HD68 - Study on the Administration of the State's Boat Registration and Titling Program

  • Published: 1994
  • Author: Department of Game and Inland Fisheries
  • Enabling Authority: House Joint Resolution 443 (Regular Session, 1993)

Executive Summary:
In its 1992 Session, the General Assembly passed HJR 191, which, among other things, directed the Auditor of Public Accounts to conduct a management study of the Department of Game and Inland Fisheries (DGIF). One of the recommendations contained in the Auditor's final report was for the General Assembly to consider having the DMV and DGIF conduct a follow-up study of the state's boat registration and titling function. This recommendation was accepted by the General Assembly in the 1993 Session with the adoption of House Joint Resolution 443.

HJR 443 called for DMV and DGIF to study whether DMV should administer the registration and titling program. The two agencies were charged with reviewing four specific options:

1. That DMV would process all boat registrations and titles;

2. That DMV and DGIF would both process boat registrations and titles;

3. That DMV would process watercraft dealer licenses and oversee enforcement of [watercraft] dealer rules and regulations; and

4. That DGIF would retain the administration of boat registration and titling [and] for watercraft dealer licensing.

The two agencies were further charged with reviewing four specific questions in conducting their analysis:

1. What costs will be required to change the program(s)?

2. What program or fee structure changes will be necessary to make the boat program compatible with programs administered by DMV?

3. What changes will be required in the Code of Virginia?4. What benefits or detriments would there be, if any, to boaters or watercraft dealers?

A study committee was formed by the agency directors comprising representatives of the two agencies. These representatives reflected all aspects of the agencies' respective registration and titling operations, including administration, customer service, and information systems. A three-step approach to the study was adopted:

Step 1: a detailed review of the systems, processes, and procedures used by both agencies -- essentially an analysis of current systems and requirements.

Step 2: an itemization of the commonalities of and differences between the existing systems.

Step 3: an analysis of the actions that would be required to address the system differences and the costs and benefits associated with those actions.

Over a period of four and one-half months, representatives of the two agencies met more than a dozen times, including small group, single-issue meetings.

Discussion

The similarity between registering and titling motor vehicles and registering and titling motorboats is not as great as is commonly thought. Issues which have to be addressed for motorboats do not occur in motor vehicles and vice versa. For example, all motor vehicles operated on the roads in Virginia must be registered and titled. On the other hand, some motorboats must be registered but do not have to be titled, some have to be both registered and titled, and some can be titled but not registered. In addition, Virginia law allows a boat owner to register and title a non-powered boat -- the equivalent of DMV issuing a registration and title for a bicycle.

The differences between the programs extend to other states as well. Across the country, motor vehicle registration and titling laws and requirements are all but identical. The same is not true for boating. For example, some states require all boats (powered and non-powered) to be registered but not titled, some require all boats to be registered and titled, and some states require all motorboats to be registered and titled, but have no requirements for non-powered boats. Differences also exist in the scope of services provided by the two agencies.

There are approximately 210,000 registered motorboats in Virginia, approximately 167,000 of which are titled. In contrast, there are approximately 5.1 million registered and titled motor vehicles in the state, of which 4,278,000 are renewed either annually or biannually.

In Virginia, passenger motor vehicles are required to be registered either annually or biannually at a cost of either $26.50 or $31.50 per year, depending upon the weight of the vehicle. Motorboats are registered for a three-year period at a cost ranging from $18.00 to $36.00 (or $6.00 to $12.00 per year), depending on the length of the boat. The titling fee for motor vehicles is $10.00. The titling fee for watercraft is $7.00. In both cases, the titling fee is required only when ownership of the motor vehicle or boat changes.

DMV processes approximately 2.1 million centralized vehicle registration renewals per year, and performs over 10 million revenue transactions per year. On the other hand, DGIF processes about 100,000 transactions in a typical year. Of these, approximately half are routine renewals. The remaining half is comprised primarily of sales between individuals, purchases of new boats (primarily small boats for which a title is not required), and post-expiration renewals.

Although not specifically mentioned in HJR 443, a concern expressed in recent years has been the relative availability of walk-in services provided to motor vehicle customers by DMV compared to the walk-in services provided to boating customers by DGIF. Currently, 50% of DMV's vehicle renewals are processed by mail. DGIF historically reaches approximately 93% of all boating customers by mail. Studies conducted by DGIF indicate that of the 7,000 boating customers who come into the Richmond office, only 35% (2,550 customers) have transactions which require a visit to the office. The remaining 65% (4,550 customers) come to the office to conduct their business because they choose to, not because the visit was required.

Another factor which needed to be addressed was a comparison of the cost per transaction for registering and titling motor vehicles versus the cost per transaction for registering and titling motorboats. The final HJR 191 report included a table comparing the relative cost per transaction rates of the two agencies. This comparison table indicated that the cost per transaction for DMV was about 20% lower than the cost per transaction for DGIF, as shown below:

AVE. COST

Registration:
Motor Vehicles: $6.41
Game & Inland Fisheries: $8.20

Titling:
Motor Vehicles: $6.76
Game & Inland Fisheries: $8.20

Dealer Licensing:
Motor Vehicles: $25.33
Game & Inland Fisheries: $8.20

These numbers are not necessarily true reflections of the average cost to process an individual transaction. The numbers shown for DMV, for example, were taken from DMV's cost allocation plan.

