MINUTES OF THE JOINT SUBCOMMITTEE ON TRANSPORTATION Sixty-eighth Session March 2, 1995 The Joint Subcommittee on Transportation was called to order by Chairman Jon C. Porter, at 1:38 p.m., on Thursday, March 2, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE SUBCOMMITTEE MEMBERS PRESENT: Senator Jon C. Porter, Cochairman Senator William R. O'Donnell ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT: Mr. Dennis L. Allard, Cochairman Mr. Bernard Anderson Mr. Dennis Nolan Mrs. Marcia deBraga SENATE SUBCOMMITTEE MEMBERS ABSENT: Senator Raymond C. Shaffer (Excused) GUEST LEGISLATORS PRESENT: Senator Lawrence E. Jacobsen Senator Maurice E. Washington Assemblyman John C. Carpenter Assemblywoman Genie Ohrenschall Assemblywoman Vonne S. Chowning Assemblyman David E. Goldwater STAFF MEMBERS PRESENT: Don O. Williams, Chief Principal Research Analyst Paul Mouritsen, Senior Research Analyst Diane Rea, Senate Committee Secretary Jackie Valley, Assembly Committee Secretary OTHERS PRESENT: Jim Weller, Director, Department of Motor Vehicles and Public Safety (DMV&PS) William Gosnell, Chief, Administrative Services Division, Department of Motor Vehicles and Public Safety (DMV&PS) Ray Sparks, Deputy Director, Department of Motor Vehicles and Public Safety (DMV&PS) Brenda Erdoes, Legal Division, Legislative Counsel Bureau Senator Porter opened the meeting with a statement: Today we are here to discuss some challenges before the committee. I want to take a few minutes to summarize prior to the beginning of the presentation by the Department of Motor Vehicles & Public Safety (DMV&PS). First of all, DMV&PS does have a mission statement and a philosophy. This is from the DMV&PS strategic plan of 1994 which can be found in the Business Process Reengineering Business Case (BPR) (Exhibit C). I would also like to suggest that we have some objectives. I would encourage that this afternoon's subcommittee meeting be on a positive nature. I would also like to encourage that we try towards the end of the meeting to summarize into three or four attainable goals that we feel we can address this legislative session. Some of the problems that have been addressed in the past were the customer lines of 4 to 6 hours, 4 to 6 months in receiving titles, 6 weeks for drivers' test appointments, and microfilming has problems of being 5 or more years behind; but probably more importantly is the productivity cost to our customers, and it is found in the BPR plan. Some specific dollars are the current cost; based on an average 1- hour wait for our Las Vegas customers, is $4.6 million; and if wait times were reduced by a half hour, savings alone would equal $2.3 million. In November 1994, customer waiting lines exceeded 4 hours. I would encourage also, that the committee discuss not only our customers as a consumer, but also the business community. An area that I would prefer for a later time is inspections and the transfer to those departments of inspection of vehicles on highway patrol. Some options that I would suggest we consider are that there are currently at least seven or eight bills that are pending that have been addressed or will be shortly in both houses. SENATE BILL 49: Repeals provisions authorizing dealer of vehicles to register certain number of vehicles without payment of privilege tax. (BDR 43-900) SENATE BILL 65: Revises provisions governing examination of applicant for driver's license. (BDR 43-585) SENATE BILL 66: Revises provisions relating to issuance of license to operate certain motor vehicles. (BDR 43-586) SENATE BILL 118: Requires redesign and reissuance of license plates for motor vehicles. (BDR S-501) SENATE BILL 119: Revises provisions relating to disclosure of odometer reading of motor vehicle and certain other information when ownership of motor vehicle is transferred. (BDR 43- 1317) SENATE BILL 172: Provides statutory authority for department of motor vehicles and public safety to deny, suspend or revoke license of fleet station. (BDR 40-584) SENATE BILL 186: Revises provisions governing fee for processing of fingerprints for applicants for licensure as vehicle transporters, manufacturers, distributors, dealers and rebuilders. (BDR 43-578) SENATE BILL 188: Authorizes department of motor vehicles and public safety to issue sample license plates. (BDR 43-898) ASSEMBLY BILL 30: Requires identification of certain vehicles not registered for use on highways. (BDR 43-116) ASSEMBLY BILL 71: Increases balance in motor vehicle revolving account. (BDR 43-577) ASSEMBLY BILL 101: Authorizes funding of programs against theft of motor vehicles. (BDR-43-145) ASSEMBLY BILL 118: Requires department of motor vehicles and public safety to issue license plates for support of missing or exploited children. (BDR 43-1232) SENATE BILL 138: Provides exemption from vehicle privilege tax for recreational vehicles registered by senior citizens. (BDR 32-1121) ASSEMBLY BILL 153: Requires department of motor vehicles and public safety to issue license plates which express support for program for drug abuse resistance education. (BDR 43- 503) Senator Porter continued: Plus another handful that have to do with missing persons, controlled substances, abusive alcohol, aggravated circumstances for death penalties and numerous others. Some other areas that have been provided for you by request of Senator Jacobsen via Don Williams of our staff, is the information on privatization in the yellow backup material (Exhibit D). This includes material on integrating emission tests with registration, using bar codes, renewals by mail and touch tone systems, and a goal of some paper-less processing being tested in Iowa and Washington. Another area of interest is self-test and exams that are being done in three or four states where you use electronic means to take the test. Areas that I know are of interest to our chairman of the Senate transportation committee are the use of credit cards by DMV[&PS], which are more convenient; touch-tone government for vehicle registrations, and