Loudoun County Motor Vehicle Decal Program Assessment

Transcription

1 Loudoun County Motor Vehicle Decal Program Assessment Department of Management & Budget

2 Board Direction Revenue impacts of discontinuation Collection rate impacts of discontinuation or alternate program Details of comparator jurisdictions programs Opportunities for program improvement via technology, efficiencies, etc. Coordinate with the Treasurer and Sheriff 2

3 Main Types of Non-Compliance Non-registration: Failure to properly register with the DMV or County. This prevents the County from levying personal property tax. DMV noncompliance could last up to 2 years (registration limit) and would require special effort after that time. Delinquency: The vehicle is registered, but owner fails to pay property tax in a timely manner. 3

4 Vehicle Decal Cost-Effectiveness Tradeoff Enforcement cost < Revenue generated Budgeted cost of program Time and effort cost to residents Lack of appropriate data precludes a statistical test of program effectiveness 4

5 Project Fairness Assessment Factors & Assumptions 1. Only new residents fail to register their vehicle with the County. 2. The average vehicle value of new residents is equal to the County-wide average of approximately $11, Vehicles depreciate at 8 percent per year. 4. The personal property tax rate is $4.20 per $100 of value; the local license fee is $25; and Loudoun still receives the State s personal property tax reimbursement of $48 million. 5

6 Project Fairness Assessment Factors & Assumptions 5. 7 percent of County residents are new which implies 21,000 unregistered vehicles out of approximately 300,000 vehicles total (excluding those in incorporated towns). 6. Failure to register in the first year of residence (assumed to span 6 months on average) implies failure to register in the second year as well. 7. Absent the decal requirement with active surveillance, the unregistered vehicles will not be detected by other measures (i.e., DMV information). 8. The 12,000 vehicles per year currently detected by Project Fairness represents the number of non-registered vehicles (which is 57 percent of the new-resident vehicle total). 6

7 Revenue Impact Previous assumptions imply $5.2 million revenue loss over 2 years but this is likely overstated because: Other enforcement measures exist (DMV exchange, tenant lists) Only 20% of vehicles register with DMV for 2 years Some cited vehicles were within the grace period Project Fairness metrics suggest average vehicle value less than $11K Actual revenue exposure probably closer to $1M, implying marginal cost-effectiveness if reasonable value imputed to resident time. 7

8 Findings: Comparator Jurisdictions Jurisdictions that eliminated decals: Reported no material impact on tax payment delinquency rates Did not conduct formal cost-benefit analyses before removing program Retained local license fee Jurisdictions that retained decals: Retained the program due to their effectiveness for unregistered vehicles Cited higher than average percentage of new residents 8

9 Other Loudoun Enforcement Mechanisms Detection/Deterrence Tip Line (ongoing) Tenant Lists (annually) DMV Download (weekly) PCI-to-PCI notification Fines/Delinquency Interest Statutory Assessment Collection Warning, ticketing DMV Stop/Hold Vehicle Booting and Impoundment Garnishments Civil Action 9

10 Conclusions Likely revenue loss from Project Fairness and decal elimination is modest. Other current enforcement mechanisms should be continued and potentially increased. County could investigate other enforcement mechanisms. Probably advisable to enable citizens to report vehicles suspected of non-compliance and to investigate vehicles reported. License plate scanners are not used to enforce tax compliance; 2013 Attorney General opinion questions legality of collecting and retaining scanner data outside of a criminal investigation. 10