On August 29 the Sunset Advisory Commission heard testimony related to several issues including the Department of Motor Vehicles (DMV). This report covers Commission decisions on the recommendations for the DMV.
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Issue 1: The Department’s Industry-Oriented Board and Its Processes Create Risk for the State.
- Steinhart – abstained from review of the DMV due to potential conflict of interest
- Birdwell – Modification to Recommendation 1.1 – Direct the Sunset Commission to request that the Legislature examine all state boards, including the Texas Department of Motor Vehicles board, for any legislation needed to mitigate the potential liability of boards controlled by active market participants.
- Non-statutory
- Will be creating omnibus bill regarding this issue in the coming legislative session
- Recommendation 1.2 will not be necessary with this modification
- Recommendation 1.1 was adopted as modified without objection
- Watson – Modification to Recommendation 1.4 – related to state board member training related to anti-trust laws so they may be better able to handle potential issue as they arise
- Recommendation 1.4 as modified was adopted without objection
- Issue 1 was adopted without objection
Issue 2: Texas Lacks Basic Safeguards to Identify and Address Vehicle Title Fraud.
- Buckingham – Modification to Recommendation 2.2 – directs the DMV to formalize its current red flag warning system as a means to provide clear a clear path for county tax assessor collectors to report suspected fraud waste or abuse of the registration system
- Goal is to better help the department and tax assessor collectors work together
- Recommendation 2.2 as modified was adopted without objection
- Pataki – Modification to Recommendation 2.2 – would instruct DMV to work with local county Tax assessor collectors to come up with red flag warnings
- Recommendation 2.2 as modified was adopted without objection
- Thompson – Modification to Recommendation 2.3 – implements fraud training for all persons processing state registration or title transactions
- Must be made available online
- Recommendation 2.3 was adopted as modified without objection
- Thompson – Modification to Recommendation 2.4 – directs the department to share best practice protocols with county tax assessor-collectors to implement such fraud monitoring
- Management action
- Recommendation 2.4 as modified was adopted without objection
- Thompson – Modification to Recommendation 2.5 – Authorizes county tax assessor-collectors to audit or perform a compliance review of any entity providing registration and title services in the county, and to access records needed to conduct audits or fraud investigations
- Recommendation 2.5 as modified was adopted without objection
- Issue 2 was adopted without objection
Issue 3: The Department’s Approach to Enforcement Does Not Effectively Address the Biggest Risks to the Public
- Lambert – requested Commissions approval to remove recommendation 3.1 from the recommendations
- Recommendation 3.1 was adopted via roll call vote
- Discussion of the voting rules of the commission
- Remainder of Issue 3 was adopted without objection
Issue 4: Key Elements of the Department’s Licensing Functions Do Not Conform to Common Licensing Standards.
- Nichols – Modification to Recommendation 4.2 – Eliminate the representative and salvage agent licenses, but maintain the lease facilitator license in statute
- Put into statute 25 years ago for consumer protection
- Recommendation 4.2 as modified was adopted without objection
- Flynn – requested Commissions approval to remove recommendation 4.1 from the recommendations
- Recommendation 4.1 was adopted via roll call vote
- Remainder of Issue 4 was adopted without objection
Issue 5: Texas Has a Continuing Need for the Texas Department of Motor Vehicles, but Opportunities Exist to Better Leverage State IT Investments.
- Thompson – Modification to Recommendation 5.1 – to change the sunset timeline from 12 years to 8 years
- Modification to Recommendation 5.1 was not adopted via role call vote
- Issue 5 was adopted without objection
New Recommendations for the Department of Motor Vehicles
- Paddie – New Recommendation 1 – accelerates study previously passed by the legislature
- HB 1959 (85R)
- Hall – can we change a date that was statutorily required?
- Paddie – the bill included a deadline and this recommendation would require the department to comply with the original contract completion date
- Buckingham – this recommendation will require the results of the study in three months as opposed to the bills deadline of 2021, is that feasible?
