SURCHARGES. DMV Surcharges

Transcription

1 SURCHARGES DMV Surcharges General. DMV Surcharges, including Regulatory Surcharges (as hereinafter defined), are assessed against drivers who commit certain violations of the motor vehicle laws of the State and are in addition to the fines, fees and other charges imposed by law for such violations. Such fines, fees and other charges imposed by law for certain violations of the State motor vehicle laws do not constitute DMV Surcharges and are not available to Bondholders. The DMV Surcharges have been levied since MVC partners with the New Jersey Division of Revenue (DOR) to manage the New Jersey Surcharge Violation System (NJSVS). Surcharges are in addition to any court fines, penalties or personal auto insurance premiums. Surcharges are authorized in statute (N.J.S.A. 17:29A-35). Assessments are based solely on offenses posted to driver records for violations occurring in New Jersey and other states. Moving out of state does not void payment obligations. The Surcharge Billing and Collection System (STARS) was developed by the State Office of Information Technology (OIT) in consultation with MVC and DOR. The STARS system is maintained by the New Jersey Office of Information Technology and the Department of Revenue. The STARS system receives information about driving violations from MVC s information system via courts. STARS will initiate a process to produce billing notices for drivers liable for a surcharge on certain driving violations or events. The collection of money associated with surcharge payments is primarily handled by collection services contracted and managed by DOR. The DOR manages cash control and revenue processing associated with surcharge collections. The contractors work in conjunction with MVC to facilitate collection of payments. The violations for which NJSVS Surcharges are imposed are (i) driving while intoxicated; (ii) receiving six (6) motor vehicle points during a three-year period; (iii) driving without a license; (iv) driving without insurance; and (v) driving with a suspended license. NJSVS Surcharges are levied over a three-year period following the event giving rise to the surcharge.

2 Driving While Intoxicated. Drivers convicted of driving while intoxicated are fined one thousand dollars ($1,000) a year for each of the first two convictions and one thousand five hundred dollars ($1,500) a year for each successive conviction. Surcharges are levied with respect to New Jersey drivers convicted of driving while intoxicated in New Jersey or in another state with a similar statutory violation. This surcharge is established by statute. Excess Points. Drivers who accumulate six (6) motor vehicle points during the preceding three (3)-year period must pay a surcharge of one hundred and fifty dollars ($150) and an additional twenty-five dollars ($25) for each point over six (6) points. The surcharge is established by statute; however, the violations for which points are assigned and the number of points assigned for a specific violation are determined by regulations promulgated by the former DMV and now the Commission. There are currently fifty-eight (58) violations for which a driver may be assessed points, including one (1) violation for which eight (8) points may be assessed (leaving the scene of an accident in which there was personal injury), seven (7) violations for which five (5) points are assessed, six (6) violations for which four (4) points are assessed, five (5) violations for which three (3) points are assessed and (thirty-nine) 39 violations for which two (2) points are assessed. Regulatory Violations. The Commissioner of Banking and Insurance after consultation with the Commission is authorized to impose regulatory surcharges ( Regulatory Surcharges ) with respect to the non-point violations subject to the DMV Surcharge, namely, driving without a license, driving with a suspended license or driving an uninsured vehicle (each a Regulatory Violation ). The following Regulatory Surcharges are imposed with respect to the Regulatory Violations: one hundred dollars ($100) for driving without a license or failing to have insurance on a moped and two hundred and fifty dollars ($250) for driving with a suspended license or failing to have liability insurance on a motor vehicle. The following table sets forth the number of DMV Surcharges allocated respectively to Regulatory Violations, Points and DWI for each year from 1995 through Calendar Year Regulatory Violations Points DWI Total , ,482 71, , , ,759 85, , , ,281 81, , , ,275 79, , , ,652 61, , , ,420 60, , , ,038 62, , , ,695 58, , , ,373 58, , , ,981 61, , , ,231 62, , , ,983 59, , , , , , , , , , , ,924 57,720 66,918 69,870 72,995 63, , , , , ,017