using the credit card system; the driver's licenses themselves with magnetic strips, digital imagery using the photo, signature and prints on one little card. Free standing facilities in shopping malls are being tested in California. The pilot programs in San Diego and Sacramento are being able to transfer the ownership of their vehicles. We have been provided with information on Level II funding (Exhibit E) by Mr. Weller. We have also made quote from the BPR report that is [incremental reactive changes and continued evolution of existing information systems are simply not enough. Unless we root our fundamental shortcomings and change the way we do business, increasing staff levels and building new facilities will not result in better customer service or improved productivity, efficiency or effectiveness.] Senator Porter stated: I would like to welcome everyone this afternoon and begin with our presentation from DMV&PS. Jim Weller, Director, Department of Motor Vehicles and Public Safety (DMV&PS) stated: On my left is Bill Gosnell who is the Chief of the Administrative Services Division, and on my right is Ray Sparks, who is the Deputy Director of the Public Safety side, but who has vast experience on the motor vehicles side. What DMV&PS would like to do today is address four issues in the following order: the 6 percent privilege tax commission, our Level II Funding which we mentioned before, the data processing issue, and the BPR request that stands before the legislature. William Gosnell is here to discuss the 6 percent privilege tax commission. William Gosnell, Chief Administrative Services Division, Department of Motor Vehicles and Public Safety (DMV&PS) stated: There will hopefully be a bill repealing the 22 percent issue. That is the ultimate desire of the DMV&PS. Simply to repeal a very old and un-working piece of legislation that would put the DMV&PS on the same level as every other department of the government. The 6 percent commission would produce a net of about $5.3 million of new money that would be available to DMV&PS. In the absence of 22 percent, DMV&PS would be in a position to put a budget before the committee that they could really take a look at to solve problems. Mr. Gosnell stated he had heard a lot of comments regrading the Constitution, and that he felt the last sentence in Article 9, Section 5 (Exhibit F) referred to a privilege type of tax which is not considered part of the highway flow. This goes back to 1937. He continued to say that if in fact the 6 percent commission was to be retained by the DMV&PS that would reduce the amount going to the highway fund and the 22 percent. He stated DMV&PS would have $5.3 million available if the legislature is willing to spend that additional money to solve some of the problems and still remain within the 22 percent. Mr. Gosnell said: The second issue of the Level II, shows different funding levels and staffing levels at the various facilities in Las Vegas where the line problems exist. The information packet gives the committee two scenarios at different levels. The first scenario is the 9-hour day (Exhibit G) that DMV&PS is presently operating under, 8 a.m. to 5 p.m. It shows the cost of increasing the window coverage at 100 percent, 90 percent or 80 percent and what that would generate in terms of new full-time employees (FTE) and dollars including credit card costs and document imaging on a lease basis. The $84,000 shown covers a couple of positions needed in the north and south for public information. DMV&PS has to get more information out to the public. The second scenario (Exhibit H) called Proposal #1 deals with the 12- hour day in Las Vegas and a full day on Saturday. It is also done at a 100 percent, 80 percent and 90 percent window staffing in order to show the varying costs entailed. The staffing pattern is a short- term solution. The long-term solution is the data processing. If DMV&PS were able to gear-up within a year, the 80 percent level model would provide the funding to open the three facilities for 12 hours and a full day on Saturday. DMV&PS believes that if there is no real activity at Kerry, they would adjust and close that facility at 6 p.m. and put the extra FTE into Sahara and have them go at 90 percent staffing during the peak times. DMV&PS does not want to have resources standing around; but existing facilities should be used a lot more than they are right now. Mr. Anderson asked if DMV&PS had at any time approached an extended time window to see what kind of response they might have? Has that been included in one of the exhibits so that the committee might see what DMV&PS really feels would be there? Mr. Gosnell stated that DMV&PS had just conducted an extended hours project in southern Nevada. Mr. Anderson asked if the study had been done on a time-flow basis so that the peak hours of usage are shown? Mr. Gosnell stated that he could not answer that question. He does not know the backup as to what was produced in the south. He stated that he will get the information for the committee. Mr Gosnell continued: DMV&PS needs to put information as to what they are doing on the Public Service Announcement. The Governor's budget puts $6,500 a year in DMV&PS budget for developing spots on the radio. They need to include what a new citizen to the state of Nevada would need to come into DMV&PS offices and get the job done. Mr. Allard asked if DMV&PS has given any thought to any type of incentives to get the customers to come in when it is not peak times, early in the morning or late in the afternoon? Mr. Gosnell stated that up until now, financially DMV&PS was not authorized to offer those types of incentives. Mr. Weller stated that because of budget restraints DMV&PS has not done incentives. On the registration issue, DMV&PS has tried to look at a disincentive for people coming into the office as opposed to mailing in their renewals. The proposal was brought before the Sixty-seventh Session but did not go anywhere. The public was not