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Insurance Trade Associations File Lawsuit to Stop DMV From Hidden Tax Increase

    SACRAMENTO, Calif.--May 22, 2002--Five insurance trade associations today filed a petition in Sacramento Superior Court, asking the Court to stop the Department of Motor Vehicles (DMV) from implementing emergency regulations to double the cost of accessing individual motor vehicle record reports (MVRs) from the current $2.00 to $4.00 per acquisition.
    The five trade associations represent more than 95 percent of the automobile insurance written in California and include: the Personal Insurance Federation of California; the National Association of Independent Insurers; the Association of California Insurance Companies; the American Insurance Association and the Alliance of American Insurers.
    Gene Livingston, partner in the Livingston and Mattesich Law Corporation, filed a petition for a Writ of Mandate on behalf of the trade associations. He stated that "without this court's immediate intervention, California businesses, both large and small, will be forced to pay an unconstitutional hidden tax to access public drivers license information maintained by the DMV at a time when the Administration has called for no new taxes.
    "Indisputably, $2.00 is far more than it actually costs the DMV to provide this service," Livingston said. "In 1997, a California State Auditor's report established that every electronic record request costs the DMV about 50 cents. Recent information disclosed by the DMV reveals that its cost is actually 13 cents per request. The facts show that the DMV is already overreaching by charging $2.00 for MVR's, so raising the amount charged to commercial requesters to $4.00 makes it a hidden tax," he said.
    "The DMV attempted to raise the rates in March of this year stating that it had not raised fees in nine years and revenues were declining. When challenged by the trade associations, the DMV withdrew the request. The DMV now cites the September 11, 2001 attack as a reason its expenditures continue to rise. We believe there is no emergency, nor is there justification to raise the rates for commercial requesters. The DMV is just looking for a way to pay for other programs unrelated to providing electronic access to MVR's. This constitutes a violation of Proposition 13 which prohibits enactment of taxes without a 2/3 vote of both California legislative bodies, not a state agency. California statutes prohibit the DMV from charging insurers more than the cost of making the MVR data available. California insurers already pay more than $1.3 billion in premium taxes each year into the State General Fund," Livingston said.
    "Every day insurers access thousands of DMV reports in order to set proper auto insurance rates as mandated under Proposition 103. If the new fee increase goes into effect, it would have an immediate impact of millions of additional dollars in monthly costs to insurers. This is unjust and an abuse of power by a state agency. We urge the court to stop the requested emergency increase before the June 1 start date," Livingston concluded.