This proposal is one of ten winning reports from the 1996 Oregon Better Government Competition. The 1994 and 1996 Competitions were organized by the Portland-based Cascade Policy Institute. Opinions expressed are those of the author(s) and not necessarily those of Cascade staff or advisors, nor should they be construed as an attempt by Cascade Policy Institute to influence any election or legislation.

Privatize the Oregon DMV
by Patrick A. Hazel
Roseburg, Oregon

Executive Summary
Most functions of Oregon Driver and Motor Vehicle Services should be transferred to the private sector. To start, the licensing of drivers, vehicle registration, and issuing license plates and tags should become the immediate responsibility of automobile associations, co-operatives, insurance companies and vehicle manufacturers, and other private for-profit and nonprofit organizations.

Oregon can build upon the example set by Ohio. For nearly a decade, the Ohio Bureau of Motor Vehicles has allowed private "franchises" to offer virtually all services that the government-run offices do. A strong incentive to provide excellent customer service exists: Each private franchise earns its revenue from a percentage of the transactions completed at its office.

More importantly, Oregon should transfer the DMV's responsibilities to the private sector for a most fundamental reason: Accountability. Though Oregon DMV "licenses only qualified persons and vehicles," it isn't legally accountable when it licenses unsafe drivers or vehicles. Private organizations would be. Further, competition for customers would spur innovation in service delivery, and significantly reduce the cost of unproductive time spent waiting in line.

Oregon taxpayers and DMV consumers could expect significant savings from this transfer. Given only partial privatization and conservative savings projections, the author estimates $68 million could be saved from the DMV budget each biennium. Additionally, savings could reach $86 million per biennium by outsourcing some functions of the central office. These numbers represent a 55 to 67 percent total cost reduction. These savings can be passed along to consumers by reducing DMV service fees by 14 to 17 percent. The figures given are revenue neutral; the reductions can be made without affecting net revenue or funds dedicated to highway maintenance or safety programs.

Imagine this scenario: You open your mail at home and find an advertisement from Quick Register describing that company's hassle-free car registration service. An enclosed coupon offers you 20% off Quick Register's already low prices, plus 20% off your license plate tags when they expire next, and a free drivers license renewal. Better still, all of those are free if you purchase Quick Register's favorably priced auto insurance.

This proposal will describe the flaws inherent in Driver and Motor Vehicle Services of Oregon, why improvements in service and efficiency are slow to occur, and why, no matter how many improvements are made, a serious structural problem will remain, that will hinder, if not block, the attainment of better drivers and safer roads. Finally, this proposal will demonstrate how transferring DMV responsibilities to private organizations and allowing Oregon drivers to act more like customers will correct those deficiencies. As this proposal will demonstrate the scenario described above can become a reality in short order, to the benefit of both the driving public and taxpayers.

For the purposes of this proposal, the terms "bundle", "package", or "services" encompass vehicle registration, drivers licenses, license plates, vehicle tags, title transfers and voter registration together or in some combination. Other DMV functions lie beyond the scope of this paper and are not discussed in detail. The word "provider" is used to describe organizations that will eventually offer DMV-type services.

Finally, individuals who patronize the DMV will be referred to as "consumers". A person who frequents the DMV is not a "customer" for two reasons. First, customers have the freedom to buy or not buy any given good or service. By law, a person must purchase the DMV's services if they want to drive on public roads. Second, customers have the opportunity to buy from an array of providers. Currently there is but one monopoly provider of such services in Oregon, by law: The government. Nonetheless, the partial privatization advocated here would allow DMV consumers to act more like customers because they would be able to at least choose the organization with which they will do business.

The Problem Defined

The Role of Oregon Government
We must start with the most fundamental question: What is the proper role of government in Oregon? "Reinvent government" advocates neglect this question and rush headlong into trying to "improve" public programs. It isn't enough to say a government-owned and operated DMV should be run more efficiently; the first order of business is to ask, "Should government be doing this?"

For the purpose of this paper the author assumes the following premise: Helping to ensure that only safe drivers and vehicles operate on public roads falls within the government's responsibility.[1] However, by accepting that premise it does not automatically follow that government should be involved beyond the point of setting the minimum standards for achieving that goal. Unfortunately, governments go beyond setting minimum standards: Governments too often wrongly undertake activities that can--and should--be left to private for-profit and nonprofit organizations. Such is true of the DMV; the private sector is quite capable of performing virtually all of its functions, which are, stripped to their essentials, fee collecting and record keeping.

The Built-In Problem
Why are drivers dissatisfied with the DMV? Why do $75 million-and-rising computer cost-overruns occur? Many blame DMV employees. That blame is, in a sense, misplaced. More accurately, the DMV's problems are systemic, they are built-in to its government granted monopoly status.[2]

To illustrate, put the world's best driver in a race car with a blown engine. That race car will not run better. Likewise, if all DMV employees were MENSA members we would still witness many of the same organizational deficiencies. The problem is the system itself. Therefore, a major systemic change is necessary at DMV, not simply more changing of drivers. Until that systemic change is made Oregon taxpayers and DMV consumers can expect more of the same problems.

DMV: A Government-Owned, Operated, and Protected Monopoly
The DMV is a government-owned, operated, and protected monopoly. That is a major cause, if not the primary cause, of its problems. Oregonians who must get a drivers license, register a vehicle, or purchase plates have no where else to go. They may leave one DMV office and go to another, but that is a difference in degree, not a difference in kind. The fact is: All DMV branches are part of the same government-owned, operated, and protected monopoly.[3]

In short, consumer choice is illegal: Competition has been outlawed. With a guaranteed customer base, and therefore a guaranteed revenue stream, no real incentive exists for the DMV to reduce its expenses, become more efficient, plan or spend its money wisely, or improve service delivery.

Moreover, there are no penalties for mistakes or bad judgement--unless bad press is considered a penalty. As happened after the computer cost overruns came to light, the DMV can ask the legislature and Oregon Department of Transportation (ODOT) to increase its funding. Taxpayers are trapped: They can't stop paying taxes without serious consequences. Or, the DMV can go to the legislature and get permission to raise its fees. Drivers are trapped: Where else can you get a drivers license? Taxpayers and drivers are stuck with the DMV.

Lack of a Feedback Loop
If a charity squanders its voluntary contributions, donors can quit giving.[4] If a private company makes a costly mistake, offers poor service or products, customers can go elsewhere.[5 ] The withdrawal of support provides important information by completing the supply/demand feedback loop.[6 ] The monopolistic DMV by law does not have the benefit of such feedback, nor does it need that feedback; taxpayer and drivers are trapped.