happy with that idea. Mr. Allard stated that he feels that just opening up for 12 hours will not get the job done. DMV&PS does have to educate the public and let them know that the 12- hour service is available, that will help. Mr. Allard continued to say that they may need to look into some type of incentives which in essence would not cost the state any more money, but will help save money. Mr. Nolan asked if the information provided in the Level II 9-hour day which indicated "contract services are $945,000 each annually for an agreement with the credit card company for the processing of collection of privilege taxes" is a new hit to the budget and where does the committee look at making up that cost? Mr. Gosnell stated: DMV&PS had Walter Lauzon, Assistant Chief of Administrative Services, Department of Motor Vehicles & Public Services (DMV&PS) work closely with the controllers, treasurers and some other state government agencies over the past year; to come up with some reasonable answers to the credit card, debit card, call-in renewal type situation. This report (Exhibit I) was completed over the last couple of days and it is not totally done, but is for the committee to start looking at. The report indicates $945,000 and I believe this is somewhat overstated. This is a number that DMV&PS has been working off since summer and are probably looking at $500,000 to $600,000 of new expenditure if the state were to absorb the cost of credit cards by having to pay the discount fee. The vendors will make DMV&PS pay for it unless there are some alternative solutions. Senator Porter stated that some of the backup material provided addresses credit card charges, express handling fees and some other charges across the country that are in essence a tax. The average across the United States is $3 to $5. Mr. Weller stated that the university system uses this now and they budget for that expense. Because of the 22 percent cap DMV&PS has not been able to do this. Senator O'Donnell stated that even though it is a tax, fee or a charge, it is an optional charge and if a person does not want to pay they can go down to the DMV. Mr. Gosnell stated that this would be viewed the same as any other customer service operation where if a person wants to pay cash, write a check or use a credit card a person could do that at DMV&PS. The only way people would be required to use their credit card would be if they wanted to call in and renew. If DMV&PS is doing the phone-in renewal there is still a question of the smog coordination as well as the mandatory insurance. He stated there have been credit card proposals come in that would not cost the state anything. It would cost the consumer because they would have to call in on an 800 number and use the renewal system. The consumer would have a service charge the same as buying something from an ad on television. If a customer comes into DMV&PS at the window and uses a credit card, the vendors have said the DMV&PS has to bear the cost of that. Senator Porter asked if what Mr. Gosnell is suggesting that the third party, private party that provides the service, is the way to go? Mr. Gosnell stated that as far as the state's cost is concerned that was the way to go. The DMV&PS would have to make sure it is compatible with whatever they put into the data processing environment. Senator O'Donnell asked if DMV&PS had worked out the technical aspects of this; assuming that the license number or the vehicle identification number (VIN) would have to be punched in, and being alpha/numeric that would be difficult over the phone? Mr. Gosnell stated that there would have to be some way to identify that vehicle or that driver. The DMV&PS is looking at that being an integral part of the BPR. The environment that DMV&PS is in now would have to be changed. This is another business process that will have to be looked at over the next year. Senator Porter stated: In the backup, New York is using a system called "Reinventing DMV" and it shows the sequence they are using. There are a lot of states that we will be able to emulate in putting this together. Mr. Gosnell stated: The DMR group that DMV&PS worked with on the BPR is doing a long range 10-year study for Oregon. Nevada is hoping to get their hands on a lot of the applications Oregon is looking at. We do not want to reinvent the wheel when there is a lot of good stuff out there that has already been paid for by somebody else. Senator Porter stated: If you look at the cost savings to our customers and the time that is wasted, they could be productive and have a lot less hassle in the lines. Mr. Gosnell stated: Anything that deals with lines, a bank, McDonalds, or DMV; there are really three things that make it pay. One is state of the art data processing where you can do as much as you can external to that facility, but when you are in that facility to do it quickly; and secondly is the resource to do it at the right time and right place; and I think the third is the facilities. We do not need to build a lot of facilities, we ought to use the ones we have better. Mr. Allard stated: Getting back to the privilege tax for just a moment, if you were able to retain the 6 percent privilege tax, I understand it would generate $5.2 million in Fiscal Year [FY] [19]96, $5.4 million in FY [19]97. If you were able to do that, how much of your five-point plan would you be able to implement with that funding? Mr. Gosnell stated: The way that money reads now and if DMV&PS were to get the approval to implement a revised data processing environment; if we were to go at 80 or 90 percent Level II staffing and a 12 hour day, they could be within $5.2 and $5.4 million. Mr. Allard asked if DMV&PSs data processing has any tie into Department of Information Services (DIS) or is this just strictly your personal computers (PCS) or how would that work? Mr. Weller stated that the way the DMV&PS is looking at it is to establish a stand alone main frame for DMV. Mr. Allard asked how much did DMV&PS