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Fiscal Note & Local Impact Statement

127 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 Phone: (614) 466-3615

Internet Web Site: http://www.lsc.state.oh.us/

BILL:

H.B. 293

DATE:

December 4, 2007

STATUS:

As Introduced

SPONSOR:

Rep. Goodwin

LOCAL IMPACT STATEMENT REQUIRED:

No

Possible indirect local effects

 


CONTENTS:

"Ohio Agriculture" license plates

 

State Fiscal Highlights

 

STATE FUND

FY 2008

FY 2009

FUTURE YEARS

State Bureau of Motor Vehicles Fund (Fund 4W4)

Revenues

Potential gain,
magnitude dependent on license plate sales

Potential gain,
magnitude dependent on license plate sales

Potential gain,
magnitude dependent on license plate sales

Expenditures

Potential increase, magnitude dependent on license plate sales

Potential increase, magnitude dependent on license plate sales

Potential increase,
magnitude dependent on license plate sales

Ohio Agriculture License Plate Scholarship Fund (New Fund)

Revenues

Potential gain,
magnitude dependent on license plate sales

Potential gain,
magnitude dependent on license plate sales

Potential gain,
magnitude dependent on license plate sales

Expenditures

Potential increase, up to available revenues

Potential increase, up to available revenues

Potential increase, up to available revenues

Department of Agriculture Fund(s)*

Revenues

- 0 -

- 0 -

- 0 -

Expenditures

Potential increase to establish and maintain scholarship program

Potential increase to maintain scholarship program

Potential increase to
maintain scholarship
program

Note: The state fiscal year is July 1 through June 30. For example, FY 2008 is July 1, 2007 June 30, 2008.

* At this time, LSC fiscal staff cannot identify the source of funding for any expenses that the Department of Agriculure might incur in assisting with or managing the scholarship program.

 

        State Bureau of Motor Vehicles Fund (Fund 4W4). The bill requires the state's Registrar of Motor Vehicles to collect an additional fee of $10 to compensate the Bureau of Motor Vehicles (BMV) for the additional services required in the issuing of "Ohio Agriculture" license plates, and to deposit all such fees in the state treasury to the credit of the existing State Bureau of Motor Vehicles Fund (Fund 4W4). LSC fiscal staff is unable to estimate the demand and production costs for these license plates. This means that the potential magnitude of the gain in Fund 4W4 license plate revenues annually and any related increase in operating expenses is uncertain.

        Ohio Agriculture License Plate Scholarship Fund (New Fund). The bill requires the Registrar to collect a related contribution in the amount of $15, and to deposit all such contributions in the state treasury to the credit of the newly created Ohio Agriculture License Plate Scholarship Fund. From LSC fiscal staff's perspective, identifying and quantifying the market for "Ohio Agriculture" license plates is rather problematic. We cannot comfortably forecast demand for this special license plate, nor how its annual sales might compare with those of prior or current special license plates. This means that the magnitude of the Fund's annual revenues and expenditures are uncertain.

        Ohio Department of Agriculture. Arguably, although the bill does not clearly do so, it seems likely that the Department of Agriculture would be the entity responsible for paying various expenses of the Ohio Agriculture License Plate Scholarship Program, including the Ohio Agriculture License Plate Scholarship Fund Board, as the Director of Agriculture will serve as the chairperson. The bill does not clearly authorize moneys in the Ohio Agriculture License Plate Scholarship Fund to be used for such program administration or management purposes, which means that, if the Department of Agriculture is in fact the responsible fiscal entity, the source of the moneys that would be used to pay for those expenses is uncertain.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2008

FY 2009

FUTURE YEARS

Counties, Municipalities, and Townships

Revenues

Potential minimal effect

Potential minimal effect

Potential minimal effect

Expenditures

- 0 -

- 0 -

- 0 -

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

 

        Redistributed Public Safety revenues. Whenever the state's BMV Fund 4W4 cash flow changes, local governments may also be affected in some manner. As BMV's expenses or revenue sources increase or decrease, moneys available for redistribution to local governments may increase or decrease. However, the manner in which the bill may affect that cash flow dynamic, if at all, is uncertain. That said, LSC fiscal staff has not gathered any information suggesting that the potential magnitude of the annual fiscal effect on any local government would be more than minimal, if that. In this context, "minimal" means an estimated annual revenue gain or loss of: (1) no more than $5,000 for any affected county, city, or township with a population of 5,000 or more, and (2) no more than $1,000 for any affected village or township with a population of less than 5,000.


 


 

 

Detailed Fiscal Analysis

 

Overview

For the purposes of this fiscal analysis, the bill most notably:

        Permits the owner or lessee of a passenger car or certain other vehicles to apply to the state's Registrar of Motor Vehicles for issuance of "Ohio Agriculture" license plates.

        Requires the Registrar to collect an additional administrative fee of $10 to compensate the Bureau of Motor Vehicles (BMV) for the additional services required in the issuing of "Ohio Agriculture" license plates, and to deposit the fee in the state treasury to the credit of the existing State Bureau of Motor Vehicles Fund (Fund 4W4).

        Requires the Registrar to collect a related contribution of $15 for every new and renewal registration, and directs the contribution for deposit in the state treasury to the credit of the Ohio Agriculture License Plate Scholarship Fund, which the bill creates to benefit certain students.

        Creates the seven-member Ohio Agriculture License Plate Scholarship Fund Board to control the Ohio Agriculture License Plate Scholarship Program, which the bill also creates, to be financed by the Ohio Agriculture License Plate Scholarship Fund noted in the immediately preceding dot point.

        Reduces, in the case of "Ohio Agriculture" license plates, the statutory numerical threshold generally applicable to the implementation and termination of special license plates from 1,000 persons to 500 persons.