For better service at the lowest possible cost, the legislature should act to restore the feedback loop. This will be accomplished by allowing competing private organizations to determine how, when, and where they will provide DMV services thereby allowing consumers to act more like customers.

Transfer Service Delivery to Private Organizations

Creating Customers
The driving public must be permitted to act more like customers, individuals who can take their business elsewhere when they aren't pleased. Simply opening the system to competition will allow that to happen.

To better understand the benefits of competition, think about restaurants. They must continually adjust their hours, prices, and menu fare to draw customers and stay in business. Many are open 24 hours a day, 7 days a week, 365 days a year. Restaurants are everywhere, and together they offer an international variety of cuisine. Some provide coupons to lower the cost of their meals. Some deliver to your door. Compare that to how the monopolistic DMV serves the driving public.

Accountability: the DMV's Missing Link
Some may say that the DMV can improve without permitting competition to play a bigger role in service delivery. That's true, but assuming even the best improvements, two serious deficiencies will remain.

First, the DMV lacks incentive to remove uninsured drivers from the road. Insurance companies are currently required by law (ORS 742.580) to report all policy cancellations to the DMV. However, the DMV does nothing with this information. Private organizations will have legal and financial incentives to use this information to help remove uninsured vehicles or unqualified drivers from the road.

The second deficiency points to the core problem: The lack of accountability will remain even if the DMV improves. Accountability is the most important reason for transferring the stated services to private organizations. Though the Oregon DMV "licenses only qualified persons and vehicles"[7] it isn't legally accountable for licensing unsafe drivers or vehicles. Mere internal tinkering will not change this fact. Greater accountability will exist only when responsibility for DMV services is transferred to the private sector.

What if the DMV assumed greater accountability? It's possible that the DMV could assume greater accountability, but that begs the question: If the DMV has had the opportunity to be more accountable, why hasn't it? Even if it attempted to be more accountable, a major problem would still remain. In the event of an accident, if the DMV was more accountable and was found delinquent in its responsibilities, who would ultimately bear the brunt of the penalty? Taxpayers and drivers.

Thus, even if the DMV is held legally accountable for allowing unsafe drivers and vehicles on the road, the problem of "consumers" versus "customers" remains. Taxpayers cannot withdraw their support of the DMV by not paying taxes; the penalty is jail. DMV service consumers cannot switch to lower cost competitors; there are no competitors to go to. Hence, trapped taxpayers and service consumers would still continue to shoulder financial burdens.

When private organizations provide DMV services, the stockholders, customers, and members will pay for bad decisions. They will pay in the form of higher prices, and lower dividends--but, they will have the option that current taxpayers and drivers don't: They could withdraw their support without penalty. Customers could take their business elsewhere, stockholders could sell their stock and invest in other, more responsible companies, and members of driving co-operatives could join another group.

Accountability does not really exist where government provides services. This is a critical point: The DMV is not fully responsible for licensing unsafe drivers or vehicles. While drivers and vehicles in Oregon must be licensed by law, there is no incentive for the DMV to seek out those individuals who are driving illegally. In a private system, the issuing organization is responsible for assuring that its licenses are given only to qualified persons. Any negligence on the part of the organization could be redressed in a court of law. Whereas a private company would be liable for licensing unsafe drivers or vehicles, the Oregon DMV is insulated from responsibility for such actions, and from the negative repercussions that may result.

Working Models: Ohio and North Dakota

Ohio
Ohio provides a working example upon which Oregon can build. For nearly a decade, the Ohio Bureau of Motor Vehicles has allowed private "franchises" to offer virtually all services that government-run offices once did. Private for-profit businesses, and nonprofit groups such as the American Automobile Association, issue new drivers licenses, license renewals, commercial and non-commercial truck certification, vehicle registration, ID cards, register voters, and more.

More than 200 privately run offices operate in Ohio. A strong incentive for providing excellent service exists as each private franchise earns its revenue from a percentage of the transactions completed at its office.

For law enforcement purposes, all private registrar bureau computers are linked together with the state's system, so records are up-to-date and accessible by authorized personnel. If hard copies are needed as evidence in court, officials can subpoena the registrar bureau to produce the documents.[8] To protect the right to privacy, the registrar bureaus are prohibited from selling or distributing information themselves.[9]

Just how well are the registrar bureaus working in Ohio? Very well. In a 1995 survey spanning 11 months, covering 6,725 customers who did business with them, the overall customer service ranking was 98%.[10]

The Ohio model is one that Oregon should embrace; however, that system can be greatly improved. Though Ohio has introduced an element of competition to its system, it is greatly limited because each bureau has an exclusive franchise over a given geographical area. Further there is no price competition; the Ohio government determines the fees the franchises can charge.

Oregon should take the process one step further. That step is to permit more competition at all levels, in all areas. Specifically, allow open entry and permit service providers to determine their own price structure and service packages.

North Dakota
North Dakota offers another example of what the private sector can and should do. "North Dakota's motor vehicle registration process is privatized. [The private branch offices] receive no financial support from the State government. They charge a fee above and beyond what is due the state. Out of that fee they pay for their staff, facility overhead, etc. The state supplies all materials."[11]

According to Mr. Jerry Auch, Branch & Dealer Administrator of the Motor Vehicle Department, North Dakota has operated for more than 30 years in this manner. Thirteen private branch offices operate throughout the state, approximately half are run by local Chambers of Commerce, three are run independently, and the others are operated by insurance companies. The State of North Dakota remains responsible for licensing drivers through a separate government entity.[12]

Private Innovations: Arizona, Oklahoma, California, Alaska, and Kansas

Arizona and Oklahoma
Arizona allows private parties to offer the written and driving skills tests.[13] Oklahoma has contracted tag agents who collect fees and issue registration and titles. Depending on the location, the agent could be a separate tag agency, part of an insurance business, or part of a whole separate business.[14]

California
This past spring California Governor Pete Wilson proposed contracting with private driving schools to administer the state's Department of Motor Vehicle written driving test for first time drivers. Cost savings are estimated at $900,000 over five years. Also being considered is the outsourcing of the state's DMV data entry and microfiche storage. The estimated cost savings would be $5.7 million over five years.[15]

California's DMV has already privatized the issuing of Student Licenses, allowing stipulated driving schools the opportunity to issue them. This has saved the department considerably. In the case of Sears Driving School, the consumer is not charged a fee for the temporary permit provided the consumer enrolls in one of Sears' courses. They provide this service even though the state charges them for materials.[16]

An office manager for Northern and Southern California Sears Driving Schools stated, "We would definitely want to provide drivers licenses, if the DMV were to give us the opportunity."[17]