believes they would save without participating ... ? Mr. Weller stated DMV was prepared to go into that if the committee wanted to jump into that now. Mr. Allard asked to stick with the funding for a moment, but does DMV&PS have that information? Senator Porter stated he wanted to stick with the funding and go back to that. Mr. Gosnell stated: DMV&PS could do some funding in the Level II for credit card development and acquire a document imaging system to deal with title problems within the next year or 2. DMV&PS would have to expand the document imaging to other applications in the Sixty-ninth Session. Right now we are looking at one device per office with the main frame and main file server here (Carson City) and getting at the title problem, and start solving these things in the field. The numbers, if DMV&PS were to go out and do everything today that we wanted to do, we would exceed the $5.2 million. We are looking at putting in the funding solution over 4 years for data processing. The scenario is the first year this biennium we would conduct the BPR and start the necessary rewrites. After the BPR is completed, we would know what types of systems we should be buying. That would occur in the second year of the bi-annum. By the end of the second year of the biennium, we would have weaned our self off of the mainframe DIS which would automatically save us $800,000 or $900,000 a year with a future offset by whatever our storage cost would be. There is a tremendous savings there. Mr. Allard asked if that would be added to the $5.2 and/or $5.4 million? Mr. Gosnell stated: If you were to buy the data processing portion right now, implement it the second year of the biennium; by a 4 year payment schedule, we would have paid for the whole thing. Mr. Allard asked if once these particular aspects of the five-point plan are enacted, what time savings does DMV&PS anticipate? Would they be cutting it down to a half hour or 45 minute wait? Mr. Gosnell stated that he would not want to sit before the committee and tell them that DMV&PS will ever have a half hour line in any facility mainly because they cannot control when the people come in. They can make the incentive in terms of everybody knows and if they do not want to stand in line, come in at 6 p.m. He stated that DMV&PS feels they can get to a hour or less. Mr. Allard asked what about titling? Mr. Gosnell stated with titling DMV&PS is looking at less than 30 days within the next 2 years just by putting the extra resources that they have in the budget right now. Mr. Anderson asked if there were peak months of vehicle purchase? Mr. Sparks stated that typically December is the heavy month because the state still has some fleets that are on a calendar registration cycle. Throughout the rest of the year it is pretty well spread out. Mr. Anderson asked if DMV&PS had looked at putting on extra help during those 2 or 3 months of the year when they have peak periods to cut those lines shorter? Obviously those renewals will come up consistently on those in addition, correct? Mr. Sparks stated that DMV&PS has not addressed the issue of employing seasonal type temporary help. They have half time positions that they have authorized currently for the Saturday operations at the two main offices in Las Vegas who are scheduled back in during the week in peak periods, lunch and breaks for the regular employees. Mr. Anderson asked if the fleet operators were taken out and they provided DMV&PS with the paperwork in advance, would they be able to shuffle those to the staff during down times to keep them at a fully implemented day, or is that a misconception? Mr. Sparks stated that in Las Vegas, DMV&PS provides a separate fleet section to handle those types of transactions. They should not on a normal basis be impacting the line that the average customer would be waiting in. DMV&PS knows that Mondays, Fridays and paydays are always busy. Mr. Anderson asked if there were no peak month if they took out the fleets? Mr. Sparks stated that they have not been able to identify any regular patterns other than the ones he described. Senator Porter asked DMV&PS to continue with their presentation while Mr. Williams checks to see if Brenda Erdoes was in her office. Mr. Gosnell stated if the committee has enough in front of them to look at regarding the Level II funding; regarding staff, data processing, and document imaging, he wanted Allen Rogers to hand out the Data Processing (DP) part of the presentation (Exhibit J). Mr. Gosnell continued: What you have is the package called Computer Upgrade Proposal. This proposal would put DMV into an independent mode of and by itself in the absence of any SCR5 or split recommendations. Our management concerns there are over the level of response, the costs, response time, our ability to determine priorities within DMV, or does some other organization determine our priorities as far as data processing is concerned. Senator O'Donnell stated that he takes exception to the comments "flies in the face of the DIS." He said he thinks the DIS is under the impression that there is no money to do an independent, stand alone data processing center with Business Process Reengineering and it came out in hearings that this would have delayed 2- years worth of time in solving the DMV's problem. He stated that he thinks Mr. Chairman, himself, and others are concerned that 2 years is just not acceptable. Senator Porter stated that for many years the public thought the mainframe was the way to go and what they did in many of the industries was to hire special data processors just to build special programs just for that particular industry. As industry and the computer technology have evolved, a lot of those folks are gone, or they have gone to work for the company; so the person who has put together those programs is no longer in existence. He continued that now industries are bandaging and adding and adding and are finding that they are doing a lot of shifting from mainframe to PCS [personal