Interim Joint Committee on Transportation


Minutes of the<MeetNo1> Third Meeting

of the 2004 Interim


<MeetMDY1> August 3, 2004


The<MeetNo2> third meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday,<MeetMDY2> August 3, 2004, at<MeetTime> 1:00 PM, in<Room> Room 149 of the Capitol Annex. Senator Virgil Moore and Representative Collins co-chaired the meeting.  Representative Collins called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Virgil Moore, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Charlie Borders, Ray Jones II, Robert Leeper, Ernesto Scorsone, Gary Tapp, Elizabeth Tori, and Johnny Ray Turner; Representatives John Arnold Jr, Eddie Ballard, Carolyn Belcher, Denver Butler, Howard Cornett, Mike Denham, Paul Marcotte, Charles E. Meade, Charles Miller, Russ Mobley, Don Pasley, Marie Rader, Rick Rand, Ancel Smith, Jim Stewart, Jim Thompson, Tommy Turner, John Vincent, and Mike Weaver.


Guests Appearing Before the Committee:  Jack Snodgrass, President, and Bill May, Kentucky County Clerk's Association; Lee Tompkins, Kentucky Interactive, Inc.; David Garnett, Executive Direction, Motor Vehicle Commission; Deputy Secretary Dick Murgatroyd, Todd Shipp, Legal Council, Debra Gabbard, Executive Direction, Budget and Fiscal Management, Mac Bushart, Jim Ramsey, Director, Division of Technology, and Asa Swan, Legislative Liaison, Kentucky Transportation Cabinet.


LRC Staff:  John Snyder, Jim Roberts, and Linda Hughes.


Senator Moore moved to approve the minutes from the July 6, 2004 meeting, as submitted.  Representative Miller seconded the motion, which passed  by voice vote.


The first item under discussion was the administration of AVIS data sharing services by KY Interactive, Inc. ( Asa Swan, Legislative Liaison, Todd Shipp, Legal Council, Mac Bushart, and Jim Ramsey, Director, Office of Technology, Kentucky Transportation Cabinet, testified on this subject.


Mr. Swan said that the Online Vehicle Information System (OVIS) began in 1999 as a pilot project designed to provide dealers with specific vehicle information over the Internet.  Originally, he said the Cabinet along with the Motor Vehicle Commission (MVC) charged $250, per subscription, which was based upon the Cabinet's cost estimate to run the program.  Of that $250 fee, the Cabinet received $150 with the remaining $100 going to MVC, who administered the program once it was operable.  Mr. Swan informed the Committee that in 2002, the Cabinet reduced the subscription fee to $125, with the Cabinet receiving $25 and MVC continuing to receive its $100 per subscription fee.


Mr. Swan said that in February 2003, as part of the Commonwealth's e-Government Internet initiative, it entered into a service level agreement with Kentucky Interative (KI) to administer OVIS.  That service level agreement was based on a self-funding model that funds e-government services without using taxpayer dollars and through fees generated by the program's users.  Mr. Swan said that neither the Cabinet nor KI can arbitrarily set OVIS's fees; that can only happen once a fee increase is  approved by the Electronic Services Committee and after receiving approval from both the Cabinet and MVC.


Mr. Swan said that under KI's administration, lending institutions, such as banks and credit unions, as well as insurance companies, can now utilize this service for the same subscription fee as automobile dealers.  This service was not available to banks and insurance companies under the previous system created by the Transportation Cabinet.


Mr. Swan said that KI plans to implement a couple of enhancements in the near future that will increase convenience and lower-user-cost.  One initiative is by adding the ability to monitor changes to a title without having to look that title up again (and thereby pay the fee a second time).  It was estimated that the average title is checked 5-7 times.  This change would reduce that number.  And another is by increasing the information provided per search to include the vehicle tag number, registration number, taxable value, and file number and date (should it become available on the AVIS system).


At this time Mr. Swan answered three questions addressed in a letter to Secretary Maxwell C. Bailey, Secretary, Transportation Cabinet, from John Snyder, LRC Staff, dated July 8, 2004.  Those questions and answers are as follows:


1.  Requested an accounting of how funds received under this program have been expended.  Mr. Swan informed the Committee that the Cabinet's funds are allocated to the Road Fund while MVC funds go directly into its general operating budget.


2.  Requested a yearly history of the number of subscribers to the OVIS database and an accounting of revenues to the Cabinet, MVC, and the contractor.  Mr. Swan stated that from February to June 2004 (the months of operation under KI) there were 192 subscribers who have looked up (Internet hits) information 55,953 times.  Thus total revenue generated by OVIS was $79,953, of which the Transportation Cabinet receives $32,776 and MVC (who still receives $100 per subscription fee) receives $19,982 and Kentucky Interactive retains $27,294.


