A state Senate bill that would give private license plate agencies more money at the expense of county governments is coming under scrutiny.
Counties could lose a projected $4.8 million over 18 months if the bill becomes law, said Todd McGee, spokesman for the N.C. Association of County Commissioners, which advocates for counties.
Starting in September, North Carolina is combining license tag and county tax payments. Private license plate agency contractors will be able to collect vehicle property taxes along with tag renewal fees.
Contractors were slated to be reimbursed 48 cents for each property tax transaction, but Senate Bill 305 would increase that rate to $1.06 for cars with registrations expiring between the end of September and the end of February. After that, contractors would be reimbursed 71 cents for each transaction.
McGee said the new fees are higher than necessary for contractors to cover costs.
Marcus Kinrade, director of revenue for Wake County, added that the Senate bill would raise the compensation for private contractors before they have collected anything under the new tax program. He worried about a lack of data to support the raise.
I dont understand how they computed how they need this additional commission, he said. They havent collected the first payment yet, so how did they determine they need to more than double the commission for the first six months?
The raises in the bill were calculated by statisticians to reflect the increased cost of living since previous rates were set, said Sen. Ronald Rabin, one of the bills primary sponsors.
That fee hadnt been increased in the last five, six, seven years, so its a fair way to recompense people at todays rates as opposed to going back and assuming no growth in inflation, said Rabin, a Republican from Spring Lake. I think you ought to pay people who are doing work.
Its unclear why the new rates would drop after the first few months if they were based on the higher cost of living, Kinrade noted.
The Division of Motor Vehicles handles vehicle tax collections directly at its locations in Raleigh and Charlotte, but most drivers in the state deal with license plate agency contractors, public and private. There were 118 contractors in the state as of January 2012 101 of which were private companies rather than local government outlets, according to a report by the General Assemblys Program Evaluation Division.
The contractors handled 68 percent of the states registration and titling transactions in calendar year 2011.
Not new money
McGee said he is worried that legislators are treating the revenue from the tag and tax program as a new source of money. Property tax collection rates are expected to rise when drivers must pay the tax up front to renew their registration.
Its not new money its money the counties have been owed and have not been able to collect over the years, he said. Its just increased enforcement of the existing revenues.
The bill would hit Wake County particularly hard, Kinrade said. The county already has a relatively high collection rate, but it has more cars than any other county, meaning more transaction fees paid to contractors.
Furthermore, the change would come after most counties have adopted their budgets and tax rates for the fiscal year that begins July 1 budgets based on the original fee for vehicle tax collection, McGee noted.
Rabin said he does not have insight into how counties are setting their budgets, but he added that county budgets cannot be totally finalized before the General Assembly determines the state budget.
The bill passed the Senate 47-0 last week and was referred to the House Committee on Finance. It had not been scheduled for a hearing as of Thursday night.
It just seems amazing that this received unanimous support, knowing that that cost may just be passed on to the taxpayer through higher tax rates, Kinrade said.