The cost allocation plan is designed to distribute the agency's indirect costs and overhead across the agency's operational functions and reflects the need for immediate on-line access to vehicle records by law enforcement agencies, as well as the complexity and detail required of those records. It is not designed to calculate the average cost of each individual transaction.

The figures given for DGIF also include overhead costs which are normally allocated through a cost allocation plan. More importantly, what is not shown is that the $8.20 figure represents the total cost of boat registration and titling and dealer licensing. It is an inclusive figure. The operational constraints of the two agencies preclude the type of comparison implied in the HJR 191 report.

In responding to the HJR 443 study request, therefore, the two agencies focused on how best to address the needs of the boating public, both in terms of cost and convenience. Two primary concerns were shared by both agencies. The first was the impact any proposed change would have on the cost of registration and titling for the vast majority of boating customers whose needs are currently being met. The second was the impact any proposed change would have on the ability of the Department of Game and Inland Fisheries to maintain its level of funding for boating law enforcement, boating safety education, and boating access programs. Of importance as well was the effect an increase in boating-related walk-in traffic might have on DMV branch office operations, especially in regions with high concentrations of registered boats (Tidewater, Northern Virginia, and Roanoke-Lynchburg).

Findings

As directed by HJR 443, the agencies studied four specific options. A summary of the findings for each of the options is presented here. Detailed information on each option included in the resolution is presented in the "Consideration of Options" section of this report, which begins on page 14.

Option #I. DMV would process all boat registration and titles.

Motor vehicle registration and titling services provided by DMV are decentralized and thus are dependent on a highly sophisticated computer system which ties all of D14V's operations together in an on-line mode. Transferring any part of boat registration and titling from DGIF to DMV would require modifications to DMV's computer system. If the intent of this option is to provide the same level of walk-in service for motorboats as is currently provided for motor vehicles, implementation of this option would require approximately eighteen months of effort, approximately $3 million in one-time costs, and an ongoing cost of approximately $500,000 annually (as compared to the current annual cost of approximately $400,000). These costs would necessitate an increase in the registration and titling fees currently being charged boat owners. Due to its highly decentralized construct, this option is the "top of the line" alternative. It represents the greatest level of customer convenience and requires the greatest level of investment. A detailed discussion of Option #1 can be found on pp. 14-18.

Option #2. DMV and DGIF would both process boat registrations and titles.

Implementation of this option would also require modifications to DMV's computer system, although not to the degree required in Option #1. The ongoing operational costs would also be less than required in Option #1, but they would be higher than are presently being incurred through DGIF's centralized system.

Having both agencies process boat registrations and titles would require a combined one-time expenditure of approximately $400,000 and an increase in ongoing operational costs of approximately$141,000 over the current program. An increase in the registration and titling fees charge boat owners would also be required by this option. A detailed discussion of option #2 can be found on pp. 19-21.

Option #3. DMV would process watercraft dealer licenses and oversee enforcement of watercraft dealer rules and regulations.

Since most watercraft dealers issue temporary certificates of registration to new owners and assign registration numbers, transferring watercraft dealer licensing to DMV would require watercraft dealers to work with two state agencies for boat transactions, rather than one. Operating costs associated with watercraft dealers would increase, as DGIF would have to hire replacement personnel to process boat titling and registration transactions sent to them by watercraft dealers (assuming present personnel who handle these functions would be transferred to DMV).

It is estimated that the implementation of this option would require a combined one-time expenditure of approximately $122,000and would increase current ongoing operational costs by approximately $133,000 per year. Watercraft dealer licensing fees would also have to be increased. A detailed discussion of option #3 can be found on pp. 22-24.

Option #4. DGIF would retain the administration of boat registration and titling [and] for watercraft dealer licensing.

This option represents no change over the current centralized processing of boat registration and titling, and would require no additional expenditures or increases in the registration and titling fees paid by boat owners. Nor does it represent any increase in service convenience. To that end, the agencies evaluated the feasibility of creating a Temporary Operating Certificate (TOC).

Used by a number of other states, the TOC would be available through a number of outlets, including DGIF and DMV local offices, selected watercraft dealers, and selected DGIF license agents. For a nominal fee ($10 is recommended), the TOC would enable a boat owner who does not have ready access to walk-in services to use his boat for thirty days while waiting for the permanent title and registration to be processed. This service could be implemented fairly quickly with minimal costs, and its effectiveness could be determined with some degree of accuracy within one boating season. A detailed discussion of Option #4 and the TOC Option can be found on pp. 25-27.

Conclusion

Analysis of the state's boating registration and titling program indicates that the central issue is centralization versus decentralization of registration and titling services. DGIF's boat titling and registration system is centralized. While this offers the least amount of customer service, it is also the most economical to operate.

DMV's motor vehicle titling and registration system is decentralized. While this offers the greatest degree of customer service, it is also more costly. However, because DMV's transaction levels are so much higher than DGIF'S, the higher costs of maintaining such a system is spread out over a larger number of transactions. Due to economies of scale, these transaction costs appear at first glance to be acceptable, but are not transferable to lower transaction volumes such as those experienced by DGIF.

Recommendation

If the desire of the General Assembly is to provide the greatest degree of customer service, decentralization of the program would-be appropriate. Depending on the level of services to be provided, decentralization would require increases in the titling and registration fees paid by boat owners.

If, on the other hand, the desire of the General Assembly is to provide boat registration and titling services at the lowest possible cost, continuation of the current centralized system with implementation of the Temporary Operating Certificate would-be appropriate.