Alaska and Kansas
Alaska has six commissioned agents that are private companies. These companies handle the workforce and the State pays a commission for each Motor Vehicle Registration transaction. The Kansas motor vehicle agency contracts with a private vendor to "print and mail registration renewal notices. The company can manipulate the data provided by the State to try and match as many owner names, addresses, and so on to optimize the efficiency of the system. This system has reduced Kansas' registration renewal mailings by 25%."[18]

Privatization Studies: Arizona, California, Florida

Arizona
A July 1995 report published by the Phoenix-based Goldwater Institute advocates the transfer of drivers license and vehicle registration responsibilities to insurance companies. In Arizona, the report estimates that underinsured and uninsured drivers cause $100 million in unpaid damages annually.[19] "One overlooked reason for the very high cost of vehicle damages is that issuing licenses to vehicles and drivers is separate from insuring them," maintains John Semmens, a researcher with the Arizona Department of Transportation, and the report's author.[20]

Goldwater Institute executive director Jeffrey L. Flake writes,

By integrating licensing, registration, and insurance, insurance companies and law enforcement agencies can possibly reduce to zero the value of unpaid damages due to the underinsured motorist problem. This will occur because insurers will only license those drivers whom they are willing to fully insure...When automobile registration and driver licensing are left to the companies who are ultimately liable for damages, the result will be that fewer irresponsible drivers will be on the road and underinsured motorists will be much easier to identify and remove from the roads. Moreover, accident victims can recover full damages caused by other drivers.[21]

The driving public and taxpayers would further benefit. Semmens estimates that by privatizing the "registration and driver's license functions [Arizona] could probably reduce public sector spending by about $20 million per year."[22]

California
The Pacific Research Institute in San Francisco published "Privatization Within the [California] DMV" in 1992. The study covers licensing, registration, title maintenance, investigations, and driver safety. The author, Ken Royal, states, "Understanding that the DMV is for the most part a tax collector is important in realizing its potential for privatization and reform. Those arguing against reform may have the legitimate interest of public safety in mind. However, nearly half the DMV's budget...is allocated for the collection of registration fees and sales taxes."[23] (Emphasis added.)

Royal maintains, once in place "the privatization alternatives in this proposal should result in a savings of at least $290 million on a yearly basis. In addition, the sale of real estate and equipment could easily generate a windfall of $550 million; this figure is based on the conservative estimate that three-quarters of the DMV's real estate and property will become unnecessary if the privatization suggestions in this proposal are accepted. Furthermore, the real estate sold will be an ongoing income for the state in terms of property taxes".[24]

Florida
The State of Florida recently contracted with Johnson Controls to study a proposed merger between its Department of State and the Department of Highway Safety and Motor Vehicles (DHSMV). The study highlighted several problem areas, including:

administering the DHSMV costs too much; [consumers] can wait in line for hours at a time to get a drivers license; outdated computer equipment causes frequent delays in service

The study concluded that many of the solutions required to improve that state's DHSMV service "simply cannot be achieved within the current constraints of government. Instead, the study proposes that [Florida] work in partnership with the private sector using the best practices of business. By outsourcing those functions best performed by private industry, and reorganizing those best performed by government, the State of Florida can do more with less." [25]

Johnson Control's Florida study referred positively to the privatization efforts in Ohio. It noted, "Florida scored lower on 'courteousness' than states like Ohio where driver licensing services are privatized." Also, under the heading "Best Practices Survey", the study highlighted that "private 'Deputy Registrars' in Ohio recently scored a 98% 'customer satisfaction' rating."[26]

The Oregon Model: How it Would Work and Why

Accountability and Innovation
Oregon's privately run DMV system would work much in the same way as it presently does, only better, and at less cost. For the sake of simplicity the author embraces the same standards and requirements for the service bundle that are currently enforced through law, rule and regulation.[27]

For Oregonians, the differences between the DMV and private organizations would be manifold in cost and service. The actual services provided would be the same, and consumers would continue to buy auto insurance from the private providers they choose. The State would still determine the size and appearance of licenses and plates, and the State would set the minimum standards a person would need to meet to obtain a driver's license. However, individuals would no longer go to the State of Oregon's DMV, instead they would go to a private for-profit or nonprofit organization to register their vehicle, obtain a drivers license, license plates or tags.

Opportunity to Reduce DMV Fees
Because the Oregon DMV would no longer provide those services, the fees it charges to cover the cost of providing them can be eliminated. It stands to reason, if the Oregon DMV no longer issues drivers licenses, no longer processes the paperwork for them, and so forth, it no longer needs to collect a fee to cover related processing expenses.

Private service providers would earn their revenue from the prices they charge for each transaction, based on their costs to provide the service. Fees would automatically be kept in check by the natural market, just like food prices, so long as the legislature creates a system whereby "ease of entry" to the industry remains the guiding principle. Thus it is highly likely that consumers would experience a decrease in the cost of services. By contracting out services such as account processing and collection, the State could save as much as 30 percent and still remain revenue neutral.[28]

Possible Service Providers
Possible service providers include insurance companies, automobile associations, auto manufacturers and dealerships, driving schools, environmental groups. One can imagine the Sierra Club providing insurance with discounts to persons who bike to work, ride mass transit, participate in carpools, and purchase electric cars, or cars that use renewable resources for fuel. Other organizations would offer the services, either separately or in bundles, like the local phone company offers general service, plus call waiting, call forwarding, and so on.

Natural System of Checks and Balances
Given accountability, a natural system of checks and balances will develop. Scrupulous organizations will cease business activities with those that do not practice quality control, both to maintain reputations and solvency. This checks and balance system can be likened to that which exists between home buyers, mortgage lenders, and insurance companies.[29]

Accountability supports the belief that most providers will offer bundles of services, plus auto insurance, to better know their customers and help limit their legal and financial exposure. In fact, many insurance companies are getting to know their customers better in an effort to improve driver safety and lower costs for everyone.[30]

In addition to providing licenses to drivers who meet the minimal standards, it is likely that organizations, in an effort to contain costs, would offer their clients the opportunity to upgrade their licenses. The upgraded license would require a higher standard of knowledge and proficiency, and would entitle the bearer to substantial discounts on insurance premiums. Private associations are likely to form to evaluate member compliance with their organizational standards, as well as the minimum standards set by the State of Oregon.[31] Consumer groups, Better Business Bureaus, and Chambers of Commerce are other candidates likely to act as watchdogs. A seriously streamlined DMV could exist as a regulatory agency to investigate private organizations that merit attention.