computers]; and the mainframe is still being used for a lot of the accounting, payroll, and taxation type of things. For specific uses, there are so many advantages to a PC that a mainframe cannot do, it is actually more cost effective to have PCS. Mr. Gosnell stated: Our proposal involves an open environment and the ability to process data, but if you look in there you will see that converting from a dump terminal to a PC environment at the terminal, at the actual counter level is a part of this proposal. The costs that are in the report are showing about a $3.3 million one-time investment which would be financed over the 4 or 5 year period you were talking about. Those numbers indicate that we would wean ourselves off DIS in terms of paying them almost $1 million a year in storage retrieval or processing that we could do ourself; then the second year we are making money and at the end of the fourth year we have completely paid it off. Senator Porter stated Brenda Erdoes was with the legal counsel. She had at least an informal opinion to give the committee today. Brenda Erdoes, Legal Division, Legislative Counsel Bureau stated: It can be done. What you need to realize is that 6 percent gets added to the amount of administration that you are allowing the DMV&PS, currently the statutory amount is 22 percent. That is what the legislature has interpreted in the past under the constitution provision that says that all of the money for the privilege of using the highways of this state, except cost of administration, must be used exclusively for the construction, maintenance and repair of public highways of this state. That is Article 9 Section 5. Traditionally, all of the money that has been subject to this provision is put into the state highway fund; but that is a tradition, not a legal requirement. Should you choose not to do that, you certainly are within the realm of your ability to do so. And there is a presumption in the law that what the Legislature does is constitutional so you are probably ahead of the game, but my advice to you would be that you need to pay attention to how far you go towards saying [these are cost administration]. I cannot tell you whether it is 23, 24, 25 [percent]; I can tell you that if you got up to about 75 [percent] I doubt if that would fly. I do not know where that is. The Legislature is privileged to have a presumption that what you do is constitutional, so there is a good part of that. I might explain one other thing. The difference between the way the privilege tax is treated and the way the sales tax is treated is because the sales tax is not imposed for the privilege of being on the highways of the state, so Article 9 Section 5 does not apply to it. That is why the difference in the current treatment. Senator Porter asked that she give a formal opinion. Mr. Allard asked what about in the constitution Article 9 Section 5 where it says that "provisions of this section do not apply to the proceeds of any tax imposed upon motor vehicles by the Legislature in lieu of property tax". Does that come in here? Ms. Erdoes stated: I think it does. I think that is something that I need to look at in the opinion that I will do for you. So, it may not make the difference. Mr. Allard stated that he had asked the budget analyst for an opinion of whether or not this was ad valorem or what, did he get with her today? Ms. Erdoes stated that he had not gotten with her today, but she believed that the privilege tax was in lieu or pursuant to Article 1 Section 10 (Exhibit K). Mr. Allard suggested that she might want to get with Mr. Stevens and work up a formal opinion for the committee. Senator O'Donnell stated he is a little confused on the 6 percent; if that goes directly to the DMV&PS, was she saying that the 22 percent cap still would have to stay in effect and would that 6 percent be part of that 22 percent? Ms. Erdoes stated if the money did not go into the state highway fund; the 22 percent cap just went for the highway fund. Senator O'Donnell asked if she was saying that it is possible? Ms. Erdoes answered "Yes". Mr. Gosnell stated: On Mr. Sparks right is Allen Rogers who is DMV&PSs DP [Data Processing] person in the department who has put together, in conjunction with some other staff members, the blue package you have received. Quickly going over the financial side of this, the handout has a detailed listing of what we would believe it would take to put DMV&PS into a DP solution in our department as it relates to the counter work, to credit cards and everything else; at the conclusion of completing the BPR. The $3.3 million that you are seeing in the blue book, is related to the spread sheet that is also in the book. The spread sheet shows those costing out over the 4 or 5 years in question as they relate to what we are doing now and what we relate them to be under the new concept. If you were to look at the cash flow, we are saying the first year of the DP solution is Fiscal Year [19]97. On there we are still showing a full payment to DIS, because we are saying it would take the full year to convert off the data base onto our own. Therefore, it does not effect their budget for this biennium. Beginning the second year, which would be Fiscal Year [19]98, we would no longer pay DIS. That money would be used to reduce the cost of our operation for the next 3 years. On the bottom line on the accumulative total on the comparative cost analysis, we are saying if we were to finance this program over the 4 years, we would be actually saving money at the end of the 4th year in terms of the initial investment. Actually, we are in the black the second year. We are actually operating at less the second year than we are right now. There is a cost effective alternative to what we are looking at under the other proposal. We believe this would bring us up to the state of the art and enable us to dramatically reduce the time. This would be involved with getting rid of the separate data bases. There is no way to treat