3 No assurance can be given that (i) convictions will continue at historic rates for violations for which NJSVS Surcharges are imposed or with respect to which points are assessed, (ii) collections of NJSVSSurcharges, together with other Revenues, will be sufficient to pay principal of, premium, if any, and interest on the 2007 Bonds, (iii) the State Legislature will appropriate NJSVS Surcharges to the Authority in amounts required to pay principal of, premium, if any, and interest on the 2007 Bonds, (iv) the State Legislature will not enact legislation that would reduce collections of NJSVS Surcharges, (v) the Commissioner of Banking and Insurance, in consultation with the Commission, will not amend or repeal regulations imposing surcharges for Regulatory Violations or (vi) the Commission will not amend or repeal regulations imposing or assessing points for certain offenses. See RISK FACTORS above. The motor vehicle laws are enforced by local and State police and law enforcement personnel. Under State law, a portion of the fine for violating certain motor vehicle laws (but not the NJSVS Surcharges) is retained by the local government which issues the summons for a violation. Billing and Collection Procedures for NJSVS Surcharges. The billing and collection procedures detailed herein do not apply to the Unsafe Driving Surcharge, which is collected by the courts. See above, SURCHARGES Unsafe Driving Surcharges Court Procedures for Assessment and Collection. In March 1996, the New Jersey Department of the Treasury entered a contract (the First Contract ) with Lockheed Martin, IMS ( IMS ) to bill and collect Surcharges. On August 24, 2001, IMS was sold to Affiliated Computer Services, Inc. ( ACS ), and ACS assumed IMS responsibilities under the First Contract. The State has entered into a new contract with ACS, effective September 10, 2008, with terms similar to the First Contract. The main difference is that ACS now operates the State's new system as opposed to operating their own system. The State is now responsible for programming, operating and administering the surcharge database (STARS) instead of ACS. The contract with ACS expires in March It may be extended until September DOR and MVC are currently discussing future options for billing, mail, remittance and collection services. ACS (took out and a second collection vendor uses a series of collection techniques including noticing, skip tracing, outbound collection calls, and legal activities. ACS (took out collection vendors) also uses various name and address databases including National Change of Address, Accurint and Experian. A driver receiving a summons has until the scheduled court date to pay the penalty or to contest the violation. When a driver is convicted of any violation which could result in a NJSVS Surcharge, the local court entering such conviction notifies the Commission generally within seven days of the conviction. (MVC was deleted)the Commission maintains a computerized database of all drivers with licenses and suspended licenses and all drivers convicted of motor vehicle offenses in the State and updates such database daily to reflect convictions for violations. Addresses of these drivers are verified through Accurint and Experian. Violations are transmitted to the Commission from the State courts, every Monday and Thursday evening. The violations are immediately posted to individual driving records. During the following weekend, the violations are transmitted to the Surcharge database. Within ten days of receiving the violation from the Commission, ACS mails an initial billing notice to the driver. The driver is requested to pay all or part of the initial bill within 35 days.