3.  Requested the initial and ongoing cost to the Transportation Cabinet to supply this data to both the dealers and the other subscribers under the original program, as well as to under the current program.  Mr. Swan said there are significant hardware, software, and infrastructure differences between the two systems.  The AVIS system was built upon older technology, which the Commonwealth had set a strategic goal to migrate away from this type of infrastructure several years ago, and OVIS is based upon Internet technologies and uses an Internet browser for accessing the data/system. Mr. Swan said there was no possible way to offer the current system to both dealers, financial institutions, and insurance companies under the Cabinet's original program.


Senator Borders asked if the original program was cost effective.  Mr. Swan said yes, the Cabinet generated approximately $36,000 the first several years and $6,000 after the subscription fee was lowered the fee in 2002.


Representative Pasley asked if a majority of the financial institutions and insurance companies are currently using the OVIS system.  Mr. Swan said no, only about 25% of these two entities are currently using the system.


Representative Pasley asked when the OVIS system became operable.  Mr. Tompkins said in February of this year.


Chairman Collins asked if AVIS information was public record.  Mr. Shipp, General Counsel, Transportation Cabinet, stated that the information contained in AVIS is protected by the Federal Motor Vehicle Public Protection Act (MVPPA).  He stated that the information contained in the OVIS system strips away the protected personal information  for commercial purposes. 


Chairman Collins asked if it was legal to charge a fee for information that is available under the Open Records Law.  Mr. Shipp said KRS 61.874 provides the mechanism that allows OVIS to charge for information.  He said that KRS 61.874(6) specifically sets out procedures for charging memberShipp fees, as well as access of public records, online. 


Representative Marcotte asked the length of the contract between the Commonwealth and KI.  Mr. Tompkins stated the contract is for two years, with four additional two year renewal periods.


Senator Tapp asked how the Cabinet was dealing with the state's uninsured motorists problem.  Mr. Bushart said that insurance companies notifies the Cabinet monthly with the names of individuals who have lapsed or cancelled their policies.  He said that those reports, on average, identify 20,000 uninsured individuals each month.  The Cabinet then checks each of those 20,000 individuals and if it is detemined that the policy has been in force for less than 45 days, the Cabinet sends that person a letter stating he has 30 days to present proof of automobile insurance or his registration will be revoked.  Mr. Bushart said the problem is, if  a person's registration is revoked for this reason, he only needs to acquire insurance and pay $20 for a registration reinstatement, which makes the penalty cheaper than carrying the insurance.  In other words, Mr. Bushart said, the penalty does not equal the charge.


Chairman Collins asked who was using the OVIS system.  Mr. Tompkins said automobile dealers, financial institutions, as well as insurance companies. 


Chairman Collins asked if there was a charge for information between state agencies.  Mr. Tompkins said no, that that type of information is acquired through the Transportation Cabinet and the AVIS system.


Chairman Collins asked if the OVIS system was the only system on charging a fee.  Mr. Tompkins said no, another example is the Department of Fish and Wildlife Resources, who  have a web page where Kentuckians can apply for fishing and hunting licenses.


Chairman Collins asked Mr. Garnett how much money the Motor Vehicle Commission received from the original system.  Mr. Garnett said it received approximately $13,000 of the $32,500 in 2000; $14,200 from the $35,000 in 2001; $14,700 of the $36,750 in 2002; and $23,800 from the $29,750 in year 2003. 


Chairman Collins asked if the Transportation Cabinet hired additional people during the program's development and start-up phase in 1999.  Mr. Jim Ramsey, Director, Office of Technology, Kentucky Transportation Cabinet, said no.


Chairman Collins asked who monitors KI's services.  Mr. Tompkins said that the Electronic Services Committee monitors their activities. 


Chairman Collins asked who serves on the Committee.  Mr. Tompkins said he did not have that information with him, however he would forward the names of the individuals to the Committee.


Representative Weaver asked how many automobile dealers were registered in Kentucky.  Mr. Garnett replied 3,782.  Representative Weaver said that if there are 3,782 dealers and only 149 were subscribed  users of the OVIS system, then he did not believe the system was working or either a large number of dealers were boycotting OVIS.  Mr. Tompkins stated that KI had yet to market the OVIS system and he felt that a large number of dealers were still unaware of the system.


Chairman Collins asked how many automobile dealers subscribed to the old system.  Mr. Swan said there were 230 subscribers prior to the OVIS system.