Removing the Uninsured from the Road
Insurers are currently required to report to the DMV, in a timely manner, those policies that have expired, been canceled, opened, or renewed. With privatization, they would also be required to notify the company(ies) that issued the driver his license, registered his car, and issued the license plate. This requirement would help to quickly identify and remove uninsured drivers from the road, and reduce the cost of damages they cause, roughly estimated at $60 million annually in Oregon.[32] Private organizations would be liable for damage caused through negligence, unlike the DMV. Likewise, groups that license drivers would also be required to give notification in the event that they revoke a drivers license. It is easily conceivable that vehicle insurance/drivers license/vehicle registration organizations will develop more advanced and comprehensive information systems to stem losses, and limit their financial liability from damage caused by uninsured drivers.[33]

Related Legal Changes
Driving without a license, or driving a vehicle without insurance, should be made civil instead of a criminal matter. This would be an improvement over the current prosecute-and-possibly-incarcerate model. Additionally it is suggested that police be granted the authority to impound a vehicle, regardless of the driver's relationship to the vehicle, if the driver has an invalid license, or if the vehicle is uninsured. A vehicle would be released to the owner after he has obtained a valid driver's permit/license, paid the accumulated storage fees, and a fine to cover offense-related expenses.[34]

The Transition Period and Process
The Oregon legislature is blessed with a built-in schedule for the transfer of DMV responsibilities to the private sector. It merely has to link the implementation process to the existing renewal cycles of operator permits and vehicle registration. Until all drivers licenses and vehicle registrations are cycled through, renewal notices may be issued by the DMV. The incremental transfer of responsibilities will help ensure orderliness and the ability to iron out wrinkles in the process as they occur. The State should announce that private organizations can begin providing DMV services in one year, and that over a four-year period the field offices would close or transfer to the private sector.

Prior to a person's birthday he will receive a notice from the DMV that his drivers license needs to be renewed. It will state that the driver must renew his license with a private company, not the DMV. The same notification will take place prior to the expiration date of a vehicle's registration. Information about each renewal will be sent immediately to the central data center, which, as it is now, will be accessible by law enforcement agencies.

The process is equally simple for new drivers. They will purchase a drivers license from a private organization after having attained the minimum standards of competency as set by the State of Oregon. Likewise, the licensing organization will forward that information to the central data center. Registering a new car is very much the same; the owner will pursue registration through a private agency and receive his plates from it.

The Next Logical Step: Contracting Out Central Office Functions

After the initial transfer of DMV responsibilities has occurred, the privatization of the DMV's central office functions should be acted upon. As previously stated, the DMV functions largely as a records keeping and fee collecting entity. These functions are performed daily by countless state, national, and international for-profit and nonprofit organizations, among them insurance, phone, and credit card companies. Untold companies exist to do just those very functions. It stands to reason that these companies would eagerly bid on the contract to process the paperwork and collect the fees as currently done by the Oregon DMV. In fact, such outsourcing is already taking place.

In the spring of 1996, Lockheed Martin IMS, a nationally recognized provider of revenue management services to state and local governments, will provide billing, payment processing, collections and customer service functions for New Jersey's DMV's Insurance Surcharge Program. According to a media release announcing its winning bid, IMS cites its success in collections as being "its ability to verify address and telephone information using various databases, including those maintained at the company's own Tarrytown, N.Y. Data Center, which is linked with departments of motor vehicles in 50 states, plus the District of Columbia." The Surcharge Insurance Program "bills approximately 350,000 drivers each year, and has collected an average of 60% of the $150 million to $170 million of total annual billings." Lockheed Martin IMS expects to increase that collection rate percentage.[35]

If Oregon were to adopt similar contracting measures, substantial savings could be realized in addition to the savings arising from privatization. Using a conservative figure, the DMV could cut 30 percent of its operating expenses without affecting funds dedicated to highway maintenance or safety programs.[36]

Likely Private Service Providers

Insurance Companies
Insurance companies are the first logical repository for providing current DMV services; they pay the bills in the event of an accident. For this reason insurance companies have a compelling financial interest in making sure that drivers are competent, and vehicles are registered and safe to operate.[37]

As former Oregon State Senator Rod Johnson points out,

The strongest element [to allowing insurance companies to offer current DMV services] is that there is already an existing institution which can readily take over the functions of the DMV. We don't have to invent or create the insurance industry. We only have to give it new responsibilities and opportunities. With appropriate standards, guidelines, and oversight, it appears likely that the insurance industry can absorb the functions of the DMV.[38]

Auto Dealers
Auto dealerships are another highly likely candidate for offering the full range of DMV services, and more. And, like the insurance industry, auto dealerships already exist. Better still, they presently process much of the paperwork for the registration of vehicles they sell. It can therefore be said that the privatization of DMV services is successfully underway and need only go a few more steps for the transition to be complete. The current three-step collection of relevant information by auto dealers, their forwarding it to the state, and the DMV's entering of said information into its system is highly redundant, and thus inefficient. Reducing those procedures to the point of sale would produce savings across the board. It is further conceivable that other auto manufacturers would follow GM's lead and create insurance subsidiaries that would allow their dealers to offer a full range of driving services.[39]

Other Possible Providers
In addition to insurance companies and auto dealerships other for-profit and nonprofit groups are also capable of providing some or all of the DMV's services for their members, for example: Auto clubs, the American Association for Retired Persons, credit unions, and so forth. Because they too will incur some liability for the competency of drivers and/or vehicle worthiness, there is a strong incentive for them to work cooperatively.

Economies of scale, and the desire to specialize, say, in drivers licenses only, as a shoe store specializes in one main item, will determine when, where, how, and at what price consumers register their vehicles or obtain a driver's license. There should be no unnecessary legal impediments to the types of organizations that can enter the market to deliver DMV services.

Requirements of Private Providers
All private providers registering vehicles or licensing drivers will be required to link their computers to the state system, thereby enabling law enforcement officials to access the necessary information instantaneously, from all reaches of the state and across state lines.[40] This system is already in place. Reasonable standards for how quickly information is to be entered should be developed so that law enforcement officials are assured that the information they receive is up-to-date. To protect civil liberties, specifically the right to privacy, private organizations should be explicitly prohibited from releasing or selling the information they receive from their customers.[41]

Benefits to Consumers, Drivers, and Taxpayers
Transferring the services of licenses, both auto and driver's, and car registration to the private sector would produce numerous benefits to DMV consumers, the driving public, and taxpayers. Among the benefits are: Improved service delivery through innovation; lower costs, in the form of less unproductive time spent waiting in lines, reduced service fees and reduced costs associated with damage caused by uninsured drivers; safer roads; and the development of accountability (legal liability) for allowing unsafe drivers and vehicles on the road.