4 Generally, about ten days Five after the due date of a surcharge payment, if the DMV Surcharge has not been paid in full or in an amount sufficient for the driver to be enrolled in a payment plan, a Proposed Notice of Suspension of the driver s license is mailed to the driver. If the driver fails to pay the DMV Surcharge or enroll in a payment plan within 35 days of the issuance of the Proposed Notice of Suspension, the driver s license is suspended on the weekend following the 35th day from date of issuance of the Proposed Notice of Suspension, STARS will notify the MVC information system of the failure to pay the debt and MVC sends outan Order of Suspension (driving privileges are suspended.. The following weekend, if an account is considered delinquent, ACS sends out a Notice of Proposed Judgment. The driver has 35 days in which to pay or enroll in a payment plan. If driver fails to do so, a judgment is filed with the Superior Court of New Jersey, a 20% collection cost is added to the original value of the NJSVS Surcharge and interest begins to accrue on this sum at the current rate allowed by law.. Four post-judgment notices are mailed to the driver over a 35-day period encouraging the driver to either pay or enroll in a payment plan. The Notice of Filing of Judgment is sent first, followed by a series of three notices from the Division of Revenue, Department of the Treasury. The notices address the driver's license suspension, the adverse effects of the judgment, the reporting to the Credit Bureau, and the use of the SOIL Program (as defined below) to satisfy the DMV Surcharges. If the driver still does not pay, LDC Collections ( LDC ), the collection agency used by ACS, will send a notice to the driver informing the driver that his or her account has been assigned to LDC and that he or she must address this issue immediately to avoid further legal action. The account is simultaneously turned over to the in-house collectors at ACS/LDC, who will first contact the driver by telephone encouraging the driver to enroll in a payment plan which can start the process of license restoration. The driver is advised that if he or she fails to satisfy the debt, the account will be forwarded to a law firm for additional legal action. If LDC fails to collect these funds, a final notice is sent from the Department of the Treasury warning the driver that the account will be assigned to a law firm on a certain date if the driver takes no action. On that date the account is assigned to one of three law firms for collections. The assigned law firm sends out a series of letters including an information subpoena issued pursuant to the Rules Governing the Courts of the State of New Jersey. The law firm then decides on the course of action for the account, such as wage garnishments or asset seizure. If the driver still fails to satisfy the debt, the account will then be assigned to GC Services in Oklahoma City for collection, which is the second debt collector. Notices of nonpayment are sent to the credit reporting agency, Experian, on a quarterly basis. All DMV Surcharge accounts are currently in one of the above-described stages of the billing and collection process. The following table sets forth the dollar amount of the DMV Surcharges billed from calendar year 1995 through calendar year 2011.

5 Calendar Year Regulatory Violations Points DWI Total 1995 $50,081,750 $30,464,650 $72,580,000 $153,126, ,833,950 24,718,725 86,453, ,006, ,315,500 31,006,100 82,584, ,906, ,446,000 30,457,600 80,693, ,597, ,298,200 29,587,999 62,340, ,226, ,288,300 22,991,900 60,712, ,992, ,409,700 21,599,350 62,867, ,876, ,342,800 19,797,700 59,031, ,171, ,679,100 18,356,725 59,195, ,230, ,780,300 19,978,100 61,526, ,284, ,151,850 21,394,225 62,876, ,422, ,848,250 21,347,675 60,321, ,516, ,718,750 54,977,450 55,429,300 54,228,400 52,496,700 21,635,900 22,626,600 22,610,175 20,651,500 18,240,224 57,989,000 67,300,500 70,234,500 73,330,000 63,881,500 The following table sets forth the amount of the NJSVS Surcharges billed from calendar year 1997 through 2008 and collected and deposited into the Surcharge Fund and the cumulative NJSVS Surcharges collected as a percentage of cumulative billed. There is a significant delay between billing and receipt of NJSVS Surcharges. A significant portion of NJSVS Surcharges are not collected until after judgments are recorded. 135,343, ,904, ,273, ,209, ,618,425 Calendar Year Net Billed (In Millions) (a),(b) Net Collections (In Millions) Cumulative Collected as a Percentage of Cumulative Billed (c) 1997 $186.9 $ %

6 (a) Does not include other costs and interest associated with NJSVS Surcharges imposed by the Commission. (b) Includes NJSVS Surcharges collected from NJSVS Surcharges billed in previous years. All NJSVS Surcharges collected are allocated first to satisfy the earliest DMV Surcharges billed. (c) Aggregate since 1984, but prior to 1997, may include computations derived from returned checks. Does not include amounts billed prior to Remedies of the Commission. The remedies detailed in this subsection do not apply to the Unsafe Driving Surcharge which is collected by the courts. Remedies of the courts are detailed herein in SURCHARGES-Unsafe Driving Surcharges Court Procedures for Assessment and Collection above. The Commission s remedy for failure to pay a DMV Surcharge is to suspend the license of the driver; and since June 1994, the Commission is also authorized: (i) to use the State s Setoff of Individual Liability Program (the SOIL Program ) pursuant to which unpaid debts are deducted from the obligor s income tax refunds and homestead property tax rebates; (ii) to file a certificate of indebtedness for the NJSVS Surcharge and proceed as though collecting a civil judgment in Superior Court (including garnishing wages and placing a lien on real property); (iii) to accept payment of NJSVS Surcharges by credit card; and (iv) to impose a fine of $3,000 upon a person driving with a suspended license who has not paid NJSVS Surcharges imposed upon them. This fine shall be waived by a court upon proof that the person has paid the total NJSVS Surcharges imposed upon them prior to the court date. This fine does not constitute a DMV Surcharge. The United States Court of Appeals for the Third Circuit has held that the DMV Surcharges create a lien which is not dischargeable in bankruptcy. In Re Schick, 418 F. 3d. 321 (3rd. Cir. 2005). Selected Information Licensed Drivers. Set forth below are the total licensed drivers in the State. Fiscal Year Number of Licensed Drivers ,681, ,711, ,682, ,736, ,707,907

