Regarding the registration and titling of motor vehicles, including by providing for initial registration and titling by any county treasurer and by modifying related fees and the amount of fees retained by county treasurers

Description

House File 674 allows for any county treasurer, instead of the treasurer of the county where the primary user of the vehicle is located, to conduct certain transactions, including accepting applications for and issuing certain certificates of title, accepting applications for and issuing new registrations, and perfecting security interests. Currently, a person must apply for registration and certificate of title from the person’s county of residence or from the county where the primary users of the vehicle are located. The Bill also increases by $10 various fees required in the registration and titling of vehicles, including establishing a $10 increase in the fee for new registration. House File 674 subsequently increases the amount the county treasurer is allowed to retain for deposit in the county general fund by $10 from each fee for certificate of title, perfection of security interest, and new vehicle registration, as seen in Figure 1. Figure 1 — County Fee Retention Per Transaction Under House File 674 Division I of the Bill is effective January 1, 2025.

Background

2008 Iowa Acts, chapter 1113, increased the application fees paid to a county treasurer for motor vehicle registration and issuance of certificate of title from $10 to $20, and from $2 to $10 for salvage titles and titles for motor vehicles returned to a manufacturer. The additional $10 or $8 collected from the collected fees is allocated to the Transportation Moves the Economy in the 21st Century (TIME-21) Fund pursuant to Iowa Code section 321.2(15). The TIME-21 Fund is currently set to be repealed on June 30, 2028.

A surcharge of $5 is also required for the issuance of a certificate of title pursuant to Iowa Code section 321.52A.

Iowa Code section 321.152 currently allows counties to retain and deposit fees in their general funds. The fees that can be retained are as follows:

• 4.0% of the total collection of each annual or semiannual vehicle registration and each duplicate registration card or plate issued.
• $2.50 from each fee collected for certificates of title.
• 40.0% of all fees collected for certified copies of certificates of title.
• 60.0% of all fees collected for perfection of security interests.
• 25.0% of each penalty collected for improper business-trade truck registration.

Transaction

Current Fees

Retained

Fees Retained

Under HF 674 Certificate of Title $2.50 $12.50 Perfection of Security Interests $6.00 $16.00 New Registration $1.00 $11.00

• $1 from each fee for new registration.
• 25.0% of each penalty collected for improper motorsports recreational vehicle registration. The remaining revenue collected from a certificate of title transaction, including the $5 surcharge per title transaction, is deposited into the Statutory Allocations Fund pursuant to Iowa Code section 321.145. After statutory distributions, any remaining revenue in the Statutory Allocations Fund is credited to the Road Use Tax Fund (RUTF).

Figure 2 includes the total number of transactions at the county level in FY 2022. The transactions are listed as they are identified in the Department of Transportation’s (DOT’s) system.

Figure 2 — FY 2022 Initial Registration and Certificate of Title Transactions by Counties In addition to the transactions above, the Iowa DOT estimates that DOT locations processed approximately 2,229 title transactions for commercial vehicles and 2,026 transactions for perfection of security interests in FY 2022.

Assumptions

• FY 2025 and FY 2026 transactions will match FY 2022 transactions.
• All “title and registration” transactions involve payment of both the new title fee and the new registration fee. As a result, it is assumed there are 888,860 new title transactions and 888,860 new registration transactions.
• Fee revenue from transactions processed by the Iowa DOT is deposited into the RUTF.
• The Iowa DOT has stated it will incur a one-time information technology labor expense of $48,000, which will be absorbed with existing resources.

Fiscal Impact

House File 674 is estimated to increase fee revenue retained in county general funds by $10.5 million in FY 2025 and $20.9 million annually beginning in FY 2025 (Figures 3 and 4). Figure 3 — Estimated Increase to Counties in FY 2025Type of Transaction FY 2022 Transactions Title and Registration 888,860 Replacement and Corrected Title 61,462 Manufacturer Buy Back Title 89 Salvage Title 42,151 Security Interests 213,427Type of

Transaction

Estimated Number of

Transactions

Estimated Increase

in Revenue Certificate of Title 496,281 4,960,810$ Security Interests 106,714 1,067,135 New Registration 444,430 4,444,300 10,472,245$Total Increase in Revenue Figure 4 — Estimated Annual Increase to Counties Beginning in FY 2026 Additionally, HF 674 is estimated to increase net revenue to the RUTF by $21,000 in FY 2025 and $43,000 annually beginning in FY 2026 (Figures 5 and 6).

Figure 5 — Estimated Net Increase to the RUTF in FY 2025 Figure 6 — Estimated Annual Net Increase to the RUTF Beginning in FY 2026

Sources

• Department of Transportation
• Legislative Services Agency calculations