Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, August 5, 2014, at 1:00 PM, in Room 171 of the Capitol Annex. Representative Hubert Collins, Chair, called the meeting to order, and the secretary called the roll. The minutes from the July 1, 2014 Interim Joint Committee on Transportation meeting were approved.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Bob Leeper, Morgan McGarvey, Dorsey Ridley, Albert Robinson, Brandon Smith, Johnny Ray Turner, and Whitney Westerfield; Representatives Kevin D. Bratcher, Denver Butler, Leslie Combs, Tim Couch, Jim DeCesare, David Floyd, Keith Hall, Richard Henderson, Toby Herald, Kenny Imes, Jimmie Lee, Donna Mayfield, Charles Miller, Terry Mills, Rick G. Nelson, Marie Rader, Steve Riggs, Sal Santoro, John Short, Arnold Simpson, Diane St. Onge, John Will Stacy, Fitz Steele, Jim Stewart III, Tommy Turner, and David Watkins.
Guests: Molly Ramsdell, Director, Washington Office, National Conference of State Legislators (NCSL); From the Kentucky Transportation Cabinet (KYTC): Rodney Kuhl, Commissioner, Department of Vehicle Regulation; Caroline Brown, Director of the Division of Drivers’ Licensing; Doug Sutton, Assistant Director of the Division of Drivers’ Licensing; Mike Hancock, Secretary; Tammy Branham, Executive Director, Office of Budget and Fiscal Management; and Russell Romine, Deputy Secretary, Policy Advisor, Office of the Secretary.
LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Christina Williams.
Deadlines for REAL ID Act and How Act Affects Kentucky Citizens
Molly Ramsdell, Director, Washington Office, National Conference of State Legislators (NCSL) discussed the impending deadlines regarding the REAL ID Act and how it affects Kentucky citizens.
Ms. Ramsdell stated after the events of September 11, 2001, the 9/11 Commission was established, which issued its report in 2004 that referenced the drivers’ license and secure identification process, and recommended that the federal government set the standards for the issuance of birth certificates and sources of identification. In December 2004, the Intelligence Reform and Terrorism Prevention Act of 2004 was adopted, implementing a number of the Commission’s recommendations. It also established a negotiated rulemaking process to be run by the federal Department of Transportation in consultation with the Department of Homeland Security (DHS), for drivers’ licenses and identification issued by states. A positive aspect of the process is that it brought all of the involved entities and stakeholders together to standardize drivers license and identification requirements. Five months later, after the negotiated rulemaking process had started, the language establishing the process was repealed and the REAL ID Act was enacted. The REAL ID Act was added to an emergency supplemental spending bill and was not received well due to the lack of transparency of the bill. The REAL ID Act terminated the negotiated rulemaking process and required DHS to develop standards for state issued drivers’ licenses and identification cards. The requirements would apply to all 56 licensing jurisdictions, U.S. territories, and the District of Columbia. REAL ID affects all of the approximately 240 million drivers’ license holders in the United States.
REAL ID requires states to verify the validity of source documents (the documents that an applicant must provide to the DMV to apply for a drivers’ license), retain copies of source documents, and provide actual physical security of the locations where drivers’ licenses are issued. There are requirements for drivers’ license card design. Each person may have only one drivers’ license and not multiple drivers’ licenses for multiple states. States must also verify the individual’s lawful presence in the United States.
The final regulations issued in January 2008 were far less prescriptive than the draft regulations. The National Governor’s Association, NCSL, and the American Association of Motor Vehicle Administrators (AAMVA) worked together to provide DHS guidance with input from the states as to how to fulfill the requirements of the law and simultaneously ease the burden on states so that they could implement the REAL ID Act.
It was estimated that the cost to states to implement the final regulation would be about $3.9 billion over 11 years. To date, Congress has only appropriated $263 million to cover the $3.9 billion mandate. While REAL ID costs are an allowable expense for states under their Homeland Security Grant Program funds, this would reduce the Homeland Security funds available for other purposes.