a new customer without coming into one of our facilities. If DMV&PS were to get to be 25 percent efficient next year in data processing, we will have the result of reducing the lines from 4 hours to 3 hours. DP of-and-by itself is not the answer. Bodies of-and-by themselves are not the answer. We cannot do it for free. Senator O'Donnell stated: DMV&PS had done a remarkable job of cost estimating in terms of what needs to be done in data processing. How about staff? How about the programming staff? And I am curious to find out whether or not the BPR would dovetail into something like this. I think what has been left out of this equation has been staffing; the DP [staff] that are going to do the programming. Have you budgeted or costed out for that? Mr. Gosnell stated DMV&PS has not added, except for two positions that they requested in the automation division for the upcoming biennium; one for Las Vegas because of the amount of equipment being put in down there, and one more in the north. They have not put into account any of the conversion in the current 1996- 1997 budget. He stated they had done the BPR and the commitment on management and some technical staff to get the BPR done in the first year. Knowing full well that DMV&PS is going to have other things that are not going to get done in management because they have to use the same people. Senator O'Donnell stated he is concerned about the fact that the committee is looking at a pretty substantial cost in terms of data processing, but not looking at any staff in order to do it. Mr. Gosnell stated: If you look at that page that shows up to $3.92 million, you will notice the bottom of that [Data Conversion Services, Installation Consulting, and System Net Work Training]; there are some dollars in our initial cost that would provide some technical expertise in the marketplace to come in and help us, especially on the conversion services between the two [DMV&PS] heads. They would not be there very long. We are looking at that basically as a one-time cost. Senator O'Donnell asked if it would be on a contract basis instead of a FTE? Senator Porter stated that what he would like to find is a consensus that this is a direction that the committee would like to go. He asked Mr. Gosnell to move into the BPR. This addresses some innovative ways to address the problems plus some realities. Mr. Sparks stated that the project working team was comprised of a lot of DMV&PS people and the project change team; himself included. This has reenforced something DMV&PS already knew; where the problems are. He said it suggests that DMV&PS does a detailed analysis, process by process, titles being one process looked at; and look and see if there is better and more efficient ways to do things. Senator Porter stated that the area addressed is the calls and complaints that are received by policy-makers for the state, and that is why it is so important that it be addressed as a state budget processing. It is in the Governor's budget to implement this. Mr. Gosnell stated that Senate Bill 218 is the vehicle to fund the BPR and beginning the subsequent rewrite of DMVs existing outdated systems. SENATE BILL 218: Makes appropriation from state highway fund to department of motor vehicles and public safety for business process re- engineering study and revision of existing motor vehicle operation applications. (BDR S-1536) Mr. Gosnell continued: I believe that bill is going to be heard March 20th by the Senate finance committee. We are trying to and will get the consultants that helped us put this together to discuss not only what their role is here but also the role they played in Oregon, similar to what we are trying to do. Senator Porter stated that if they have not had a chance, both the subcommittee and the full committees should review this. Of all the things being addressed today, he stated he feels the BPR is the most important. Mr. Gosnell stated this is the key document. DMV&PS believes it is the catalyst to start the whole thing towards solution. Mr. Nolan stated he had looked at some of the staffing recommendations, and his background used something they call "system status management program" where they try to match their supply with what the demand is on the street. He said he was trying to imagine how DMV&PS would initiate this program and start something as soon as possible, because the problem is almost at crisis proportion especially with the number of people moving into southern Nevada everyday. If DMV&PS extend their hours to 12-hour period, communications travels slow with respect to that. He said DMV&PS will still have the masses appearing at the offices and long lines because the people are down there and do not want to turn around. If DMV&PS had an appointment scheduling desk right at the front; when people came in and saw the lines they could make an appointment to come back at 8 p.m. or 9 p.m. Mr. Gosnell stated DMV&PS is even thinking that possibly within a model of an 80 percent funding or a 90 percent funding, saying a 12-hour day and an 8-hour Saturday; and if they got a Henderson facility in the future, it is going to make a tremendous impact on the Sahara office. Mr. Allard asked since the BPR is just a brief overview of what could be yet to come, how much of this does DMV&PS agree with, disagree with, or are they in total accord with this? Mr. Weller stated DMV&PS was part of the team at two different levels; the actual working level and the advance level. He stated they are all in agreement with everything that is in the BPR. Mr. Allard asked if in specifically talking about the business of titling; Mr. Gosnell had touched on titling earlier, and said DMV&PS plans to get that cut down to 30 days. Could Mr. Gosnell expound on that for a few minutes? Mr. Gosnell stated he believed Mr. Sparks could answer that better, or Donna Wadey. DMV&PS has requested in their budget 17 additional FTE for the immediate biennium that would be directly related to title reduction; and some