7 2002 5,713, ,706, ,741, ,668, ,629, ,519, ,501, ,500, ,484, ,078,814

8 Total Vehicle Registrations. The following table sets forth total registrations of vehicles in the State. Number of Fiscal Year Total Vehicle Registrations ,249, ,057, ,393, ,774, ,924, ,043, ,302, ,055, ,781, ,537, ,362, ,846, ,749, ,724, ,343,306 Recommendations of the Fairness and Affordability Task Force The Motor Vehicle Fairness and Affordability Task Force (the Task Force ) was created in February, 2005 to study the impact on the public of driver s license suspensions, including suspensions attributable to the State s surcharge programs. The Task Force concluded its study and made its final report to the Governor in February, 2006, including its recommendations for legislative changes. Four bill packages were introduced in the 212 th State Legislature ( session) proposing measures to implement certain of the Task Force recommendations. In particular, such bills provided measures to (i) authorize the courts to waive unpaid portions of court-imposed time payment orders for certain indigent or low-income persons up to a two hundred dollar ($200) cap per order (A.3526/S.2332); (ii) provide the courts or the Commission with the option of suspending the registration of a motor vehicle as to which parking fines or penalties remain unpaid (as an alternative to the current option of driver s license suspension) (A.3523/S.2326); (iii) extend the period over which installment payments may be made (A.3524/S.2331); (iv) permit the restoration of driver s privileges upon payment of five percent of the outstanding surcharge assessment (A.3524/S.2331); and (v) expressly authorize the State Treasurer periodically to establish motor vehicle surcharge amnesty periods (principal would be paid but not interest or collection costs) (A.3525). A.3526/S.2332 was enacted January 13, 2008 as L. 2007, c A.3523/S.2326 was enacted January 13, 2008 as L. 2007, c A.3524/S.2331 was enacted January 13, 2008 as L. 2007, c A3525 was not enacted during the 212 th Legislature. A3525 was reintroduced as A.342 in the current 213 th State Legislature ( session). A.342 was introduced on 1/8/08 and referred to the Assembly Transportation, Public Works and Independent Authorities Committee. Surcharge-Related Enactments

9 In January 2010, Senate Bill No was signed into law as P.L.2009, c.224. This law requires the Chief Administrator of the New Jersey Motor Vehicle Commission ( MVC ) to periodically establish promotional payment incentives and offer such incentives to any driver who has failed to pay any motor vehicle surcharges levied for accumulated motor vehicle points and those levied for motor vehicle violations or convictions for which points are not assessed. Any driver whose outstanding surcharges include any levies imposed for a drunk driving conviction or refusal to submit to a blood alcohol content test are not eligible to participate in any promotional payment incentives. The law required the Chief Administrator to establish the first payment incentive within six months of the date of enactment. The initial MVC Surcharge Payment Incentive Program, which ran from June 15, 2010 through July 30, 2010, consisted of three main components: month payment plans. Suspended drivers who were not making regular payment were allowed to sign up for a 48-month payment plan. Additionally, drivers who were making regular payments could extend their payment plans from 24 to 48 months. 2. Waiver of interest for eligible individuals who paid the principal and collection costs in full by July 30, An automatic write-off of interest for eligible drivers with interest-only balances. Approximately 1,700 individuals (out of about 273,000 who were eligible to participate) took advantage of the 2010 MVC Surcharge Payment Incentive Program. No representation can be made as to whether any of the above-mentioned bills will have a materially adverse effect on the amount or timing of Unsafe Driving Surcharges or DMV Surcharges collected. See RISK FACTORS above.