Ms. Ramsdell stated the penalty for non-compliance to the REAL ID Act is that the states’ citizens will not be able to use the states’ driver’s licenses as identification to enter certain federal facilities or board commercial aircraft.
There has been opposition from states, with some voicing concerns that the REAL ID Act is a federalism issue and that there is not enough funding, and that it is also a privacy issue due to having access to databases that will be able to verify source documents. There is concern that the databases may not be secure with personal information.
There are 17 states with statutory opposition to comply with the REAL ID Act. There has been no recent discussion of repealing the REAL ID Act.
In fall 2013, the enforcement schedule was released. Ms. Ramsdell discussed the phases of the schedule: phase one, dealing with restricted areas for DHS headquarters, specifically the Nebraska Avenue complex; phase two, dealing with restricted areas for all federal facilities and nuclear power plants; and phase three, which will not have full enforcement until January 2015. Phase three will involve semi-restricted areas for the remaining federal facilities, and phase four will deal with restrictions on commercial aircraft.
Ms. Ramsdell stated concerning phase four, DHS is contemplating allowing individuals to use other forms of identification in addition to their non-compliant drivers’ license to allow them to board a commercial aircraft, however, a regulation has not been put into place at this time to allow that.
Ms. Ramsdell added that if a state is noncompliant, its residents will still be able to board a commercial aircraft, but they will need another form of federally accepted identification, such as a passport, military ID, or another form of identification deemed acceptable by the federal government. The Transportation Security Administration (TSA) is the agency that designate acceptable forms of ID. Citizens may go through secondary screening with an extra level of screening at an airport if they do not have a compliant license or other form of federally accepted identification.
Chairman Collins stated that, after 9/11, the 2002 General Assembly adopted some of the most stringent license requirements for proof of legal presence in the United States.
In response to a question from Representative DeCesare, Ms. Ramsdell stated the REAL ID Act regulations and the law were written to give states’ a choice to have a two tier system. The state can issue a REAL ID compliant card, which can only authorize individuals who are lawfully present, or the state could enact a two tier system for citizens who do not wish to have a compliant card or those who are not eligible for a compliant card, to have a non-compliant card that states that card is not good for federal purposes. The non-compliant card could not be used to board commercial aircraft or to access federal facilities. She added there will however be a phase-in period where a citizen could be from a compliant state, but the license is not yet compliant because the re-enrollment period has not been completed.
In response to a question from Representative DeCesare, Ms. Ramsdell stated even if Kentucky did not adhere to the REAL ID Act requirements, the citizens would have access the offices of their federal Representatives and Senators. She is unsure if the United States Capitol building could be accessed, but the congressional offices would be accessible.
Chairman Collins clarified that someone does not necessarily have to be a citizen of the United States to receive a drivers’ license in Kentucky, but if a visa were acquired, the person holding it could receive a license in the state until the visa expired.
In response to a question from Representative Floyd regarding other acceptable forms of identification, Ms. Ramsdell stated any form of identification that is currently accepted in place of a drivers’ license, such as a military ID or a passport, would continue to be acceptable after the REAL ID Act has been fully implemented.
Ms. Ramsdell said that, when the regulatory debate of the REAL ID process was occurring, some states considered the possibility of it being more feasible to assist citizens in obtaining a passport, as opposed to obtaining a REAL ID, depending on the number of citizens within that state that may not have another form of acceptable ID such as a passport or military ID.
Ms. Ramsdell offered to send to members TSA’s list of acceptable forms of ID to board commercial aircrafts.
In response to a question from Representative St. Onge, Ms. Ramsdell stated REAL ID requires proof of lawful presence in the United States. The regulation has a list that defines which visa categories would be eligible.
Representative St. Onge suggested having a database in which the Division of Drivers’ Licensing and the State Board of Elections, where voter registrations are issued, would be able to cross-communicate to eliminate fraud, errors, and other issues that may arise because of different names or different legal ways of writing the same name.
Ms. Ramsdell stated there is no central REAL ID database, and information often times has to be verified by an assortment of databases; this is not addressed by the Act. REAL ID requires citizens to show proof of name change.