would be document imaging, if they could get it. Mr. Sparks stated: Currently, the backlog on titles is 3 months. We have brought it down from 4 months backlog in the last couple months by temporarily shifting people from other assignments. Our intent is, with Legislature approval of the additional positions that are in the budget request, to staff those positions on a full-time basis. The problem with the title backlog really started developing in 1991 when the state hit a hiring freeze because of the recession at that time, and the backlog simply crept up on us. I reported during the Sixty-seventh Session that at that time the backlog was 3 months and as you know we did not get any assistance at that time to address that problem. The situation crept up to over 4 months. We shifted people, instituted an evening shift, authorized as much overtime as could be afforded to address the problem. That is a temporary solution. The long-term solution is some staffing increases in that program area and some enhancements in the data processing support for the title processing. The optical imaging system will be an important improvement in that because of the need to microfilm a tremendous number of documents. In addition, if we can enhance our data processing environment, we can save time by using the data entry that is done at the time of registration for processing the title rather than duplicating a lot of data entry. Mr. Allard stated he is sure that the auto dealers association will be glad to hear that. Do we have any more questions on titling? BPR? Senator Porter asked since the titling process is not always a smooth transition, was this be addressed in the BPR; some new procedures of handling that process? There seems to be some confusion in the marketplace. Mr. Sparks stated that the title processing is a good example of an area where DMV&PS is amenable to the BPR review; what we are doing, why we are doing it, if it is necessary to even do it. For those steps that are required, how DMV&PS can facilitate that through the use of technology. It will be a major component of the BPR. Mr. Gosnell stated DMV&PS's goal was to bring three or four issues to the committee today. The revenue issue, the data processing issue, the Level II funding issue and the BPR. Mr. Gosnell continued: What role could the dealers play in registration? We have approached those people over the years and they are really not that interested. I think the privilege tax messes that up. We are looking at the possibility of what we could do at having drivers' license schools do drivers' licenses. It is a resource allocation question. Mr. Anderson stated that here in Nevada drivers' training funding level disappeared and as a result, all the drivers' licensing programs became opened to those students who wish to purchase it and Nevada lost that funding level. Mr. Weller stated the primary reason for drivers education is the reduction in insurance costs to have his kids drive one of his cars. Nevada could look at giving the schools the authority to do the testing and all DMV&PS would have to do is monitor them. How much would that be taken advantage of? Senator Porter stated that in his opening comments he had summarized some of the background information that Senator Jacobsen had requested the committee receive. One specific item was the question of a public-private partnership and it is understood that data processing is the foundation for anything that is planned in the future. He asked how does DMV&PS feel about some agencies in the rural areas that may work in a public-private cooperation to provide services to customers? Mr. Sparks replied that it is not exactly a public-private effort, but in the rural areas DMV does have a public effort on the registration side. The county assessors act as agents. He said it is not without some problems because of the control issue over the procedures employed by the county assessors. DMV&PS requested money to open an office in Ely because of problems with the White Pine County Assessor in handling of funds. DMV&PS took over the operation in Ely. He continued stating that in terms of other types of true private-public type partnerships; registration has pursued a number of alternatives, none of which have materialized at this point. DMV&PS is currently in discussion with some rent-a-car business about bringing them on-line to do their own registrations. Mr. Sparks stated that there are a number of private services that do registrations on behalf of DMV&PS customers. Laughlin is a good example. He said DMV&PS feels the complexity of the registration with the privilege tax, allowing credit when a person is transferring their registration from one car to another ... he said he thought those were reasons that have been disincentives for private groups to participate. Senator Porter stated that is another quantum leap and a change in procedures. He asked that in coming months if DMV&PS could take a look at some of these other states. Is there some way in the future that they could provide a quicker service? Mr. Gosnell stated that he would like to add two points there. One point was that DMV&PS made the decision last May or June to request funds sufficient to put every county assessor on-line because, the counties that are doing that are pretty much required to come up with their own money to get on-line into DMV&PS system. Many of the counties really do not want to do it or really cannot afford it. He continued to say that the other issue is the private-public service. While it is not really an issue in the registration or drivers' license side, DMV&PS has a major program that raises a lot of the money for the highway fund. He said the motor carriers right now is a real strong private-public cooperation in the sense that the whole International Registration Plan (IRP) and International Field Tax Agreement (IFTA) registration programs are off a privately owned computer and their programmers have written a program that DMV&PS