The second meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, July 6, 2004, at 1:30 PM, in Conference Room C-407, Transportation Cabinet Building, Frankfort, Ky. Senator Virgil Moore and Representative Hubert Collins Co-Chaired the meeting. Senator Moore called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Virgil Moore, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Charlie Borders, Ray Jones II, Robert Leeper, Richard Sanders Jr, Ernesto Scorsone, Gary Tapp, and Johnny Ray Turner; Representatives Eddie Ballard, Carolyn Belcher, Denver Butler, Mike Denham, Paul Marcotte, Charles E. Meade, Russ Mobley, Rick Nelson, Don Pasley, Marie Rader, Rick Rand, Ancel Smith, Jim Thompson, Tommy Turner, and Mike Weaver.
Guests Appearing Before the Committee: David Garnett, Executive Director, Kentucky Motor Vehicle Commission; Lee Searcy, Kentucky Automobile Dealers Association; Joe Goodman, Auto Dealer, Glasgow, Kentucky; Eddie Deskins, Director and Willie Payton, Division of Motor Vehicle Licensing, Transportation Cabinet.
LRC Staff: John Snyder, Jim Roberts, and Linda Hughes.
Prior to the Transportation Committee meeting Secretary Bailey, Transportation Cabinet, conducted a tour of the Cabinet's new facility. The tour consisted of the Cabinet's Operation Center and its auditorium.
Representative Collins moved to approve the Committee's minutes from its June 21, 2004 meeting, as submitted. Senator Scorsone seconded the motion, which passed by voice vote.
Secretary Bailey, Transportation Cabinet, opened the meeting by welcoming the Committee to the Cabinet's new facility. He said stated that the facilities' meeting rooms, as well as its auditorium, was open to other state agencies for their use and encouraged any agency to do so. He stated that there was no charge to state agencies for use of the meeting rooms.
David Garnett, Executive Director, Kentucky Motor Vehicle Commission, testified in favor of 605 KAR 1:060 (Permits for temporary car sales), which was deferred from the Committee's last meeting at the request of Mr. Garnett. After a brief discussion Representative Collins moved to approve 605 KAR 1:060. Representative Pasley seconded the motion, which passed by voice vote.
At this time Chairman Moore turned the meeting over to Chairman Collins for a discussion of the charges charged various entities (automobile dealers, banks, insurance companies, etc.) for the use of the AVIS system. Mr. Lee Searcy, Kentucky Automobile Dealers Association (KADA) and Joe Goodman, an auto dealer in Glasgow, Kentucky, testified on this subject. Mr. Searcy said that the change in the way members are charged for use of the AVIS system is the result of Kentucky's new internet home page "Kentucky.gov", operated under contract by Kentucky Interactive, Inc. Prior to the change when the Cabinet maintained the site, clients were charged a yearly fee of $125, which enabled that client unlimited access to the system anytime throughout that year. Now, Mr. Searcy said, under Kentucky.gov, clients are charged a $125 yearly fee, as well as $1.00 every time that client uses the system throughout the year. Mr. Searcy said it is his understanding that the breakdown of the money collected is that the Cabinet receives $25 of the $125 subscription fee along with fifty cents of each dollar collected, with the Motor Vehicle Commission receiving the remaining $100 of the subscription fee and ten cents of each dollar, and Kentucky Interactive Inc. receiving the remaining 40 cents of each dollar. Mr. Searcy commented that there are over 240 dealerships in Kentucky and KADA estimates the Transportation Cabinet should be receiving around $395,000 from both the yearly fee and the $1.00 fee per hit combined.
Mr. Searcy said several years ago KADA worked with the Transportation Cabinet to develop a means for automobile dealers to access AVIS. He said that KADA then helped promote the system to its auto dealers. At that time, Mr. Searcy stated, the Cabinet assured KADA that the fee for the access would be minimal, and in fact, the Cabinet set the original yearly fee at $250. He stated that the $250 yearly fee was lowered the next year to $125 and had remained at the $125 amount until Kentucky.gov took over the program.
Mr. Searcy said KADA was not notified or asked for their input prior to change of the access to AVIS and feels the Cabinet took advantage of their assistance. He said that under no circumstances would KADA have promoted such a costly system to its automobile dealers.
Mr. Goodman, an automobile dealer in Glasgow, Kentucky, testified that he used the system prior to Kentucky.gov but cancelled it when he learned of the additional dollar fee per access. He said that he estimated that his dealership, which is a medium size dealership, used the prior system approximately 200 times a month, which would have cost him around $2,525 annually to access the system. Mr. Goodman said that he could not justify the extra cost when his people could acquire the same information from the county clerk's office. He said the information would take longer to receive, but he preferred going back to the old way of collecting the information as opposed to paying $2,000+ a year.
Senator Borders asked what type of information dealerships needed. Mr. Searcy said that buyers were notorious for coming into a dealership to buy a new car without having the title of the car they wish to trade-in, so a title was the most sought after information. He said dealerships also use the AVIS system to see if a car has been branded, such as for salvage purposes.
Representative Butler asked if Mr. Searcy knew how the time period of the Kentucky.gov contract. Mr. Searcy said he understood the contract was good for 10 years. Representative Butler said that in this day and age, with computer technology changing daily, he thought a 10 year contract of this kind was ridiculous.
Representative Marcotte asked Chairman Collins if the Committee could find out how much revenue is generated by this AVIS system, how it is distributed, and how the state agencies are using the funds they receive.
Representative Weaver asked how much the original operation cost the Transportation Cabinet, and how much money they received for that system's use as opposed to what they are now receiving under Kentucky.gov. Deputy Secretary Murgatroyd was unable to offer specifics, but said he would do so at the Committee's next meeting, if the Chair so wished. Chairman Collins indicated that the Committee would like to receive the information at its August meeting.
Representative Pasley asked what other information could be acquired from the AVIS system. Mr. Searcy said tax collection and title information was available on the system and indicated there were presently around 3 million registered automobiles in Kentucky.
Senator Sanders stated that it seemed to him that under the new system dealerships would have little interaction with the Cabinet and he thought it should be the exact opposite, that there should be an open line of communication between the Cabinet and dealerships.
Chairman Collins turned the meeting back over to Chairman Moore for the Committee's last discussion - implementation of 2004 House Bill 29. Mr. Eddie Deskins, Director and Willie Payton, Division of Motor Vehicle Licensing, Transportation Cabinet, offered testimony on this subject.
Mr. Deskins informed the Committee that the Cabinet was still in the process of looking into how other states collected their insurance information. He said the Cabinet is currently doing an in-depth research into three different ways - (1) insurance companies must submit their total auto insurance information monthly; (2) insurance companies must submit their original insurance information and then report cancellations and new members monthly, or (3) insurance companies must submit their original insurance information and then report any changes monthly. Mr. Deskins noted that the Cabinet is currently leaning towards the third choice, i.e., having insurance companies transmit their original insurance information and then only report changes each month. He said that he envisioned such a process could easily be checked against the Cabinet's AVIS system.
Representative Rand commented that this would be a nightmare for insurance companies and asked if there were any funding attached to the legislation. Mr. Deskins said no, House Bill 29 did not stipulate any funding and that the legislation takes effect January 1, 2006, so they have time to work with the insurance companies.
Representative Rand asked how many other states were collecting such insurance information. Mr. Deskins said around 28 other states.
With no further business before the Committee the meeting adjourned at 2:45 p.m.