New Problems for the Old Dominion: VA DMV Must Shift Money or Make Cuts

By: Ryan Gallagher June 23, 2017
Virginia's DMV is running up a multi-million dollar deficit, and lawmakers there need to decide how to handle it.
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Virginia drivers could be faced with a very different DMV experience in the coming months and years.

The Virginia Department of Motor Vehicles (DMV) is up against a $13.4 million budget deficit that could increase to $93 million through 2022—and as of this writing, a plan to fight this deficit is not yet in place. The solution, when it arrives, could mean higher prices for drivers, or a scaled-back VA DMV.

The problem occurred slowly over time and for a variety of reasons, said DMV Commissioner Richard Holcomb.

“The salary increase, benefits, retirement and healthcare increases, elevated IT costs, increased usage of credit cards, and costs associated with compliance with standards set by the banking industry” all weighed on the stressed DMV budget, Holcomb explained.

The issue cannot be solved solely from within the Department unless it was to cut current and new jobs, and/or DMV branches. Instead, Department leaders are asking and planning for some type of legislative action.

Virginia DMV officials met with legislators earlier this month to talk budget options. Commissioner Holcomb brought a few choices to the table, including proposing higher fees for vehicle registration, titling, and driver licensing.

Current DMV fees were established in the 1980s and have never adjusted for today’s inflation rates, the commissioner said. “That $4 [registration fee] would be closer to $9,” he explained, “and the [$10] title fee would be closer to $22.” When calculated, an increase in the titling fee could raise about $26 million, while an increase in the driver’s license fee could raise about $21 million.

Holcomb also suggested another option that would allow the DMV to keep more of the money it makes. As a state-run organization, some of the funds the Department generates go to other state agencies. Holcomb asked that the DMV be able to keep more of its earned transportation taxes. However, he admitted this plan would be a “tough sale” for legislators due to a 2013 tax package that implemented higher sales and titling taxes.

If all else fails, the Virginia DMV’s only other option would be to cut from within, with Holcomb affirming that “the only places to make the cuts are people or offices.”

That choice didn’t sit well with some legislators. State Senator Janet Howell (D-Reston) called it a “regression” of greatly-valued customer services, and encouraged more funding for the Department rather than risking severe inconvenience to and anger from Virginia constituents.

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