In response to a question by Representative Miller, Ms. Ramsdell stated that all states are committed to ensuring increased security, integrity, and the issuance of the drivers’ licenses and that a single approach does not necessarily work for all states. Implementation of the REAL ID Act came at a difficult time for many states due to hard economic times and decreasing budgets. DHS is only implementing what Congress enacts, and Congress has not appropriated additional funds since 2011. Congress feels there has been additional flexibility given to states by being able to use Homeland Security Grant programs.
Ms. Ramsdell added that an example of a costly change in the system concerns when a citizen takes a photo for identification. Currently, the photo is taken at the point of final issuance, but REAL ID will require the photo to be taken at the point of application. This change will require a complete transformation in some DMV systems.
There are certain aspects with which DHS has been flexible during the transition period, but there are requirements and limitations that must be adhered to within the law unless the law changes.
In response to a question by Representative Steele, Ms. Ramsdell stated the commercial aircraft portion of REAL ID will not be enforced until 2016.
Rodney Kuhl, Commissioner, Department of Vehicle Regulation; Caroline Brown, Director of the Division of Drivers’ Licensing, and Doug Sutton, Assistant Director of the Division of Drivers’ Licensing, clarified questions regarding Kentucky and REAL ID.
Commissioner Kuhl stated that, going forward, Kentucky will need to make tough decisions if the REAL ID Act will be implemented. The state will need to address how the Act will be implemented, whether licenses will still be issued in each county or move to a regional or central issuance system, whether the state issue both a regular drivers’ license and a REAL ID compliant license for those who wish to have a REAL ID only. Another option is to create a duel license REAL ID. Kentucky is in compliance until October 2015 due to the extension that was given.
Chairman Collins stated any changes that need to be made statutorily will need to be made in the upcoming Regular Session of the General Assembly.
Commissioner Kuhl stated another issue that will arise because of REAL ID is the physical security aspect of circuit clerk branches. Several circuit clerk branches have actively begun the security assessment process to evaluate which branches are compliant within the security parameters of REAL ID, and which branches will need security changes. This process could take time due to the number of older courthouses that more than likely will need updating.
In response to a question from Representative Floyd, Commissioner Kuhl stated it was correct that the current drivers’ license will not look different after REAL ID, but the source documents that are needed to renew the licenses will change. Kentucky’s current physical drivers’ licenses could be REAL ID compliant. The department has already identified the fields within the drivers’ license itself and within the face where the REAL ID compliant indicator would go. The department has already identified where the “not for official federal use” language would be placed if needed.
In response to a question from Chairman Collins, Commissioner Kuhl stated implementing REAL ID would allow citizens to not only board commercial aircraft but to be allowed access to other federal facilities that would be restricted to citizens who are not REAL ID compliant. There will be an evaluation period for the commercial aircraft requirements that will not start sooner than 2016, therefore it will be at least 2016 before a Kentucky citizen would have problems boarding commercial aircraft.
In response to a question from Representative DeCesare, Commissioner Kuhl stated there is a chance that some judicial centers will be REAL ID compliant with security but others will not. For those that are not, the security systems will need to be changed if Kentucky decides to become REAL ID compliant.
In response to a question from Representative DeCesare, Commissioner Kuhl stated at this stage there is no way to know the cost of revamping the circuit clerk offices to meet REAL ID Act security requirements.
Road Fund and FY 2014 Close-out Report
Mike Hancock, Secretary, Kentucky Transportation Cabinet; Tammy Branham, Executive Director, Office of Budget and Fiscal Management, Kentucky Transportation Cabinet; and Russell Romine, Deputy Secretary, Policy Advisor, Office of the Secretary, Kentucky Transportation Cabinet, gave an update on the Road Fund and the FY 2014 close-out report.
Ms. Branham stated the fiscal year 2014 ended June 30, 2014. The December Consensus Forecasting Group (CFG) estimated 2014 Road Fund revenue at $1.582 billion; the state actually collected $1.560 billion, missing the estimate by $22.2 million. Motor fuels taxes were $14.5 million below the estimate. Motor vehicle usage taxes were $5.4 million below the estimate and the various other categories were $2.3 million below the estimate.