 

State fiscal effects

 

Production costs and process

 

The Department of Public Safety's Bureau of Motor Vehicles (BMV) is responsible for the design, production, advertising, and issuance of specialty license plates. The design process functions as a collaborative effort between the BMV and the organization(s) associated with the specialty license plate. Only after the state's Registrar of Motor Vehicles and the organization(s) have approved the license plate's design can it advance to the advertising and production stage. The availability of specialty license plates is advertised through various means, including the BMV's online catalog, a catalog available at all deputy registrar locations, and periodic inclusion as an insert in registration renewal notifications.

 

The BMV currently produces special license plates via a digital "print on demand" process. Before transitioning to a digital process, the BMV ordered rolls of metal sheeting, some of which remained as unused inventory. Under that prior production process, it appears that it could take up to seven years before the BMV fully recouped the design, production, advertising, and issuance costs for certain special license plates. Although the current digital process has somewhat shortened the timeframe in which the BMV potentially recoups such expenses, it still appears to be the case that, at least in the short term, the administrative fee does not fully cover BMV's production and issuance costs associated with implementing a new special license plate.

 

Demand for specialty plates

 

The bill's fiscal effect on the state, in particular the Department of Public Safety's Bureau of Motor Vehicles and its Fund 4W4, as well as the Ohio Agriculture License Plate Scholarship Fund, will be dependent on the number of "Ohio Agriculture" license plates actually issued. As discussed below, from LSC fiscal staff's perspective, identifying and quantifying the market for "Ohio Agriculture" license plates is rather problematic. This means that the potential magnitude of the gain in BMV's Fund 4W4 license plate revenues annually and any related increase in operating expenses, as well as the amount of moneys that would be distributed annually to benefit students enrolled in a program of agricultural education at an Ohio land grant institution, is uncertain.

 

That said, LSC fiscal staff studied calendar year 2006 vehicle registration data obtained from the BMV to identify the range of demand for special license plates being issued during that timeframe in Ohio, with the hope that, by doing so, we would be creating for the reader a general frame of reference for potential revenue based on relatively current special license plate sales. In studying the data, LSC fiscal staff omitted any special license plates that restrict their issuance to certain eligible persons, such as those exclusively available and issued to current or former members of the United States military.

 

Approximately 106 types of special license plates were made available by the BMV to all persons registering a passenger car or certain other vehicles during the 2006 calendar year. The lowest selling special license plate during that year was the "Cleveland Cavaliers" plate, which sold 59 units. During that year, the "Wildlife" plate sold the highest number of units with 34,150. The average number of units sold per specialty license plate during the 2006 calendar year was 1,582, though that number is notably pulled upward by the two most in demand plates the aforementioned "Wildlife" plate with 34,150 units sold and the "Lake Erie" plate with 23,327 plates sold. Clearly, special license plates have varying levels of appeal and each special license plate has its own, arguably unique, market. In the case of the proposed "Ohio Agriculture" license plate, LSC fiscal staff cannot specifically forecast demand nor be certain as to how its annual sales might compare with those of prior or current special license plates.

 

Department of Agriculture

 

The bill: (1) creates the Ohio Agriculture License Plate Scholarship Program to benefit certain students with scholarships funded with moneys from the Ohio Agriculture License Plate Scholarship Fund, (2) creates the seven-member Ohio Agriculture License Plate Scholarship Fund Board to be chaired by the Director of Agriculture or their designee, and (3) places the former under control of the latter.

 

Board members will serve without compensation, but are required to be reimbursed for actual expenses incurred in performing their duties, for example, travel, parking, lodging, and meals. LSC fiscal staff estimates that the Board might meet a few times in any given year and generate reimbursable expenses totaling less than $10,000 annually, with the actual cost being dependent upon the frequency of Board meetings and the ultimate scope of Board duties. The bill is silent as to who is responsible for covering these reimbursable expenses. The bill is also silent on the matter of who would provide the Board with any services and support necessary to manage the Scholarship Program.

 

Arguably, although the bill does not clearly do so, it seems likely that the Department of Agriculture would be the entity responsible for paying such Board and program management expenses, as the Director of Agriculture will serve as the chairperson. The bill does not clearly authorize moneys in the Ohio Agriculture License Plate Scholarship Fund to be used for such program administration or management purposes, which means that, if the Department of Agriculture is in fact the responsible fiscal entity, the source of the moneys that would be used to pay for those expenses is uncertain.

 

Local fiscal effects

 

Redistributed Public Safety revenues

 

Whenever the BMV Fund 4W4 cash flow changes, local governments may also be affected in some manner. Most collected local and state motor vehicle license taxes are deposited into a holding account within the Department of Public Safety. Monthly, an assessment of Fund 4W4 occurs and cash is transferred from the holding account to Fund 4W4 in order to cover BMV's monthly operating expenses. Any remaining funds in the holding account are then forwarded to local governments (counties, municipalities, and townships) to use for transportation-related needs such as roads and bridges. As BMV's expenses or revenue sources increase or decrease, moneys available for redistribution to local governments may increase or decrease.

 

However, the manner in which the bill may affect that cash flow dynamic, if at all, is uncertain. That said, LSC fiscal staff has not gathered any information suggesting that the potential magnitude of the annual fiscal effect on any local government would be more than minimal, if that. In this context, "minimal" means an estimated annual revenue gain or loss of: (1) no more than $5,000 for any affected county, city, or township with a population of 5,000 or more, and (2) no more than $1,000 for any affected village or township with a population of less than 5,000.

 

 

 

LSC fiscal staff: Jeffrey R. Kasler, Budget Analyst

 

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