At this time Chairman Collins turned the meeting over to Chairman Moore.


The next item on the Committee's agenda was a discussion of licensing procedures for vehicles purchased outside a person's county of residence.   Mr. Jack Snodgrass, President, and Bill May, Kentucky County Clerk's Association presented testimony on this issue.  Mr. May referred to two pieces of legislation from the last session, House Bills 348 and 399.  2004 HB 348, which did not pass, sponsored by Representative Ted Edmonds, provided that fees from 3% of the U-Drive-It tax be deposited monthly into a newly created county clerk motor vehicle registration supplement fund.  2004 HB 399, which also did not pass, sponsored by Representative Ancel Smith, required motor vehicles to be registered in the county of the owner's residence. 


Chairman Collins stated that he, and he believed most of the Committee members, were not in favor of using Road Fund dollars to subsidize the state's county clerks.


Representative Smith noted that another concern was a safety issue for local law enforcement officers.  He said that an officer in his county said he was always more apprehensive when pulling over an automobile that did not have a Knott County license plate, the county he served.


Chairman Collins asked President Snodgrass if the county clerks had discussed this issue.  Mr. Snodgrass said no, not to his knowledge.  Chairman Collins said that he thought the county clerks should take a position on this matter because he could guarantee it would not go away and, in fact, would probably come up again in the next regular session of the General Assembly.


Mr. Snodgrass said that this was a difficult issue.  He understood that the smaller counties needed additional revenue; however, he was not in favor or reducing the revenue in the larger counties.


Mr. Snodgrass stated that he believed something needed to be done regarding the manner in which sales tax is collected on the purchase price of automobiles; specifically,  where affidavits are used to verify the purchase price. He stated there is too much fraud with this process and that counties, county clerks, taxing districts,  and the state, are loosing astronomical amounts of money under this system.


Chairman Collins said he hoped he misunderstood Mr. Snodgrass, and that he was not advocating reverting back to the old system of using the NADA book value for an automobile's purchase price.  Mr. Snodgrass said something needed to be done, because too much money is being lost under this new system.


The last item on the agenda was the Committee's review of Executive Order 2004-724 - Reorganization of the Transportation Cabinet. Deputy Secretary Dick Murgatroyd, and Debra Gabbard, Executive Direction, Budget and Fiscal Management, Kentucky Transportation Cabinet. presented this testimony.


Secretary Murgatroyd said Executive Order 2004-724 eliminated two departments - the Department of Human Resources was moved to the Department of Administrative Services and the Department of Rural and Municipal Aid was moved to the Department of Highways.  It also eliminated two offices - Office of Technology in the Department of Administrative Services and The Office of Quality.  He said that no employee was terminated due to these eliminations.


Secretary Murgatroyd stated the Cabinet's current total workforce is at 5,300 (1,400 of which work in Frankfort), compared to a workforce of 9,500 in 1970.  He said that he and Secretary Bailey both felt that while the workload has more than tripled since 1970, the Cabinet has continued, and even improved, its work performance.  Another change, Secretary Murgatroyd noted, was that all Cabinet attorneys now answer to the legal department in Frankfort, something that had not been done in the past.


Secretary Murgatroyd stated that the Division of Vehicle Enforcement now falls under the jurisdiction of the Justice Cabinet, but is still housed within the new Transportation Cabinet building.  And, he said, the Division of Aeronautics is now the Department of Aviation.  The Cabinet has plans of upgrading most of the state's airports to attract new businesses, and new construction is currently underway for two new airports, one in Williamstown and the other in Morehead.


Secretary Murgatroyd said that chief district engineers have been named in each of the 12 highway districts.  Two additional employees were appointed, one for Districts 1 and 2 and another for Districts 10 and 11.  Secretary Murgatroyd said that each chief will divide their time between the two districts and an assitant will be hired for each.  He said the Cabinet looks upon this as a pilot project and if it works well, they may consider doing something similar in other districts.


In closing, Secretary Murgatroyd said that housing the majority of the Cabinet's central office employees in the new building is helping to facilitate communication and continuity.


Chairman Collins asked if all of the executive order changes have been made.  Secretary Murgatroyd said yes, all of the changes were in place by this past July 9th and everything seems to be running smoothly.


Chairman Collins asked if the Department of Vehicle Enforcement's budget followed that agency to the Justice Cabinet.  Secretary Murgatroyd said yes.


Chairman Collins moved to approve Executive Order 2004-724, as outlined by Secretary Murgatroyd.  Representative Marcotte seconded the motion, which passed by voice vote.


With no further business before the Committee, the meeting adjourned at 2:30 p.m.