Ms. Branham stated that $22.2 million shortage seems a little worse than it is because the budget was actually built on the December 2011 Road Fund estimate of $1.568 billion, and after the lapses, the budget only had to be reduced by $3.7 million, $3.4 million of which came from Research due to toll credits being used to match federal grants instead of being used for the Road Fund. State construction was reduced by $259,000. Road Fund revenues in FY 2014 to FY 2013 had growth of $68.8 million or 4.6 percent, but had been expected to be 6.1 percent.
In response to a question from Representative Combs, Ms. Branham stated the particular expenditure lapses include: $912,000 in aviation, $306,000 in revenue sharing, $4 million in highways, $2.6 million in vehicle regulation, $3 million in general administration, and $1.9 million in capital projects, all of which account for $12.7 million.
In response to a question from Representative Simpson, Ms. Branham stated toll credits are a mechanism that allows the state to access federal dollars without having a cash match, but there is no purchasing power. If there is a grant that is an 80/20 split, and the state does not have the 20 percent cash match, it can access the 80 percent by using toll credits on a one for one basis. Mr. Romine said that toll credits are earned by investment of state dollars in the federal highway system.
Status of Federal Highway Trust Fund
Mr. Romine testified about the Highway Trust Fund. Congress acted on the Highway Trust Fund by authorizing a transfer of $10.9 billion to the Highway Trust Fund over the span of the upcoming 10 months. MAP-21, the current federal transportation bill, was due to expire in September 2014. The transfer extends MAP-21 through May 31, 2015. The $10.9 billion comes through three different avenues. One is through pension smoothing ($6.4 billion), which allows corporations to reduce their contributions to retirement funds but make them up later. Since retirement fund contributions are tax deductible, they will be paying more on corporate earnings in the short term, with the idea that they will be made up over the long-term. Restructuring customs user fees will account for $3.5 billion, which are fees paid to customs services for goods, services, and people who enter the United States. Also, $1 billion from the leaky underground storage tank fund will be transferred into the Highway Trust Fund to make up the rest.
Mr. Romine emphasized the difficulty for the cabinet to engage in long-term planning when there is no more than a 10 month window of funding. Congress averted the current crisis this time, but in June 2015, the situation will need to resolved again.
Mr. Romine stated the last fully funded Transportation bill was TEA-21 in 1998, which expired September 2003. Congress did not immediately reauthorize TEA-21, but there were 12 extensions before SAFETEA-LU was signed by President George W. Bush in August 2005. SAFETEA-LU passed, predicated on greater levels of funding than what the Highway Trust Fund has realized. There were more outlays from the levels of spending that were authorized in SAFETEA-LU than money coming into the Highway Trust Fund. Beginning in 2008, the crisis with the Highway Trust Fund became very apparent. Since 2008, $55 billion in non-highway General Fund money has been transferred into the Highway Trust Fund to keep it solvent. With the latest action, that amount is now $66 billion. The Highway Trust Fund is a deteriorating revenue source. A long term solution is needed.
Discussion of Changes in VTR forms and Temporary Tags, and Consideration of Resolution Expressing the Committee’s Concerns
Commissioner Kuhl provided an update on the previous meeting’s discussion on changes in VTR forms and temporary tags.
Chairman Collins stated the motor vehicle usage tax brings in over $400 million per year. Any impediment to the transaction going smoothly might endanger a sale, so there is a need to be careful to make sure the process is streamlined and fast as possible.
Commissioner Kuhl provided an omitted email dated June 16th email that was sent to the County Clerks that was presented at the previous meeting. The email addressed the department’s intentions for the August 1, 2014 deadline, for clearing up old forms that sometimes in from clerks and that no longer need to be used, even though the forms are still acceptable.
