Capitol Alert: Legislature seeking to halt DMV notices to buy time on budget

Updated at 3:40 p.m. to include Department of Finance comments.

To buy negotiating time for Gov. Jerry Brown's tax extensions, lawmakers are seeking to halt Department of Motor Vehicles notices for drivers whose vehicle registration expires in July and later.

Under current law, DMV must send notices at least 60 days before a renewal due date. That means the department is required to notify motorists by May 2 if their vehicle registrations are up for renewal on July 1.

Because lawmakers haven't agreed to extend the 2009 vehicle license fee increase, drivers are poised to receive a 0.5 percentage point reduction in their VLF starting July 1. The fee is currently a 1.15 percent tax on the estimated value of a vehicle. On a $15,000 car, the difference in rates would be $75.

Democrats still hope to persuade Republicans to extend the higher VLF rate beyond June. But they don't want drivers to receive renewal notices quoting lower VLF rates now, only to have DMV ask them for more money later this year. That would frustrate drivers and likely undermine support for Brown's tax plan.

So the Assembly approved a bill Thursday that directs DMV to delay sending renewal notices starting with drivers whose registrations are due July 1. That buys at least another month of time for Democrats to negotiate with Republicans on maintaining higher VLF rates. Democrats say the money is needed to avoid deep cuts in local law enforcement programs.

"This just avoids a lot of confusion and allows us to keep the option open of extending the status quo," said Assemblyman Bob Blumenfield, D-Woodland Hills, chairman of the Assembly Budget Committee.

Brown's Department of Finance pushed for the change, according to Finance spokesman H.D. Palmer. The bill does not specify when DMV should send out notices; Palmer said it allows the department to wait until July 1 if need be. If there is no agreement to extend taxes by that date, the VLF rate would return to the lower 0.65 percent of vehicle value.

The proposal, Senate Bill 94, also gives drivers an extra month to pay their registration fees -- up to one month after their current registration has lapsed. That means drivers whose registration is due July 1 wouldn't have to pay until Aug. 1. The state would notify law enforcement officials not to pull over motorists with a July 2010-issued registration sticker.

Bad news for drivers thinking of running down to their local DMV offices to pay the reduced VLF. DMV will not accept their renewals this early, and the bill actually prevents DMV from collecting July 2011 registration fees until the department sends out its notices, Palmer said.

The maneuver shows how complicated the tax extension path has become after Brown's original June election failed to materialize. Absent the bill, Blumenfield acknowledged that drivers would likely see a DMV follow-up notice asking for more money as a tax increase.

"Politically, extensions are much more palatable than increases," Blumenfield said. "If you send out notices again, you're framing it in some people's minds as an increase even though it would technically be an extension."

Blumenfield said the bill gives DMV leeway to wait until the June 15 constitutional deadline to send out notices to drivers with July 1 renewals.

The Senate plans to consider the bill Monday, where it is expected to pass. The Assembly approved the measure on a party-line 50-21 vote. Even though the bill is an urgency and fiscal measure, Democrats were able to approve it using Proposition 25 majority-vote powers because it was drafted as an attachment to the 2010-11 budget.

PHOTO CREDIT: A customer waits in at the Department of Motor Vehicles office in south Sacramento on Aug. 17, 2006. Sacramento Bee file/ Randall Benton