By ERIC FREEDMAN
Capital News Service
LANSING – Motorists could get the option of two-year vehicle registrations rather than the traditional one year under a pending legislative proposal.
The bill would give vehicle owners the convenience of a two-year renewal – but at the cost to the state of millions of dollars in lost revenue.
Michigan currently has almost 7.2 million registered passenger vehicles. Their registrations expire each year on the owners’ birthdays.
The House Transportation Committee has approved the measure, which now awaits action in the full House.
During the early months of the COVID-19 pandemic, motorists couldn’t register or renew their registrations in person because Secretary of State branch offices were closed.
The lead sponsor, Rep. Steven Johnson, R-Wayland, said the impetus was a constituent whose daughter lives in Missouri, which has a two-year registration period.
The cosponsors are Reps. Karen Whitsett, D-Detroit; Robert Bezotte, R-Marion; Beau LaFave, R-Iron Mountain; Joseph Bellino, R-Monroe; Andrew Fink, R-Hillsdale; Steve Carra, R-Three Rivers; John Damoose, R-Harbor Springs; Gary Eisen, R-St. Clair Township; and Jeff Yaroch, R-Richmond.
Johnson looked into the constituent’s suggestion and discovered that “a number of states have multiyear options, and Michigan has only the one year.”
It’s “sometimes a pain” to have to renew annually, he said. “It made sense to provide people with more convenience in dealing with government.”
The Secretary of State’s office supports the proposal and “is working with Rep. Johnson to make improvements due to potential costs and lack of demand,” department press officer Aneta Kiersnowski said.
The department’s legislative policy manager, Matt Levin, recently told the House Transportation Committee that implementing the change would mean additional expenses. They include money to reprogram 135 kiosks across the state and the computer registration system used by motor vehicle dealerships, as well as to adapt or replace the system used to sort mail-in renewals.
“We want to proceed and move forward with a little bit of caution,” Levin said at a committee hearing.
Motorists pay an $8 service fee when registering a vehicle or renewing the registration.
Of that amount, $2.25 goes to the Traffic Law Enforcement and Safety Fund for State Police traffic and safety operations and trooper recruit schools. The other $5.75 supports the Transportation Administration Collection Fund to operate the registration program.
A House Fiscal Agency analysis of the bill concluded that the change “could result in a significant decrease in registration service fee revenue,” although the actual amount would depend on how many owners take the two-year option.
In the 2017-18 fiscal year, the $8 service fee brought in $62.6 million, the House Fiscal Agency analysis said — $45 million to cover administrative costs and $17.6 million for the State Police programs. Service fee revenue the next year was $63.3 million.
If 2.5% of motorists choose the two-year option, the state would lose about $1.6 million, the agency estimated, but the hit would be about $12.7 million if 20% of motorists go that route.
Johnson’s bill would prorate the registration tax for the extended registration period but wouldn’t raise the service fees to cover the revenue lost during the second year, the analysis said.
It also said reduced administrative costs are unlikely to offset the lost revenue.
However, Johnson said there may be upfront costs to implement the change but he believes any extra costs will be minimal and will save the Secretary of State money in the long run.
The Michigan Farm Bureau has endorsed the proposal.
Its legislative counsel, Andrew Vermeesch, said, “This is even more significant for registering vehicles that cannot be renewed online such as farm plates in the case of farmers.
“Allowing individuals to register for two years would reduce the burden of going into a SOS branch for routine transactions, which may or may not take place during critical times for agriculture.”