Wednesday, August 28, 2013

Lege committee looking to tweak Drivers Responsibility Program; incentive program about to gear up

The Texas House Homeland Security and Public Safety Committee plans to draft legislation during the interim to reform, but likely not eliminate, the Driver Responsibility Surcharge - at least unless somebody finds a source to supplant the revenue generated by the program. Go here to watch Monday's hearing online, with the portion on surcharges beginning at the 1:37:15 mark.

Rebekah Hibbs, who runs the program for DPS, told the committee a new "incentive" program for drivers between 125% and 300% of federal poverty levels will come online by the first of October, joining a more generous indigency program created in 2010. Drivers who qualify can have their surcharges reduced by 50% and pay the amount in a lump sum or over a six month stretch. (Those who qualify for the indigence program can have them reduced even more.)

Only four states have similar programs and none are very successful, said committee Chairman Joe Pickett, who appears to have been delving into the weeds on the topic. Since the Driver Responsibility Program's implementation in 2003, the state has assessed $3.2 billion in surcharges but only received about $1.2 billion in payments. That $2 billion in unpaid surcharges has caused a couple of million drivers to lose their licenses, with more than 1.2 million of them still suspended as of this week. Because most of these are working people who need their car to drive, Williamson County Justice of the Peace Edna Staudt told the committee, they usually continue to drive anyway.

Staudt and Hibbs disputed whether DPS will allow those folks to get an occupational license. Hibbs insisted it was legal but Judge Staudt said as a practical matter "they won't do it." A committee member who was an attorney (couldn't tell who from the video) said his firm charges $2,500 to secure an occupational license, so that's probably not a realistic option for low-income folks, anyway.

These surcharges are issued for accruing too many points from moving violations, driving without insurance, driving with a suspended license, and DWI, but the driver of such enormous numbers are tickets for no insurance. This can create a vicious cycle: People can't afford insurance and get ticketed. They pay the ticket but can't afford the surcharge so their license is suspended, anyway. Because they must get to work, they keep driving, then if they're stopped again they get more surcharges for both the insurance offense and driving with a suspended license.

By then, even if they pay the surcharges their license is still suspended for at least a year, giving them little incentive to pay up. To get their license reinstated they must pay even more fees - between $100 and $425, the committee was told. No wonder nearly 2/3 of surcharges go unpaid.

In response to questioning, Hibbs told the committee that these surcharges could be eliminated through Chapter 13 bankruptcies but not Chapter 7. Rep. Dan Flynn pointed out the oddity of that situation: Chapter 13 is a reorganization of debt while typically Chapter 7 is more sweeping. But Hibbs said a case styled Holder v. State of Texas (a driver named Holder, not the US Attorney General) found that the surcharges were essentially similar to a criminal punishment and therefore couldn't be vacated. That's bizarre considering these are explicitly civil surcharges over and above any criminal penalties, but that was the ruling.

Judge Staudt argued for abolishing the program entirely and going back to punishing these offenses exclusively through the court system. "It's an unjust program," she told the committee. Texas is "creating a debtors prison," she said, lamenting that there's "no due process" in the application of surcharges.

Chairman Pickett asked Staudt how to replace the trauma care funding and she suggested it would be better to do it through court fees, which are presently $95 on most traffic tickets, she told the committee. Pickett said there was "no way" the Lege would eliminate the program without an alternative funding source but Staudt replied, "I beg you to look at the fact that you're going to have to put the need for the money aside." Right now, she pointed out, the "state gets money from the program but the counties, the courts, and the people are paying the price." The overall cost to the locals, she said, was greater than the benefit to the state.

Grits should also mention a report from the state auditor issued earlier this year on the contract with Municipal Services Bureau to run collections for the surcharge program. The report criticized DPS for two significant errors: Failing to run the contract by the Legislative Budget Board before approval and failure to notify competing bidders of changes to the RFP. That gave MSB the upper hand because competitors didn't know to update their bid applications in light of additional requirements. The audit was not discussed at Monday's hearing but Hibbs told the committee the contract will be up for re-bid in late 2014.

The audit also revealed that MSB is raking in more money than just the 4% commission that's been previously disclosed, charging debit and credit card fees as well as an extra fee for each payment in an installment plan. According to the audit, "For example, an individual convicted of driving while intoxicated will be assessed a surcharge of $1,000 per year for three years. If the individual uses a credit card to make monthly installment payments over three years, that individual would pay a toal of $3,286.50: $120 in service fees, $76.50 in credit card fees (unless prohibited by law), $90 in installment fees, and the $3,000 surcharge." By those figures, MSB would be charging drivers an additional 5.5% on top of their 4% commission if they used a credit card to pay in installments. In all the years Grits has been working on this issue, that's the first I've heard of those extra costs.

Rep. Dan Flynn said the committee is looking more seriously at revamping the program than ever before and that appears to be the case. If one were to judge by suggestions from Hibbs and Staudt at the hearing, we could see them eliminate or scale back mandatory drivers license suspensions and perhaps explicitly change the law to allow surcharges to be discharged through bankruptcy proceedings. They could also streamline the occupational license program so you don't have to pay a lawyer $2,500 to get one. (Hibbs said she'd sent three pages of reform suggestions to Pickett, but when Grits requested the document from DPS their public information office wouldn't give it to me and said to file an open records request. I did; more on that later, hopefully.)

Really, though, Judge Staudt nailed it: This is a bad, "unjust" program that should be flat-out eliminated. If the state wants to subsidize trauma hospitals (despite all the Ted Cruz rhetoric hailing the benefits of market forces in healthcare), they should do it with general revenue dollars. The state hasn't even been paying hospitals the full amount, instead using DRP funds to "certify" the budget instead of doling out the full sums. Punish traffic offenses through the courts: At the end of the day, the DRP surcharge is and always has been just a tax by another name.

Pickett said he expected this issue to be among the committee's interim charges when they're finally released, meaning they'd likely have at least one more hearing on the topic before the 84th session convenes in 2015. However, he said he hoped to have a first draft of possible reform legislation put together by the end of the year.

See prior, related Grits posts:


Anonymous said...

They are tweaking when they ought to be tweaking.

Anonymous said...

Tweaking when they should be TWERKING.

An idea this bad could only come from government. Kill the whole program gentlemen.

Anonymous said...

Has anyone challenged this in court on double jeopardy grounds? Or treating out fo state drivers differently? Or filed a writ? That's the answer IMHO.

Lee said...

Scott the status of the surcharges being either criminal or civil could be a double edged sword for the state. If they are recognized as criminal penalties then a defendant might have a claim on double jeopardy. The traffic court set a punishment and case should be closed. Instead the TXDPS goes and levels another separate punishment against the defendant. Thoughts......?

Owing the state money is a crime. We should level surcharges and handcuff on the state the next time they are delinquent in paying.

Anonymous said...

$2500 for an occupational license is completely excessive and ridiculous. I've never charged more than $1000. There's no justification for such an expense, even assuming you need a hearing, which in 90% of the cases, is unnecessary.

Anonymous said...

GFB, has anyone checked the campaign contributions that MSB has made to the politicians who sponsored and co-sponsored this ridiculous piece of legislation?

Unknown said...

I wanted to post this to FaceBook but the text under the story link showed "They are tweaking when they ought to be tweaking" which I figured would turn off any interest in seeing the actual story. Strange, just thought you might want to know.

Hillsboro, TX