 must be assessed each year for two consecutive years if an individual is convicted of specific violations, such as operating under the influence of alcohol or a controlled substance, or fleeing and eluding an officer. For certain other violations, such as reckless driving or operating a vehicle while impaired, a DRF of $500 must be imposed each year for two consecutive years.

Under the bill, beginning September 30, 2018, all of the following would apply:

-- Any outstanding DRF that had been assessed could not be collected.

-- An individual would not be liable for any outstanding DRF assessed or responsible for completing community service as an alternative to paying a DRF.

-- An individual whose driving privileges were suspended for nonpayment of a DRF would be eligible to reinstate his or her operator's license if the person were otherwise in compliance with the Code.

Senate Bill 610

The bill would require the Department of Treasury, in consultation with the Department of State, the Department of Health and Human Services, the Department of Corrections, the Unemployment Insurance Agency, and Michigan Works Agencies, to create a program to educate individuals whose driver responsibility fee obligations were affected by changes made to State law on the bill's effective date. The educational program would have to consist of informational materials and effective outreach.

For the 2017-18 fiscal year, the bill would appropriate $1.0 million to the Department of Treasury to implement and administer these requirements.

Senate Bill 611

In addition to the driver responsibility fees described above, the Code required the Secretary of State, through September 30, 2012, to assess a DRF of $150 each year for two consecutive years for driving without a valid license or failing to produce proof of insurance upon the request of a police officer. This DRF could not be assessed for such a violation committed on or after October 1, 2012.

The Code permitted a person who was assessed a DRF under these provisions to engage in 10 hours of community service as an alternative to paying any unpaid portion of the fee. The community service had to be completed within 45 days after the application to engage in it was filed with the Department of Treasury. Under the bill, this requirement would be subject to Section 732(a)(11) (which contains the provisions proposed by Senate Bill 609).

Senate Bill 612

The Code phases out the assessment and collection of driver responsibility fees between October 1, 2015, and October 1, 2019, after which no fee may be assessed. For an individual who accumulates seven or more points on his or her driving record, the assessment must be the following percentage of the fee calculated under the Code:

-- 75% beginning on October 1, 2015.

-- 50% beginning on October 1, 2016.

-- 25% beginning on October 1, 2018.

Beginning on October 1, 2019, no fee may be assessed for a person who accumulates seven or more points. The bill would change that date to October 1, 2018.

(The Code also phases out the $500 and $1,000 DRF assessment for specific violations, and provides that no fee may be assessed for a violation that occurs on or after October 1, 2019. The bill would retain this schedule.)

Senate Bill 613

The Enhanced Driver License and Enhanced Official State Personal Identification Card Act specifies that the holder of an enhanced driver license is subject to every licensing sanction provided under the Michigan Vehicle Code. The definition of "licensing sanction" includes the assessment of a driver responsibility fee. Under the bill, the definition would include the assessment of a DRF until October 1, 2018.

Senate Bill 614

The Vehicle Code requires the Secretary of State to issue a restricted license to a person whose license was suspended or revoked based on certain convictions of driving under the influence of alcohol or a controlled substance, if the person has been admitted into a DWI/sobriety court and other conditions are met. All driver responsibility fees required to be assessed for the conviction must be held in abeyance while the person is participating in the program. At the end of the person's participation, the DRFs must be assessed and paid under the payment schedule described in the Code.

Under the bill, if the person's participation ended on or after October 1, 2018, the DRFs would be waived and could not be collected.

Senate Bill 615

The Code allows the Secretary of State to authorize payment of DRFs by installment for a period of up to 24 months. Under the bill, all of the following would apply to an individual who, before the bill's effective date, had entered into an installment payment plan:

-- Any outstanding DRF that had been assessed or outstanding installment payment could not be collected.

-- An individual would not be liable for any outstanding DRF that had been assessed.

-- An individual whose driving privileges were suspended for nonpayment of a DRF would be eligible to reinstate his or her operator's license if the person were otherwise in compliance with the Code.