- Whitney Brewster, Texas Department of Motor Vehicles – have reached out to Texas State about completing it earlier, they have indicated they could complete the study in March
- Buckingham – that would be beyond the proposed date
- Brewster – we can reach out to Texas State to see if that is possible
- Buckingham – did this issue come up in the agency review or in public comments?
- Brewster – no it did not
- Buckingham – would this new deadline have any impact on the contract between the department and Texas State University?
- Brewster – do not believe so
- Buckingham – are you aware of a similar program in California implemented in 2010?
- Brewster – aware there is a pilot program for fleet vehicles, they are still in pilot phase
- Buckingham – will the study consider the potential fiscal impacts?
- Brewster – Believes it would
- Paddie – why have we not started working on this?
- Brewster – the agency tried to accelerate the timeline – there was a thought of another study to be completed before and to be used as foundation for this study
- Paddie – if the recommendation was changed from December 2018 to march of 2019 that would be attainable?
- That is correct
- Paddie – would like to make that modification
- Nichols – noted that there is another part to this – direct the department to include an analysis of any statutory impediments to conducting a pilot program as described in H.B. 1959 – which would not have to wait
- Brewster – will try to work with Texas State to get that list of impediments earlier
- Paddie – Modification to New Recommendation – change the accelerated due date of the study to the end of March 2019
- Modification to New Recommendation 1 was adopted without objection
- New Recommendation 1 as modified was adopted without objection
- Buckingham – New Recommendation 2 – Direct the department to establish a risk-based approach to its salvage vehicle dealer inspections. As part of the risk-based inspections, the department should consider factors including inspection history, complaint history, and any other factor determined by department rule
- New Recommendation 2 was adopted without objection
- Buckingham – New Recommendation 3 – Direct the department to consider the criminal background of an applicant’s partner, company principal, officer, or general manager as a qualifying factor when determining whether to issue a license
- New Recommendation 3 was adopted without objection
- Hall – Modification to New Recommendation 4 (modification in order to make it cost neutral)– authorize the comptroller of public accounts “at its discretion” to include as part of ongoing audits a review of processes related to county’s collection of revenue included in the audit to reduce fraud
- Will authorize office of the comptroller at its discretion
- Cites Sunset report which states – decentralized structure for providing vehicle title and registration services lacks basic oversight safeguards resulting in significant fraud risk
- Modification is intended to close oversight gap
- Watson – you want to give DMV and the Comptroller that ability, is there a need to give both entities the ability to do that audit?
- Hall – believes there would be more transparency if the Comptroller did the audit instead of DMV
- Watson – the modification is only at the comptroller’s discretion and as a part of an ongoing audit?
- Hall that is correct, to keep it a revenue neutral item
- Watson – if it is part of an ongoing audit, why wouldn’t the review be happening anyway?
- This would make sure that it is included if it was not
- Watson – this would allow them to analyze processes as well?
- Hall – correct
- Modification to New Recommendation 4 was adopted without objection
- Paddie – what effect would this have by making recommendations to the comptroller’s office in recommendations to the DMV?
- Levine, Sunset Staff – it is possible that it would open the Comptroller’s statute in the bill – would meant that another article would be opened up
- Levine – have personally seen issues arise when other statutes are opened up
- Birdwell – is there a way to accomplish this modification without taking on the risk of opening that statute?
- Levine – it would be easier if there was a direction within this issue for the department to consult with comptroller on issues where there is risk of fraud
- Hall – Modification to New Recommendation 4 – Require the department to coordinate with the comptroller of public accounts and authorize the comptroller of public accounts to include, at the comptroller’s discretion and as part of its ongoing audits of state revenue collections by county tax assessor-collector offices, a review of processes relating to a county’s collection and remittance of revenues included in the audit
- Modification to New Recommendation 4 was adopted without objection
- New Recommendation 4 as modified without objection