calls for help if they have some glitches. He said DMV&PS pays money for that, but it does work. Mr. Gosnell said he thought if the Legislature decides to move the gas tax, and integrate gas with special fuels, and raise charges at the rack or to the distributor; there are systems that can do a wonderful job for the state of Nevada. He said it has been started and DMV&PS is proud of the motor carriers thing. It is a money maker. Mr. Allard asked if there were any other questions from the committee or anyone in the audience. Mr. Allard asked if DMV&PS is able to retain the 6 percent privilege tax and the 1 percent that the county has, would that give them the $5.2 million and would this allow them to move into a direction that would allow them implement the five point plan or possibly some of the things that some of the other states are doing, which in turn would increase services dramatically? He said would it allow DMV&PS to also have their own computer system and save money by not giving anywhere from $800,000 to $1 million a year to DIS. But there will be a hole in the Highway Fund if they are allowed to retain that. He asked DMV&PS to touch on the BDR that they had that would allow the short-term, lesser money to go into the Highway Fund rather than the General Fund? Mr. Gosnell stated: There is presently in place a short-term lesser act that DMV&PS actually administers for the department of taxation and the General Fund. The interim committee, I think would make the recommendation that those revenues that are presently going to the General Fund go to the Highway Fund. What I think has happened is those revenues have been assumed by the economic forum to be a General Fund revenue. Then you have the conflict between a transportation committee looking at the Highway Fund and what they consider highway fund revenues verses the General Fund people that feel that is really a sales tax thing. Ray Sparks administers that program and we did a physical note to see what the full impact would be for the upcoming full year biennium type thing, but when I looked at that last fall that was to me a potential source of the offset. I think the decision on where that money goes has pretty much been made. Mr. Sparks stated: That tax or fee was established by the Sixty-seventy Session. It is a 6 percent tax on the rental of a passenger vehicle. Of that 6 percent, one-third goes to the state; the car rental agencies are entitled to retain two-thirds of that up to but not exceeding their costs for registering and titling vehicles. If the two-thirds exceeds their costs they remit that surplus to the state. We estimate that the revenues would be in the neighborhood of $4 to $5 million annually from that fee. 1994 will be the first full tax year that we have implemented it. Originally, as the bill was proposed, the funds were to go to the state Highway Fund. Towards the end of the Sixty-seventy Session, in an effort to balance the General Fund, a decision was made to redirect those funds from the highway into the General Fund. Coincidentally, we get no money from administering that program right now. It is another one of the duties that the department has picked up with no commensurate resources. Mr. Allard asked if that would dovetail nicely in plugging that Highway Fund hole right up? Now the only thing is that they will have a little less in the General Fund. Mr. Anderson stated that he has a little knowledge on that subject, since he had proposed that at an earlier time period, as a potential source of revenue for the state, hopefully for this department. He continued that there are several states that utilize it because it is another one of those taxes that is generally not most heavily felt by residents of the state or visitors to the state. He stated that Florida and Hawaii are the other two major leaders as potential sources of revenue in this area, and Nevada picked up model legislation from them. Florida has a highway problem similar to Nevada. Hawaii has a different problem. Mr. Allard asked how many years would this program take to pay for itself? Mr. Gosnell stated: We would recover the total amount invested in the second year of the biennium. If we were to go out and buy it on a lease basis, we would have recovered the cost by the end of the 4th year. We would be working off a net savings of around a quarter million a year from now and forever as [compared] to what we are spending right now. Senator Porter stated that he wanted to acknowledge that in attendance were Senator Maurice Washington, Assemblywoman Vonne Chowning, Assemblyman David Goldwater, Senator Jacobsen and Assemblyman Carpenter who are not a part of the subcommittee. Mr. Weller asked if there was anything DMV&PS needed from the committee? Senator O'Donnell stated that the committee had gotten quite a bit of information. He continued with a suggestion for the chairman to come back with some recommendations for the subcommittee to vote on in terms of where they want to go, what direction to take. Then they can bring that back to the full committees. Mr. Anderson stated that he concurred with the statement made by Senator O'Donnell. The subcommittee had quite a bit of ways to go. There were several other issues that were outlined and he thought that DMV&PS might use those as an indicator of some of the concerns. Senator Porter stated that Mr. Wallace was there from the Governor's office and he expressed his thanks to the Governor for his support. Mr. Gosnell stated the material presented here today has never been seen anywhere else. Senator Porter stated that the individual committees should prepare some recommendations for DMV&PS to take to their hearing on the 10th. Senator Porter adjourned the meeting at 3:00 p.m. RESPECTFULLY SUBMITTED: Diane C. Rea, Committee Secretary APPROVED BY: Senator Jon C. Porter, CoChairman DATE: _____________________________________________ Assemblyman Dennis L. Allard, CoChairman Joint Subcommittee on Transportation March 2, 1995 Page