MCL 257.732a (S.B. 609) Legislative Analyst: Suzanne Lowe

Proposed MCL 257.732c (S.B. 610)

MCL 257.732b (S.B. 611)

257.732a (S.B. 612)

28.304 (S.B. 613)

257.304 (S.B. 614)

257.732a (S.B. 615)

FISCAL IMPACT

This package of bills would completely eliminate all collection of driver responsibility fees beginning October 1, 2018. Additionally, individuals who were assessed a DRF would be no longer be liable for the fee, would no longer be required to complete community service in place of paying the DRF, and would become eligible for reinstatement of their driver license if they were otherwise in compliance with the Vehicle Code.

According to the Department of Treasury, there currently are an estimated 317,000 drivers who owe driver responsibility fees to the State who are in default. An estimated 15,000 individuals have chosen to complete community service in lieu of paying the DRF, resulting in the forgiveness of an estimated $2.0 million annually. The outstanding DRF collectable fees at the end of fiscal year (FY) 2015-16 totaled an estimated $633.7 million. Of that figure, almost 201,000 assessments were issued in that fiscal year, totaling $106.9 million for FY 2015-16. The history of collections indicates that payments received in a given fiscal year come primarily from current assessments and those assessed within the past two years of that fiscal year.

The amount estimated to be collected in FY 2016-17 was $71.0 million. Actual collections to date for FY 2016-17 total $69.2 million. The amount of collections for FY 2017-18 is estimated at $52.0 million.

Due to the timeline of the eventual elimination of the DRFs, the amount of the fees assessed between the bills' enactment and October 1, 2018, that will actually be paid is indeterminate. According to data from the Department of Treasury, current revenue collected from DRFs consists of collections from people who receive a DRF and pay the total within 90 days, people who enter into a payment plan (an estimated $20.0 million in FY 2016-17), and offsets captured from State income tax refunds or other payments to pay off old DRF debt (an estimated $19.0 million in FY 2016-17). Based on these figures and the best estimate of how much revenue would go uncollected as people simply waited until October 1, 2018, when all DRF fees would be forgiven, it is estimated that the loss in revenue for FY 2017-18 would be an estimated $30.0 million. This figure is derived from an estimated $8.0 million that would go uncollected from new fees assessed between the bills' enactment and October 1, 2018; $2.0 million that would be forgiven from those choosing to do community service; and $20.0 million due to the elimination of the payment plans as of October 1, 2018.

The Department of State also would lose the current $1.0 million annual appropriation from the DRFs collected that are used by the Department for costs associated with administering the Breath Alcohol Ignition Interlock Device (BAIID) program. While the Department has spent nearly the full $1.0 million each year, it has indicated that the costs are decreasing and could be absorbed within the Department's annually appropriated budget.

Additionally, the Department of State would see an increase in revenue from the reinstatement fee of $125 charged to each person who would become eligible to renew his or her driver license. The amount of revenue is indeterminate and dependent on how many of the estimated 317,000 individuals who are currently in default in DRF payments have had their license revoked and would be eligible. If only a quarter of those 317,000 became eligible to reinstate their driver license, the Department of State would receive an estimated additional $9.9 million from the reinstatement fees. That revenue would remain with the Department for its operational costs.

The Department of Treasury would receive a $1.0 million appropriation under Senate Bill 610 in order to educate individuals whose driver responsibility fee obligations were affected by the changes.

Under current law, the first $8.5 million in revenue collected from DRFs is deposited into the Fire Protection Fund created in the State Treasury. The money in the Fund is then spent via fire protection grants to cities, villages, and townships with State-owned facilities for fire services. The elimination of all DRFs would eliminate the deposit of $8.5 million into the Fire Protection Fund beginning in FY 2018-19. Unless that revenue was replaced with another revenue stream or General Fund/General Purpose dollars, those grants to local units of government would be eliminated.

Fiscal Analyst: Joe Carrasco

Cory Savino

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.