Utah governments are losing $7.3 million a year because motorists aren't registering their cars and trucks in accordance with the law, a new legislative audit shows.
The Legislative Audit Committee was to meet Monday to hear that $4.5 million of the money is in unregistered cars and trucks and $2.8 million is in lost registrations and taxes by Utahns who register their vehicles in other states.
For years, Utah has lost out on vehicle registration fees in both categories, said Legislative Auditor General Wayne Welsh.
Idaho, Oregon and Washington do not have property taxes or like fees on their vehicles and so some Utahns register their cars in those states to avoid Utah taxes.
"Registration compliance can, however, be improved with minor cosmetic license plate changes, increased enforcement and increased penalties and fines for noncompliance," wrote audit staffers Tim Osterstock, Maria Stahla and Aaron Eliason.
A recent change in how Utah taxes cars and trucks is helping.
Utah used to place a yearly ad valorem (market value) property tax on cars and trucks. New, expensive vehicles were taxed at $600 or more a year. Someone who had a business or vacation home in another state may have registered their primary vehicles there in an effort to avoid Utah's higher vehicle taxing system.
In 1998, Utah lawmakers approved a fee-based-on-age system. Regardless of the vehicle's fair market value, a set fee based on the age of the car is imposed — with a top fee of $150. Yearly registration is $24.50 per vehicle.
That new system, the auditors said, makes it less attractive for owners of new, expensive cars to register them in states that used to have a much smaller yearly vehicle registration fee or tax or no tax at all.
"Motor vehicle registration evasion is not unique to Utah; it is a national problem," the audit said. A number of states are going to the flat-base fee system to discourage vehicle registration shopping.
Even though Utah governments are losing money, only around 3.8 percent of Utah cars are not properly registered at all or are not registered properly, which is a good rate, the auditors found. That number is significantly lower than what the Utah Highway Patrol estimates — around 11 percent based on actual stops and registration citations.
But the auditors did a random check and came up with the lower number, mainly because UHP troopers may be stopping drivers who have other problems as well or multiple registration citations.
Auditors estimate around 172,000 vehicles in Utah are either not registered at all or are illegally registered out of state.
Legislators and Department of Motor Vehicle officials have been lobbied over the past several years to implement a mandatory "relicensing" policy. In one swoop, every car and truck would get a new plate and law officers could more easily catch drivers whose cars had the old plates.
But such an automatic relicensing system would cost the state $8 million in new equipment and, at most, the state would get only $4.5 million in recouped registration revenues. The last time Utah had a complete relicensing — when every car and truck owner had to get new plates — was 1973.
Such a change is not cost-effective, the auditors said, and shouldn't be done, especially in light of inconvenience to car and truck owners.
The firms lobbying lawmakers for that change make the replating equipment or the reflecting material used on new plates, auditors said.
However, other changes can be made.
The Legislature should pass a law prohibiting a vehicle-to-vehicle license plate swap for plates that aren't being used any more, auditors were to recommend to the legislative leaders who make up the audit committee.
The use of county identification stickers should be stopped. Lawmakers should review fines and penalties for late renewals and change state law to require proof of purchase when paying fines for late registrations. Utah's fine is only $40 and up to the court's discretion if even imposed. Surrounding states have fines as low as $45 up to $171 for unregistered cars.
It's tougher to catch Utahns who register their cars and trucks in another state when they should be registered here, the auditors said.
Mainly that's a resource and time issue. Most of the time, they said, out-of-state registrations are appropriate and legal, making routine out-of-state stops effective for law officers and a pain for visitors driving here.
The state is currently in a budget crunch — the current fiscal year will see a $177 million shortfall. For the past several years, the state has been pouring general tax revenues into the Centennial Highway Fund for freeway reconstruction. Last fiscal year, vehicle registration fees put $26 million into roads and $17.3 million into the Centennial Highway Fund. So getting the registration deadbeats to pay up means some real savings, auditors said.
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