Senate Committee on Transportation, Technology, and Legislative Affairs

February 6, 2023

Sen M Johnson: The Committee will come to order. The Chair sees a quorum. If you’re here to speak for or against any particular bill please be sure you sign in. I will announce to the Committee that Senate Bill 120 by Senator Love, he has asked to hold that bill as he’s working on it. So we’ll just hold that one over.

I don’t see General Berry, is he in the room or Representative Collins. So Representative Cavenaugh, we’d love to have you come forward now if you’re ready. Welcome, Representative Cavenaugh, and Senator Blake Johnson, please, you’re here to present House Bill 1150. Please proceed.

Rep Cavenaugh: Thank you, Mr. Chair. Thank you, Committee. House Bill 1150 is a bill that will just extend the time that Arkansans have to license their vehicle from 30 days to 60. The current problem that we’re experiencing, and this is from just practical experience running dealerships, is that as a person buys a vehicle from us we sometimes will have a payoff from a lending source, we don’t get that title in for 45 days so we’re already past due the 30 days so it causes a problem. So if we extend it to 60, this will help alleviate some of the problem that we’re experiencing where Arkansans aren’t at fault but they’re getting charged penalties and fines for something beyond their control.

The other thing is it will also help the lowest income Arkansas to have additional 30 days to be able to pay that tax. We’re not getting rid of the tax all we’re doing is deferring it for 30 days. So we’re going to collect the same amount of tax, we’re just going to collect it 30 days later.

Sen M Johnson: Okay. Senator Johnson, do you have anything to add? Okay. So we’re really, we’re just going from 30 to 60 is the only change that it would make?

Rep Cavenaugh: Yes, sir.

Sen M Johnson Okay. Yes, ma’am. Mr. Gehring from DFA is signed up to speak on the bill. So Paul if of you would come join us at the table. Mr. Gehring, you’re recognized, and please identify yourself for the record.

Gehring DFA: Good morning, Mr. Chair, members of the Committee. Paul Gehring, DFA. And Senator Chesterfield, to your point we’re not here to talk anyone for or against the bill. We have merely signed up to speak as to the fiscal impact of House Bill 1150. So as Representative Cavenaugh noted that there is a delay in time from 30 to 60 days for an individual to pay their sales tax and also register their vehicle. 

So what does result in the fiscal impact that DFA issued for this bill is what’s known as a one-time revenue shift. So essentially what will occur is that those individuals that would ordinarily would have registered and paid their sales tax in June of 2024, they’ll have the ability to delay that additional 30 days to July of 2024. So there is a one-time shift in those revenues up to the $42.6 million as noted in the fiscal impact. It’s not a definite figure, there still are going to be individuals that will continue to register within that 30-day time frame but there will be a shift from one fiscal year to the next. Be happy to answer any questions about the fiscal impact statement of the committee.

Sen M Johnson: Let me ask a question quick, Mr. Gehring. The bill does not have an emergency clause, so if it doesn’t take effect until the new fiscal year. Would it still have that revenue shift?

Gehring DFA: Yes it would, Mr. Chairman. and the issue for that is that of course, once the bill becomes effective if it were to be enacted by the General Assembly and signed by the governor, that whether that’s in July or August or September, whenever 90 days after sine die, the process will go into effect on the effective date, so that that deadline will move but of course, there are going to be individuals that ordinarily under existing law would have a deadline to register and pay their sales tax in June of 2024, those individuals that do come in if that makes sense.

Sen M Johnson: I understand. It’s leap frogging so to speak. It pushes it out one more month maximum.

Gehring DFA: The registration fees and the sales taxes are all going to be collected, so it’s a matter of timing.

Sen M Johnson: Okay. All right, thank you. You have a question, Senator Chesterfield? You’re recognized.

Sen Chesterfield: Thank you. Are not the monies subsequently collected?

Gehring DFA: That’s absolutely correct. The monies–

Sen Chesterfield: So you’re talking about just that shift. You’ll lose it for this time but when the person comes in and pays it you make up that money anyway don’t you?

Gehring DFA: It will be collected, that’s right.

Sen Chesterfield: Okay. That’s why I think the $42 million is rather misleading in that it appears to be a total loss and it is not, it’s a shift from one month to another month.

Gehring DFA: And that’s exactly correct. That’s exactly how we stated in the fiscal. One-time revenue shift from one fiscal year to the next.

Sen Chesterfield: Okay but when you look at the $42 million, you’re going oh, and then you realize you’re going to get the $42 million back one way or the other.

Gehring DFA:It’s just a matter of one fiscal year.

Sen M Johnson: It’s a one-time cash flow change.

Gehring DFA: One-time cash flow change, exactly. And we don’t have a for or against position, we just want to make sure the Committee was aware of the again, fiscal impact.

Sen M Johnson: Thank you, Mr. Gehring. Senator Rice, you have a question?

Sen Rice: Thank you, Mr. Chair. Not necessarily on the fiscal impact but it is to in the discussion about the delay of taking sometimes 45 days and I’ll forget about buying a vehicle for the business or something, and sooner or later that title shows up. And I realize we’ve seen the Postal Service not be as quick as it used to be. Is there any exception that you see coming from DFA that is going to go back to a more prompt delivery of a title or papers whatever it being is discussed, and I’m not against giving people extra 30 days anyway but are y’all, is DFA expecting to get much better?

Gehring DFA: I can certainly speak to that issue. So as an initial matter, DFA we don’t need an individual’s title to do your registration. What we do need is a copy of the bill of sale, proof of assessment, and then as the title works its way through the former lien holder or the prior holder, that’s a process that can take place after the person has registered their vehicle. But certainly, Senator, during the pandemic we certainly had a period of time where our title processing at DFA – and that’s when we actually have the title in hand – there was a period of time that we had a much longer period that people were waiting for titles.