Concerns could be raised about transferring current DMV responsibilities to private for-profit and nonprofit organizations. Though it is valid to question such a transfer, in the end all of the concerns can be ameliorated. There is no reason to maintain the status quo of poor service delivery, high service delivery costs, lack of accountability, and continuing computer system overruns. Possible questions are covered in the following description of benefits gained from the divestiture of the DMV's responsibilities.

Transferring DMV responsibilities to private organizations
would produce $68 to $86 million in biennial savings.
The elimination of DMV leases, field office expenses, and a reduction in labor costs would produce an estimated savings of at least $68 million per biennium. This can be increased to $86 million per biennium by using private contractors to provide many of the DMV's central Salem office services. These figures represent a savings of 55 to 67 percent of the total DMV budget.[42]

Monies received from asset sales can be used to reduce DMV debt service.
The DMV is currently paying over $7 million in debt service each biennium on field office remodeling and construction. From a sale of fixed assets and property holdings, the author estimates a windfall between $3 million and $7 million. This revenue could be used to reduce the debt service by up to $1 million per biennium.[43]

The transfer would help reduce court costs and enhance the right to a speedy trial.
With insurance and other companies actively involved in helping to remove under- and uninsured drivers from the road, as well as promoting better driving skills of those they service as customers, fewer driving-related court trials would take place. This would reduce the burden placed on court dockets, and increase others' right to a speedy trial. It is conceivable that companies, in the attempt to reduce court-related expenses, would make greater use of arbitration services, which in turn would free-up the system for more serious criminal cases.

Safer roads
Private organizations would be financially motivated to actively seek out those vehicles that lack proper insurance and drivers who have had their license revoked. Private organizations would act quickly to ensure that they will incur no further liability for those drivers and vehicles that they have severed ties with.. Further, they would be motivated to contact one another about said status of each person and vehicle. The DMV doesn't do this now because it lacks the economic incentives to use the information. Thus, taxpayers and consumers must pay for both the DMV's mistakes and the higher insurance premiums that result from the DMV's lack of liability.

Furthermore, even if the Oregon DMV would accept greater liability, such a position would be without substance. Government courts have repeatedly granted state and local governments and their various subsidiaries virtual immunity from lawsuits. Thus, the DMV has authority to act, but no real responsibility for its actions. On the other hand, private organizations, namely insurance companies, currently have major responsibilities, bear great financial exposure, but they do not have full authority. Transferring the DMV's functions to private organizations would marry greater responsibility and authority, as they should be.

The Oregon DMV contributes to making the states roads less safe in several ways. First, a skills test is only required to obtain one's first drivers license; once the first license is obtained, it can be renewed by mail, without a representative of the Oregon DMV even making a visual analysis of a person's ability to drive.

Second, a person seeking to replace a lost license is asked to provide two pieces of identification, their current address, et cetera., and answer three questions: Have you had a change of vision, a loss of limb or any other physical change within the last four years that might affect your driving ability? Have you had a loss of consciousness or physical control or has your ability to drive been impaired within the last two years? Have you had a problem with the use of alcohol or drugs within the last four years to the degree that it has caused a problem? Answer "no" to these three questions and out the door one goes with license in hand. And no accountability is accepted for allowing someone to drive who has lied and poses a safety threat. To attain the safest streets possible private organizations should be allowed to set higher standards and price structures for their customers, as health insurers do for non-smoking clients.

Private organizations will have more incentive to encourage drivers to improve their skills.
Those who offer the current DMV-services will have greater incentive to encourage their clients to obtain higher levels of driving skill proficiency. Some insurance companies are working in that direction.[44] This would be especially true of organizations that offer the complete bundle of services (drivers education, drivers license, auto registration, and license plates) as their liability exposure would be greatest.

Transferring responsibilities to the private sector would lead to job creation.
There will be an increased need in the private sector for persons to do the same activities that Oregon DMV employees perform. The only difference for many qualified DMV employees will be the name of their employer.[45] Natural attrition (retirements and job changes) would further reduce the effects of the transfer, especially if the transfer is phased in over a four-year period.

Employment opportunities will be created in other areas related to driving. More driving schools would open to provide certificates for driving skills. More individuals will be needed to staff these organizations. Further one would expect an increase of jobs at auto dealerships, auto organizations, et cetera, which undertake to provide more driving services.[46]

Moreover, money saved from lower fees and lower taxes is money that will be spent or invested elsewhere in the Oregon economy. This, too, will improve the overall state economy and in the creation of other job opportunities.

If a net job loss does occur in the area of record keeping or fee collecting it will be due to the inefficient way things are currently done; any net job loss in these categories represents previous inefficiencies and waste. Conversely, any net job loss indicates that a better allocation of resources has occurred. With increased efficiencies comes lower prices, or improved service at the same cost.

To ease the transfer, employees at each office should be given the opportunity to purchase their branch office and its assets. This would allow individuals with the most DMV experience the opportunity to become a part of the solution.

Consumers will benefit from service delivery innovations.
In the attempt to lure new customers to its main product--a car or truck--automakers may soon offer driver training courses, free annual driving exams to test competency, insurance complete with discounts for those who successfully pass the annual exam, drivers license renewals, vehicle registration, plates, and tags at a discount, vehicle inspections, and a discount on new automobiles purchased from, the company.

Auto dealerships might rent space on their premises to other organizations where car buyers could purchase insurance, license plates, and renew an expiring drivers license. The proliferation of fast food outlets and mini-banks in supermarkets and convenience stores suggest the evolution of such partnerships.

The cost of protection from uninsured drivers should decrease.
Given the intensified effort to identify and remove uninsured drivers from the roads and highways, damage caused from these persons is expected to decrease. Consequently, the premiums that cover an insured driver from an uninsured one can also be expected to decrease.

Insurance costs in general should go down.
General premiums for safe drivers, driving safe cars, should go down, in addition to the cost of insuring oneself against the uninsured. Justifiably, auto insurance is likely to increase for those who pose a greater risk. To further help lower rates, the author advocates legislators remove arbitrary and capricious obstacles to open entry to providing insurance coverage. Increased choice among service providers could expand, as would choice among options offered. The more competition that exists, the better off insurance consumers will be. The cost of drivers licenses, vehicle registration, license plates and other DMV-related expenses borne by drivers could also be expected to decrease, thereby helping to offset any increases, should they occur, in insurance premiums.