In response to a question from Chairman Collins concerning lack of space for a mileage listing on the back of old titles, Commissioner Kuhl said the current VTR form should be used. The odometer disclosure statement is within the new VTR form. Commissioner Kuhl added that the TC965 form, referenced at the last meeting, is an odometer disclosure form that is mainly used for corrections of odometer reading discrepancies.
Chairman Collins said he understood that if the title is unavailable, then whoever sells the automobile must have a mileage statement. Commissioner Kuhl responded in the affirmative. He stated dealerships can continue to use KADA odometer disclosure forms as part of keeping up with their files.
Commissioner Kuhl said the department did a state survey through AAMVA concerning temporary tags. He stated that 36 other states and jurisdictions responded, indicating that 43 percent used plain paper as temporary tags. About 58 percent allowed temporary tags to be placed on the inside back window of vehicles. Most responding states do not have any sort of imbedding security within temporary tags, as Kentucky does now.
Commissioner Kuhl stated the department is doing materials research on the temporary tags, including testing the longevity of the tags.
At the previous meeting, the department was asked about the disposition of damaged temporary tags. Since there is a limit of only one temporary tag per vehicle, the department has been working with the Motor Vehicle Commission on a process to allow a dealership to issue another temporary tag if needed. To issue another temporary tag, the dealership must document the old tag, the new tag, and the reasons for the new one.
Commissioner Kuhl stated that during the auditing process the department is not citing dealerships for the issue of new temporary tags or the reissuance of temporary tags.
Commissioner Kuhl stated there are remaining temporary tags in inventory. There is discussion on what should be done with them. One suggestion is to purchase protecting sleeves to use with the remaining temporary tag inventory until a more permanent solution is realized.
In response to a question from Chairman Collins, Commissioner Kuhl stated there are approximately 400,000 temporary tags in inventory.
Chairman Collins added that Indiana prints temporary tags from a computer with an expiration date already on them and charges $3.00 per tag. Ohio prints temporary tags with handwritten dates and charges $18.50. If the dealer inputs the information into the system, the charge is $15.50 per temporary tag.
Commissioner Kuhl showed a temporary tag in a protective sleeve to the committee. In response to a question from Chairman Collins, Commissioner Kuhl stated the temporary sleeve cost is $0.03 per sleeve.
Commissioner Kuhl added that another way to address damage to temporary tags would be to amend KRS 186.170 to allow the temporary tags to be placed in the back window.
Representative Simpson applauded the cabinet for printing the new temporary tag, as it has proved to be more economical than the printing of the older temporary tags.
In response to a question from Chairman Collins, Commissioner Kuhl stated the cost to produce the current temporary tag is approximately $0.09. However, the state will continue to charge $2.00 to citizens to obtain the tag.
Chairman Collins requested information as to the cost to produce the old temporary tag that is no longer in use. He reiterated that he was impressed with the quality of the older tag. Commissioner Kuhl stated he has requested that information and has also requested the cost for using the older temporary tags without the embedded security measure.
Commissioner Kuhl stated the current temporary tag is used as an inventory number. If law enforcement were to run the temporary tag, there is no database to find out if the tag belonged to another vehicle previously. He said that fraud would be easily monitored if there were such a database.
Chairman Collins questioned Commissioner Kuhl about a committee resolution to require the state to provide the forms to the automobile dealers. Commissioner Kuhl stated he agrees with the idea that the state must provide the forms necessary and that the department will continue to provide the forms.
Representative Lee reiterated his position that the State needed to cut down on paperwork associated with the automobile purchasing process, specifically paper titles. He advocated paperless titles, which would be easier to keep track of because the titles would be in a database versus a paper copy with a vehicle owner that would often be lost and have to be reissued.
In response to a question from Representative Santoro, Commissioner Kuhl stated the 400,000 temporary tags that are in inventory last through the year.
Representative Santoro stated that, due to his experience as a former state trooper, temporary tags that are placed in the back windows of vehicles do not work.
Representative Lee moved to adopt the resolution. Chairman Harris seconded the motion, and the resolution passed and was signed by Chairman Collins and Chairman Harris.
With there being no further business, Chairman Collins adjourned the meeting at 2:34 P.M.