TWO-YEAR VEHICLE REGISTRATION                                                                     H.B. 4117 (S-1) & 4026 (S-1):

                                                                                                                                                                                                      SUMMARY OF BILL

                                                                                                                                                                        REPORTED FROM COMMITTEE

House Bill 4117 (Substitute S-1 as reported)

House Bill 4026 (Substitute S-1 as reported)

Sponsor:   Representative Steven Johnson (H.B. 4117)

                            Representative Gary Eisen (H.B. 4026)

House Committee:   Transportation

Senate Committee:   Transportation and Infrastructure

CONTENT

House Bill 4117 (S-1) would amend the Michigan Vehicle Code to allow a vehicle registration issued by the Secretary of State (SOS) to expire two years after the owner's birthday if requested by the owner of the vehicle.

House Bill 4026 (S-1) would amend the Michigan Vehicle Code to specify that the amount of the recreation passport fee for an individual who obtained a two-year vehicle registration as proposed in House Bill 4117 (S-1) would be $20.

(Under the Code, the State Treasurer is required to adjust the recreation passport fees by the cumulative percentage change in the Consumer Price Index from October 1, 2010, to the October 1 immediately preceding the calendar year, rounded to the nearest dollar. Currently, the fee for a motorcycle is $6; for a motor vehicle, it is $12. Under the bill, the $20 fee also would be subject to this adjustment.)

The bills are tie-barred to each other and to Senate Bill 220, which would amend the Michigan Vehicle Code to require the SOS to provide a system for applicants for special vehicle   registrations (i.e., for vehicles used exclusively in connection with a wood harvesting operation, milk hauling operation, or certain farming operations) to renew their special registration at no additional charge in a branch office, by first-class mail, and online. The bills would take effect October 1, 2022.

MCL 257.226 (H.B. 4117)                                                                                   Legislative Analyst:   Tyler VanHuyse

            257.805 (H.B. 4026)

FISCAL IMPACT

House Bill 4117 (S-1) would have a significant fiscal impact on the Department of State and Michigan State Police (MSP) by reducing revenue collections that are used to fund each department and the services they provide. The amount of revenue loss would depend on the actual number of vehicle owners who opted for a two-year registration instead of the current one-year registration.

Currently, the Department of State collects a registration service fee of $8 per registration or registration renewal. Based on fiscal year (FY) 2019-20 Department data, there were 8,503,500 registration transactions for which the $8 fee was collected for an estimated total receipt of $68.0 million. According to the Michigan Vehicle Code, $5.75 of the $8 fee is credited to the Transportation Administration Collection Fund (TACF) and the remaining $2.25 is credited to the Traffic Law Enforcement and Safety Fund (TLESF). This fee is collected for each new vehicle registered in Michigan and for each year a vehicle's registration is renewed. There is no provision in the bill to replace the revenue lost in the second year for each two-year registration.

In FY 2019-20, an estimated $48.9 million was deposited into the TACF (the major source of restricted funding for the Department) while the remaining $19.1 million was deposited into the TLESF (a restricted source of funding for the MSP). Assuming 10% of vehicle owners opted for a two-year registration, the bill would result in a loss of an estimated 850,400 vehicle registration fees for a total loss in rev