We have certainly gotten much better since where we were at from 2020 when there was this large rush to purchase vehicles because all of the manufacturers and the dealers, a lot of them were offering favorable financing, more attractive pricing. We did have a backlog of titles that we have gotten much better at the time to turn those around. And I’d be happy to get with motor vehicles to see exactly where we’re at on average–

Sen Rice: It’s not a derogatory comment but I do it too in retail. I’m better at getting the money and I’ll get the service to you as quick as I can but it sounds like y’all are better at getting the money, and this will give people a little more time and it still is taking a delay sometimes more for the title to come back.

Gehring DFA: We understand. Yes, sir.

Sen Rice: Thank you, I’m good with the bill.

Rep Cavenaugh: And if I may just make a comment, when they’re able to license without the title, what happens is as a dealer we write a letter and say that they have the right to go ahead and license, that we do in that letter promise to present that title when we get it from the lien holder. What happens then is it gets sent to DFA and goes to a department called suspense. Suspense has issues getting those titles and the paperwork lined up, and I can’t tell you how many people come to me trying to renew their tags but they can’t because their title is in suspense. And then what has happened we find that suspense has lost the title that we sent in. And we go as far as a dealership is to actually send it so we know we got proof somebody did it but they’ve still lost the title. So then we have to start the process of trying to go back and get a duplicate title. If it’s an Arkansas title, that’s great, if it’s an out-of-state title it’s a nightmare.

Sen M Johnson: Okay. Is the fact that we’re changing this to 60 days, does that have an effect on the insurance being bound?

Rep Cavenaugh: No.

Sen M Johnson: I want to make sure that we’re not giving a loophole there so.

Rep Cavenaugh: No because the law technically is now when you drive off the lot you’re supposed to have liability insurance. So that’s not going to cause that.

Sen M Johnson: And the paper tag that’s issued is done with the binder for insurance in effect?

Rep Cavenaugh: Yes. And that will actually extend for 60 days too to match the registration period. And Just for clarity, also prior to the temporary tags, we used to transfer tags when you bought a car, whatever car you were driving and traded in, we’d transfer it. And so there was really no way to know if anybody had ever licensed their car because they were driving around on fictitious tags all the time.

Sen M Johnson: All right, thank you. Was there any other questions for Mr. Gehring?

Gehring DFA: Thank you, Mr. Chair. Thank you, Committee.

Sen M Johnson: Anyone else, anyone in the audience would like to speak for or against this bill? We don’t have anyone signed up. Okay, well, let’s let her close real quick, Senator Chesterfield. Would you like to close for your bill, Representative Cavenaugh?

Rep Cavenaugh: I’m closed. I’m just trying to have a practical bill that helps Arkansans and I’d appreciate a good vote.

Sen M Johnson: Okay, Senator Chesterfield moves do pass, second by the Vice-Chair Senator Boyd. Any discussion? All in favor say aye. Opposed? Congratulations, you passed your bill.

Rep Cavenaugh: Thank you all.

Sen M Johnson: Yes, ma’am. Okay, as I mentioned, Senator Love is holding his bill. Representative Dalby, you’re welcome to come forward and present House Bill 1208. You are recognized.

Rep Dalby: Thank you, Mr. Chair, members of the Committee. House Bill 1208, you may remember those of you who have been around, two sessions ago we passed a bill that when somebody is paroled out they can get a temporary driver’s license for the length of their parole, which is a good thing, we want them to be able to go to work, get their job, do all those kinds of things that we require. 

But here is the problem, and this problem came to me when I was in the grocery store one day, one of our state troopers stopped me and he said you remember that bill? I said yes, and he said well, the bill’s good but he said here’s the problem with it, I just stopped somebody out on I-49 South, Miller County, he said I just stopped somebody on I-49, they had a temporary driver’s permit for 10 years because that was the length of their parole. And so he said we’re also stopping people who have never had a driver’s license but now they have this temporary driver’s license for the length of their parole.

All this bill simply does is still allow them to get that license when they get out and when they’re paroled out so that they can go to work but it requires two things, one that they have at least had a driver’s license at some point in the past that was suspended because obviously, they’ve been in prison. And secondly, that within a year of being out that they go back and get a driver’s license. That’s all this bill does. I’d be happy to answer any questions.

Sen M Johnson: Any questions for Representative Dalby? Senator English?

Sen English: So I guess is there a reason why somebody would have a temporary license for 10 years that they couldn’t go and get a license after a year or something? Is there something in the law?

Reb Dalby: Well, the only thing that I could think of – and I had that question asked before when I ran it in the House committee, would be possibly if their underlying offense was maybe a DWI 5 that would have put them in prison that they couldn’t get a driver’s license or something like that. I can’t imagine, I couldn’t think of any other underlying offense that would keep them from getting a driver’s license unless it’s something like that. And if they were convicted and in prison for a DWI 5 or a DWI 6, they’re not going to get a temporary license anyway when they get out.

Sen English: Thank you.

Sen M Johnson: Any other questions? No further questions, is there anyone in the audience like to speak for or against the bill? If not, Representative Dalby, you’re welcome to close for your bill.

Rep Dalby: Thank you I’m closed and I would appreciate a good vote.

Sen M Johnson: All right, thank you. Motion by Senator Boyd do pass, second by Senator English. Any discussion? All in favor say aye. Opposed? Great, thank you. Bill is passed, congratulations.

Rep Dalby: Thank you, Mr. Chair. Thank you, members of the Committee.

Sen M Johnson: Yes, ma’am. I don’t see any other sponsors of the bills that are on our list for today. So if there’s any comments from the Committee. If not, we are adjourned. Thank you.