Texas drivers will see their vehicle registration renewal fees increase beginning Jan. 1 as the Texas Department of Motor Vehicles board approved an additional $4.75 processing and handling fee June 27.

Board members said the new fee will bring about increased transparency for taxpayers by displaying the true cost the government bears in providing registration services to the public. Additionally, the entirety of the vehicle registration fee will be credited to the State Highway Fund, which provides additional funding for highway projects.

A Texan who registers in person at the county tax office—about 64 percent of car owners—will now see their state payment increase from $51.75 to $55.50. Those who register online—about 18 percent of Texans—will see it drop from $54.75 to $54.50. Those who mail in their registration will see their payment increase from $52.75 to $55.50.

While the new processing fee will be applied to each form of payment, it will be replacing some of the handling fees currently used at local tax offices, which is why there is not a flat increase of $4.75 for each payment, said Adam Shaivitz, public information officer for TxDMV.

Texans also pay additional fees on top of that for county roads and bridges when they register. Drivers in Harris County pay an additional $11.50 in fees, and $10 in Montgomery County. These fees will remain in place.

TxDMV had initially wanted a $5 processing and handling fee to cover its budget gap—estimated at $70 million in the biennium that starts in 2018. But the DMV found a few million dollars more in its budget, which Gov. Greg Abbott’s office encouraged be used to lower the fee.

In a rules proposal update, the TxDMV board said, “The TxDMV’s staff recommendation to lower the processing and handling fee to $4.75 aligns with Gov. Greg Abbott’s commitment to the fiscal responsibilities of state government.”

Effects at county level

After the rule was proposed April 7, the agency received comments from tax assessor collectors, public officials, legislators, businesses, associations and individuals. Most of the comments opposed the setting of the processing and handling fee as it will reduce the amount of revenue the counties will receive from registration renewals.

In the first year with the new fee structure, Harris County is expected to lose about $1.7 million in revenue, and Harris County drivers will pay close to a collective $20 million more annually in fees, according to Mike Sullivan, Harris County tax assessor/collector. Montgomery County is expected to lose $130,000 in the first year, Montgomery County Tax Assessor/Collector Tammy McRae said. That number is only expected to increase year after year. 

“The DMV has predicted a 2 percent increase in population in Montgomery County for next year and 10 percent shift in online registration each year, so of course that number continues to grow,” she said. “It grows because of the population increase and that 10 percent increase in online renewal [which reduce the county contribution from the DMV]. The larger the county, the greater the impact.”

McRae said although the online fee is decreasing for drivers, the amount of money allocated for county revenue online will also be decreasing from $1.90 to $0.25 cents per vehicle.

Sullivan said previously, when a driver renewed his or her registration online, the new sticker would be printed at a local Harris County office and mailed to the driver. Under the new process, the sticker will be printed by Xerox and mailed from their warehouses.

“The TxDMV increase will affect every single motorist in Harris County. It doesn’t matter if it’s a motorcycle, a personal vehicle or delivery truck,” he said. “And keep in mind, Harris County is home to a very large number of companies that deliver goods. So while on the surface someone might say, ‘Well, it’s only [$4.75] a year,’ it’s [$4.75] a year to a whole lot of companies [with multiple cars] and a whole lot of individuals.”

TxDMV’s proposal states the processing and handling fee would allow $50.75 of the fee to be dedicated to the State Highway Fund, which would result in an additional $47 million or more annually to the fund.

“That’s a good thing—we’re all in favor of more infrastructure in Texas,” Sullivan said. “But they’re taking money out of Harris County.”

Sullivan said his office has been preparing for the loss in revenue and operates with a $1 million surplus. However, the full effects of the change will not be seen until a year following the new fee structure. 

“I’m always looking for ways to improve our efficiencies,” he said. “We’ll be doing more with less, which is not always a bad thing. We’ll reassign personnel where we can and if it results in a loss of positions, we’ll know that next budget year.”

McRae said her office has begun work on a budget for the next fiscal year and is still searching for solutions to make up for the loss in revenue.

“We want to be good partners with DMV, but the counties are certainly taking a hit,” she said.