STEVE SEBELIUS: A do-over on DMV fees

Time for a do-over.

Since the Nevada Supreme Court ruled May 13 that an extension of both the payroll tax and a $1 DMV fee were unconstitutional, the state has faced a problem: giving the money back.

That’s because Carson City District Court Judge James Todd Russell — the first judge to hear the case and the first to say the tax and fee were unconstitutional because the Legislature failed to get the required two-thirds supermajority — also said the money improperly collected had to be returned.

“All fee payers and taxpayers from whom such fees and taxes have already been collected are entitled to an immediate refund thereof with interest at the legal rate of interest from the date collected,” Russell wrote.

And the Supreme Court, in upholding Russell’s ruling, said, “We affirm the district court’s judgment in whole.”

So money please?

Not so fast.

While there are a trio of bills dealing with the DMV fee, Assembly Bill 488 would extend the tax to June 2026, but also make the fee retroactive to June 2020, when collections started. That would allow the state to keep about $5 million in fees, all of which are targeted to update the DMV’s technology.

Unlike last time, however, lawmakers know that keeping the money will require a two-thirds vote, which means two Republicans in the Senate and two in the Assembly have to join with majority Democrats.

Further complicating the issue? According to Assembly Ways and Means Committee Chair Maggie Carlton, D-Las Vegas, refunding the $5 million will actually cost $8.3 million.

“We have a $5 million problem, with the refund, and it’s going to cost us $8.3 million to refund it,” Carlton said. “So we have to figure out how to do this the best way.”

Two other bills would return the cash, using money drawn from state highway funds, but Carlton says getting two-thirds to keep the money already collected and continuing the fee is a sensible approach.

“Myself, retroactively, I believe if we got the two-thirds vote on that I think it makes perfect sense, it’s kind of a little bit of a do-over, let’s go back and do it again,” she said. “But if the vote isn’t there, we’ve got to figure out another way to do it. We have a responsibility, we have to fulfill it. We just don’t want to spend more money on complying than the actual problem. We just want to make sure we do this the right way.”

The fee is $1 per transaction conducted with the DMV, so refunds to regular people would likely be small. “I have not had one person complain to me about paying a $1 technology fee,” Carlton said.

Even if the DMV didn’t send refund checks, and decided to give drivers a credit on the fee going forward, it would ironically require some computer programming on a system that the fee was intended to upgrade. “Any time you do programming at DMV it is a long, dark, scary road,” Carlton said.

Almost as long, dark and scary as the road to two-thirds.

And if the state decides to go with refunds, it may have to contend with separate constitutional questions.

Assembly Bill 490 would take money from the state highway fund to pay for refunds for the improperly collected fees. And Assembly Bill 491 would both extend the fee to 2026 (assuming it could get a two-thirds vote) while also using highway funds to make refunds.

But Article 9, Section 5 of the state constitution says license and registration fees “and other charge with respect to the operating of any motor vehicle upon any public highway in this State … (must) be used exclusively for the construction, maintenance, and repair of the public highways of this State.” That language is repeated in the Nevada Revised Statutes.

There are some in the Legislature who want the money refunded, even at a higher cost to the state, as a mea culpa from Nevada for passing and collecting a tax that was ultimately declared unconstitutional. But it’s also worth considering that improving the DMV’s technology would benefit everybody, far more than getting a refund that probably wouldn’t cover the cost of a Double-Double at In-N-Out.

With lawmakers doing the fee right — reaching for the two-thirds supermajority they should have obtained in the first place — this may be a good time for a do-over.

Contact Steve Sebelius at SSebelius@reviewjournal.com. Follow @SteveSebelius on Twitter.