Greater choice would reduce unproductive time spent waiting in line.
Individuals would not tolerate long waits; they would take their business elsewhere. The average wait time at Ohio's private Northfield-Macedonia License Bureau is under 10 minutes.[47] Even during a lunch hour visit to another franchise outside of Columbus, which is slightly larger than Portland, the wait was approximately ten minutes.[48]

According to the Oregon DMV, average wait times in 1995 at the States twenty-five busiest offices were nearly five times longer.[49] At Portland-area offices the average wait was 77 minutes.[50] Even though Oregon DMV state-wide average wait times declined to just under 20 minutes during May 1996, that is still double the wait times at the two private franchises in Ohio.[51]

Consumers would benefit from money saving innovations.
It's conceivable that insurance and/or registration companies would create license plates that remained with a car for its lifetime, or with a driver for his. Such a minor innovation would reduce the number of plates to be printed, thereby saving resources and reducing costs for consumers. (In Germany license plates are specific to the car and the city it's registered in. As long as the car stays registered in the same city, no matter who owns it, it keeps the same plate.[52]) If phone numbers can become portable, license plates should also.

Uninsured drivers are likely to be identified and removed from the road faster.
Based on an informal analysis by Arizona Department of Transportation Researcher John Semmens, perhaps $60 million a year in costs are imposed on Oregonians by uninsured drivers.[53] Privatizing the issuance of vehicle registrations, drivers licenses, and plates would help reduce this amount because organizations that provide plates would have a financial incentive, due to possible liability, to reclaim them from autos that do not have insurance. This action would be backed up by the requirement for insurance companies to report uninsured autos to state law enforcement organizations, and organizations that issue drivers and vehicle licenses, and register vehicles.

DMV service fees could be reduced by 14 to 17 percent.
The legislature could reduce the cost of registering vehicles and issuing drivers licenses because overhead and management costs will be reduced. As private organizations assume DMV functions, DMV expenses will go down; thus, less money will be required to cover those expenses. The author estimates that fees could be reduced from 14 to 17 percent across the board. This would be a revenue neutral reduction.[54]

Oregon government still sets the minimum standards.
This proposal leaves control of drivers and vehicles in the hands of the government; the Oregon government still sets the minimum standards. This proposal only advocates letting the private sector deliver the services according to the minimum standards, as is the case in Ohio and North Dakota. Please refer to "Working Models: Ohio and North Dakota" in this paper. Essentially the DMV serves as a fee collection and record-keeping agency, and these functions are successfully undertaken and completed every day by small and large organizations. In fact, governments across the country are farming out their payrolls to private companies to reduce costs. See "The Next Logical Step: Contracting Out Central Office Functions" in this paper for a similar example

Getting There From Here

Action Points for Legislators
Announce that private organizations will be able to deliver DMV services in one year, and all branch offices will be auctioned, closed, or sold to employees. This will allow the private sector time to develop the infrastructure for a smoother transition.

Direct DMV officials to identify the current minimum standards for private entities to enforce when issuing drivers licenses, vehicle plates, registering autos, offering written and driving tests and so forth.

Develop the legal mechanism enabling private organizations to fulfill the above responsibilities.

Review and remove currents rules, regulations and other legal impediments that hinder, or outright prohibit, organizations from offering vehicle insurance.

Reduce the fees for registering vehicles, drivers licenses, and license plates. The transfer should be revenue neutral. All cost savings should be passed on to consumers.

Principles and Guidelines for Legislation
To ensure the best possible service and consumer benefits, the guiding principle to legislation must be "open entry" to the service delivery market. Moreover, legislation, related rules, and regulations must allow the greatest amount of competition, be it from entrepreneurs or long-established organizations. Increased competition, through open entry, will assist in lowering overall insurance costs and promote greater consumer options.

The right to revoke a driver's license, terminate a vehicle's registration, or cancel a driver's insurance must be upheld. Also, an organization must have the right to physically remove the main identifying feature, the license plate, from a vehicle at the insurer's direction. This will protect the insurance company's right to limit its financial and legal liabilities. Further, allowing the removal of the plate will help law enforcement officials identify which vehicles do not have insurance.

Service consumers, through their patronage, not the law, should determine the number of offices a given company can operate. This will increase job opportunities and foster the entrepreneurial spirit, allowing singular "mom and pop" stores to co-exist alongside major chains with numerous franchises.

Set notification period that all insurers must meet in informing the police and other law enforcement computer systems of uninsured drivers, whether lapsed or canceled.

Require private service providers to link their computers to the central state system, thereby enabling law enforcement officials to access the necessary information instantaneously. Reasonable standards for how soon information is to be entered must be developed so that law enforcement officials are assured that the information they request and receive is up-to-date. To protect civil liberties, namely the right to privacy, private organizations should be explicitly prohibited from releasing or selling the information they receive from their customers.

Conclusion

The problems experienced by Oregon Driver and Motor Vehicle Services are systemic at root. Problems arise from the DMV because of its government-granted monopoly status. Tinkering with its structure will not change that fact. Serious reform must occur at the foundation. Legislators can do taxpayers and DMV consumers a favor during the upcoming session: Transfer the responsibility for licensing drivers, registering automobiles, and issuing license plates to insurance companies, automobile associations, and other private organizations.

Oregon should build upon the working examples offered by Ohio and North Dakota. Privatizing Oregon's DMV would improve service delivery; help reduce damage costs caused by uninsured drivers; establish greater accountability for unsafe drivers and vehicles; and lead to safer roads and highways. This revenue neutral proposal would also reduce the DMV's budget by up to $86 million, and lower driving-related fees by up to 17 percent.

1. If all or some roads were private, the government's role would be greatly reduced. The owners of the roads and highways could set the standards, ranging from age of drivers to the speed limit, for use of their property. For further discussion refer to "Highway Aggravation: The Case for Privatizing the Highways", Peter Samuel, Cato Institute (Washington, DC), Policy Analysis No. 231 (June 27, 1995). See also "Highway Investment Analysis", John Semmens, Senior Planner, Arizona Transportation Research Center, Transportation Planning Division, Arizona Department of Transportation (December 1994).

2. Computer system problems and the lack of punishments meted out to those in charge are not particular to Oregon's DMV monopoly. A six-year Arizona project to develop a new computerized database combining driver's licenses, vehicle registrations, and titles was a complete failure. Arizona's Department of Transportation spent almost $30 million on the project. The final output is described as unusable by ADOT...ADOT is now promising a fresh start with an initial budget of $12 million. Arizona legislative Representative Tom Smith summed up the problem by observing that "in government nobody is ever held accountable." In fact. a couple of the key managers of the failed project have been promoted. "What Went Wrong with the Enterprise? MVD's Computer Woes Never Ending" Arizona Capitol Times, Sept. 29 1995.

3. To make matters worse, "There is considerable confusion about who is in charge." "Report criticizes DMV's lack of communication," The Oregonian (April 2, 1996), p. 1A.

4. In 1992 United Way came under fire for allegedly paying excessive executive salaries. After considerable bad press, and a serious drop in contributions the organization changed its behavior.

