Report Claims that a Major Funding Source for the California DMV might Collapse

In late February, a nonpartisan report from the California Legislative Analyst’s Office (LAO) claimed that an account used to fund 95 percent of California’s Department of Motor Vehicles’ expenses will soon become insolvent. LAO predicts that the $3.9 billion Motor Vehicle Account will collapse in a few years, which will affect funds for the California Highway Patrol (CHP) and DMV. Deputy legislative analyst Anthony Simbol believes that California will be unable to pay down its debts by 2021-2022.  Simbol stated the following,

We’ve just been dipping into our reserves, but at some point, the fund will go insolvent. The Legislature has to raise fees, provide general fund support, or cut down on expenses.

Apparently, the majority of money in the Motor Vehicle Account comes from vehicle registration fees, which is about $86 per vehicle. From that account, about 60 percent of the money goes to the CHP, about 30 percent goes to the DMV, and one-tenth is used for other purposes. The DMV has not been getting enough money to support itself and has been forced to dip into its reserves as its costs have gone up while trying to adapt to changes such as complying with the federally-mandated Real ID cards. The report claims that the only ways to address the problem are to increase registration fees or make the DMV more efficient. However, an audit and a report from a strike team are expected to come out within the next few months, which could provide the state with other solutions to this problem. Hopefully this issue is resolved before anymore issues occur.

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