RD386 - Virginia Department of Motor Vehicles Report on Customer Service, December 1, 2009


Executive Summary:
This is the second report on the implementation of Senate Bill 116 which was passed by the 2008 Session of the General Assembly with the intent to further promote the operational efficiency at the Department of Motor Vehicles (DMV). The bill included two main provisions: 1) an increase in the validity period of Virginia driver's licenses, and 2) an incentive based fee structure for vehicle registration renewals.

DMV implemented the requirement for an eight year validity period for driver's license renewals and original driver's licenses in July 2008. During the first year, DMV received positive feedback on the extended validity period and had a smooth implementation. This implementation allows the Department to collect the fee for eight years upfront even though the annual license fee did not increase. This revenue was critical to allow the Department to maintain service levels despite declines in overall transportation revenues for this period. After five years, the Department will have to reduce its operating costs substantially or identify other revenue sources in order to offset the decline in driver-related transactions and revenue until renewals resume in earnest after year eight. The decline in revenues will occur starting in FY 2014 and will result in fewer resources for DMV to support day to day operations. The Department will experience some cost savings from this reduction in transactions, but the degree to which that will offset the projected shortfall is unknown at this time.

To generate cost savings and reduce customer traffic in DMV's service centers, the law also established an incentive based fee structure for vehicle registration renewals. The bill included a combination of discounts and surcharges to drive transactions to low cost delivery channels. During the first year, DMV did receive some negative customer feedback, but it was minimal in the context of the overall volume of transactions. The department did experience a 32% reduction for in-person renewals. DMV's internet option saw the largest increase in demand of 57%.

From July 1, 2009 to September 30, 2009, the Department has continued to see declines in customer demand for in-person renewal, now 42% below pre-surcharge levels. Overall the reduction in customer traffic and reduced cost will allow the department to allocate staff resources to meet the needs of customers who require face-to-face assistance for more complex issues. The Department will continue to monitor the progress of this program. This will be increasingly important considering the impact on customer service centers from the implementation of the Federal Real ID Act of 2005.