5. This will soon be true for consumers of local phone service and electricity.

6. Free to Choose, Milton & Rose Friedman, (New York, Avon Books, 1981), pp. 6-9.

7. The 1995-96 Oregon Bluebook, p. 103.

8. All information collected by the private franchises is sent to the main office in Columbus. Nevertheless, bureaus are required to store records on-site for one- year, and off-premise for two more years. Thus, it is likely that the private franchises can produce the requested documents quicker than the State.

9. Phone conversation with Donna Bender, Co-owner, Northfield-Macedonia License Bureau, Northfield-Macedonia, Ohio, 12 noon (October 9, 1996), T: (216) 468-1155.

10. "How to Merge Florida's Department of State and Highway Safety & Motor Vehicles", A Study for the Secretary of State of Florida by Johnson Controls (February 15, 1996), page 45.

11. Ibid, page 53.

12. Phone interview with Jerry Auch, Branch & Dealer Administrator, North Dakota Motor Vehicle Department (Bismarck), 9:30am on Nov. 26, 1996. T: (701) 328-2725. Keith Kaiser, director of the Division of Motor Vehicles, is another source for details about North Dakota's licensing and registration system.

13. Johnson Controls, op. cit., p. 51.

14. Ibid, p. 52.

15. "Competitive Government: A Plan for Less Bureaucracy, More Results", Calif. Gov. Pete Wilson, April 1996, p. 7.

16. "Privatization Within the Department of Motor Vehicles", Ken Royal, 1992 Published by the Pacific Research Institute (San Francisco, CA), p. 96.

17. Ibid.

18. Johnson Controls, op. cit., pp. 52, 53.

19. "How to Solve Mandatory Auto Insurance," by John Semmens (July 1995), Issue Analysis Report #5 published by the Goldwater Institute (Phoenix, AZ), p. 5.

20. "Why Insurers Should License Drivers," John Semmens, Liberty magazine (January 1996), p. 31.

21. "How to Solve Mandatory Auto Insurance," Semmens, op cit. See also "Solving the Mandatory Insurance Problem", by John Semmens and Jeffrey Flake, Perspective on Public Policy No. 95-3, (March 20, 1995), Goldwater Institute, Phoenix, AZ).

22. Ibid.

23. "Privatization Within the Department of Motor Vehicles", Ken Royal, op. cit., p. 94.

24. Ibid, p. 93.

25. Johnson Controls, op. cit, p. i and ii.

26. Ibid, p. 3.

27. The author welcomes suggestions for improvements in any of these areas.

28. The figure is based on a 1987 national study on privatization of specified services. The study State Government Privatization in America, was conducted by Touche Ross and found that tax bill processing, as a category, could save up to 36 percent and be revenue neutral. A figure of 30 percent was used for this report.

29. Lenders research the potential home purchaser's ability to pay the mortgage, require an appraisal to be sure the home is worth the price being paid, and require insurance in the unfortunate event of damage. The insurance company reviews the house for potential safety hazards and adjusts its premium accordingly. Purchasers, to protect their interests, get insurance and seek an appraisal to be sure that the price they are paying is what the house is worth should they need to sell it.

30. For instance, Farmers Insurance "requires agents to make safe-driving presentations...to all new teen-age drivers and their parents before starting coverage." See "Insurance agents talk tough to teen-age drivers: Companies want the newest motorists to know how serious and costly an accident or ticket is", Elisabeth Dunham, The Oregonian (June 20, 1996), supplementary Metro West section, p. 1.

31. The development of numerous private associations would be beneficial and is to be preferred to the state government establishing a singular board. The main benefit is that competing organizations would oust those members that exercise poor judgement and service practices. Numerous associations would also compete to raise standards and qualifications for the customers that their members accept; obviously private service providers have an incentive to keep their costs and expenses down, and the best way to do so is to have safe-driving customers.

32. John Semmens conversation with Steve Buckstein, President of Cascade Policy Institute, May 1995. A case could be made for eliminating the legal requirement that drivers have vehicle insurance at all. The rationale for this is that insurance companies are guaranteed customers and thus have reduced incentive to watch their expenses. In that sense, present insurance purchasers provide a guaranteed revenue stream just like DMV service consumers.

33. In all cases, electronic and legal methods for protecting civil liberties must be simultaneously developed and employed. Companies could offer bounties or rewards for persons who identify and report the location of uninsured vehicles to the insurance company and/or law enforcement officials.

The insuring company could either remove the plates from the vehicle itself, making it easily identifiable to law enforcement authorities, or contract with another organization to remove the plates, which is likely in the event that the vehicle is out-of-state, or not near any of the insurance company's branch offices.

As electronic toll roads become more common, technological means of identifying uninsured vehicles will be employed. Devices could be posted along non-toll roads to do the same. Or, insurance companies could require their customers, as a contractual condition, to keep a transponder device in their vehicles, which could be activated in the event of insurance cancellation. This transponder would assist in locating the uninsured vehicle, possibly utilizing the Global Positioning Satellite System.

34. These changes would be an improvement over the current prosecute-and-incarcerate model for at least three reasons. The civil violation and impound model transfers the costs and penalties of traffic infractions from the law-abiding citizen to the law breaker; it allows the district attorney to spend more time prosecuting truly serious crimes; and, finally, it would free up jail space for more dangerous criminals. If a vehicle was borrowed, the owner has the option of paying the fine to get his car back. Thus, a car lender would bear the burden of making sure his "friend" was licensed before loaning her the car. The car lender could sue the borrower in Small Claims Court for reimbursement if necessary. "Civil Pursuit of Traditional Criminal Cases", a speech by Captain Lee Benson, Coos Bay Police Department, Coos Bay, Oregon.

35. "Lockheed Martin IMS Wins DMV Insurance Surcharge Procurement", Lockheed Martin media release, May 6, 1996. Contacts: Terry Lynham (201) 996-7052 or Ron Jury (201) 996-7057. Lockheed Martin IMS, 300 Glenpoint Centre East, Teaneck, NJ 07666.

36. State Government Privatization in America, Touche Ross, op cit.

37. Companies that provide insurance and register/license vehicles would know instantaneously when a policy has lapsed and could take instantaneous action to obtain payment, or remove the plate from the vehicle, thereby alerting everyone to the fact that the auto has no insurance.

38. Personal letter from former Oregon St. Senator Rod Johnson to author, (June 26, 1996).

39. Indeed, General Motors offers insurance through a subsidiary, the General Motors Insurance Corporation.

40. This should be relatively easy to accomplish. The author recently received an offer from Texaco, among other things, to obtain a copy of my driving report. The offer read: "See the official Motor Vehicle Report that helps set your auto insurance rates, including all reported violations and even out-of-state tickets." October 1996 solicitation from Texaco for its PrivacyGuard® service. In time, one can envision the interconnection of international organizations that provide these services.

41. Insurance companies are, by their nature, reluctant to release information about their clients so as to protect themselves from having their clients "raided" by other insurers. Thus it is unlikely they would release such information even if not prohibited by law.

42. The author used the 1995-96 DMV Expense Budget figures for his calculations. In that one year the budget total for the DMV was $64.8 million. Of this total the author allowed for the state retaining current employment levels at the central office Salem (generous indeed, given its responsibilities would be limited to oversight functions). Currently, 48 percent of all DMV employees work in the central office. The remaining 52 percent are employed in field offices. The author accordingly cut 50 percent of salary figures, as well as 50 percent of all staff related services such as training, continuing education, out-of-state travel, telecommunications, data processing, consulting, professional services, fuels, and utilities.

Due to the nature of field offices, there is much duplication of equipment, supplies, and other expenses. It is much cheaper to run one office with 100 people than it is to run 50 offices with two people each. For facility maintenance, equipment purchases, photo processing, and miscellaneous office expenses the author has used the following calculations: while half of the DMV staff are located outside of Salem, a much larger percentage of equipment, maintenance, supplies and office expense is required, due to the duplication of materials in each office. The author has estimated that at least 75 percent of the total equipment (it is likely to be much higher with 64 field offices) would be in the field offices. To be conservative, the author used 70 percent as a rough guide and calculated savings accordingly.

The author kept some budget items at 1995-96 levels: in-state travel expenses (for monitoring and communication purposes), State government fees and charges, Attorney General and legal fees, intra-agency charges and ODOT fees, in-state training, and special payments to the health division. The author estimates $34.3 million per year in savings, or $68 million per biennium. If the remaining central office were to contract some services out, an additional 30 percent (See endnote 28) could be saved, bringing the total up to $42.4 million. The author also proposes using the sale of assets to help offset debt service. This could increase the savings by up to $500,000 per year, depending on value of sales. See endnote 43.

43. The 1995-96 budget for the DMV lists $3.5 million in debt service. The 1996-97 budget lists the debt service as $3.7 million. In a conversation with Mr. Arnie Kujola of the ODOT Financial Services Division, the debt service was explained to be repayment of certificates of participation that had been issued to fund various remodeling and construction projects on field offices. Fixed assets for the DMV total $4.8 million, while property holdings are valued at $12.7 million. The author estimates that approximately 70 percent of all fixed assets are located in field offices, and that the central Salem office accounts for 70 percent of the total land and property value. Assuming sale of 70 percent of fixed assets as well as 0 to 30 percent of the total property, this gives a sales range between $3 million and $7 million.

44. Dunham, op. cit.

45. To encourage the hiring of former DMV employees, Ken Royal suggested offering California companies a "$3,000 tax credit for employing a laid-off DMV employee for the period of one year." "Privatization Within the [California] Department of Motor Vehicles", p. 98.

46. Recall, before telephone deregulation, no specialty stores sold phones; they proliferated after deregulation (as did phone service options). Someone has to staff and manage them, and deliver the products to the store. Similar retail innovations and related employment opportunities would arise with transferring DMV responsibilities to the private sector.

47. Conversation with Donna Bender, op. cit.

48. Johnson Controls, op. cit., page 45.

49. DMV Media release (June 4, 1996).

50. "DMV officials vow upgrade in service, end of long lines", The Oregonian, June 5, 1996, p. C4.

51. The averages offered by the DMV may not accurately reflect the real wait times. For example, it's unlikely that the DMV averages include time spent on previous trips when frustrated individuals who cannot wait any longer leave without transacting business, and must make a return trip. Also, when a person with a low number bails out and hands her number to another with a higher number, allowing the person with a higher number the opportunity to "cut" ahead of others, that would also falsely produce lower the average waiting time. Though the author is unaware of formal statistics on "bailouts," this is a problem cited by Johnson Controls in its State of Florida-commissioned study of that state's DMV offices. The Johnson Controls report concluded, "Out of 1,423 observed clients there were 300 (20 percent weighted) who [were] observed leaving the office without reaching the counter and initiating a transaction." (Johnson Controls, p. 14)

As Oregon's wait times are, on average 10 minutes longer than the standard set by Northfield-Macedonia and applying those 10 minutes of wasted time to Oregon's 3 million clients served per year, there are 500,000 hours of wasted time, and $6.375 million in wasted productivity. Then counting for a (generously) reduced bailout figure of 5 percent there are an additional 25,000 wasted hours, or $415,000 more in lost productivity.

Daily DMV users: 12,000 served (Oregon Bluebook 1995-96)
20 minute wait, 10 more than Ohio
5 day week, 50 weeks a year (a conservative number, which does not include wait times on Saturdays)
Average hourly wage in Oregon: $12.00 (rounded down from $12.76, figure from Jeff Hannum of the State of Oregon Employment Dept Workforce Analysis 11/22/96).

52. E-mail from Heiko Diekmeier to author, Dec. 3, 1996.

53. John Semmens phone conversation, op. cit.

54. Using the 1995-96 revenue budgets for the DMV, the author found a surplus of $189.8 million going to the Highway fund, and other safety and road maintenance programs. This figure does not include fuel taxes, only revenue generated through transaction fees. Using the savings outlined in this paper of $34 million to $43 million, fees could be reduced by 14 to 17 percent while keeping net revenue for the highway fund at $189.8 million.

The Goldwater Institute, Valley Bank Center Concourse, 201 N. Central Ave., Phoenix, Arizona 85004. T: (602) 256-7018

Johnson Controls, Leofwin Clark, Project Manager, State & Local Government, Johnson Controls Inc., 8062 S. Rosemary Court, Englewood, Colorado 80112. T: (303) 804-0042; E-mail: leofwin@csn.net

North Dakota Motor Vehicle Department. Jerry Auch, Branch & Dealer Administrator, or Keith Kaiser, director of the Division of Motor Vehicles, is another source for details about North Dakota's licensing and registration system. They can be reached at (701) 328-2725.

Northfield-Macedonia License Bureau (Ohio). Donna Bender, co-owner. 9735 Valley View Rd., Northfield-Macedonia, Ohio 44056 T: (216) 468-1155.

Pacific Research Institute, 755 Sansomme Street, Suite 450, San Francisco, California 94111 (415) 989-0833.

John Semmens, Senior Planner, Arizona Dept. of Transportation, Intermodal Transportation Division, Research Group, 1130 N. 22nd Ave. 075R, Phoenix, Arizona 85009-3716. T: (602) 407-3137