Audit finds Oregon DMV under collected $1.7 million in fees from car drivers

(Source: Persistent Fee Errors Occurring in DMV’s Title and Registration Transactions, ODOT Audit Services)

The Oregon Department of Motor Vehicles is having a very hard time figuring out how much to charge drivers for title and registration fees.

An internal audit of a subset of fee transactions released earlier this month by the Oregon Department of Transportation revealed that the DMV charged people the wrong amount in title fees 17% of the time and levied incorrect car registration fees 26% of the time. The mistakes included both overcharging and undercharging car owners.

According to the audit, the DMV under collected about $1.7 million in fees — and that’s just from the transactions auditors reviewed.

Why does ODOT care about this? Because title and registration fees make up about $437 million of their annual revenue. And as ODOT looks into the future with big plans for congestion pricing and tolls, they need to make sure public trust is rock solid.

Unfortunately, what they found at DMV is pretty bad. “Results of the audit found a high rate of error,” ODOT Director Kris Strickler wrote in a letter to the Oregon Transportation Commission ahead of their meeting in Salem on May 12th.

Of the 702,343 transactions analyzed by the audit, 7,151 customers paid too much and 156,972 customers didn’t pay enough.

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Tiered fee structure charges more for higher MPG vehicles.

There are several culprits and they all come back to errors being made in mileage per gallon ratings — something that has become more complicated since a tiered fee structure went into place in January 2020 and more Oregonians are buying hybrid and fully-electric vehicles.

Title and registration fees in Oregon are based on a vehicle’s MPG rating set by the U.S. Environmental Protection Agency (electric cars and trucks are a separate tier). Oregon went to a tiered fee structure (at right) in order to close the gap in gas taxes paid by owners of high-mileage vehicles. Since more fuel-efficient cars pay a lot less in gas taxes (ODOT’s #1 source of non-federal revenue) and still use the same transportation system, ODOT wants to “reduce this inequity in how drivers pay.”

The problems at DMV arose when vehicles were placed in the wrong tiers due to faulty MPG ratings being used. The errors are blamed on a combination of faulty equipment, incorrect MPG data taken from auto dealerships, and mistakes made about driver enrollment in the state’s OReGO program (a voluntary vehicle miles traveled fee pilot).

For example, if DMV assigns a 25 mph rating to a vehicle that has an EPA rating of 40 MPG, they end up undercharging the owner by $20.

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For some reason there was an especially high number of errors on the base model Toyota Prius where a majority of owners — 18,813 out of 32,935 — where charged less than the correct amount.

“The implementation of the tiered fee structure has led to multiple issues that ODOT needs to address for the approach to be fair to Oregon drivers and to bolster equity in paying for the transportation system,” the audit reads. “ODOT has not captured the full potential of increased revenue by under charging on a sizeable number of transactions.”

Among its recommendations, ODOT says DMV needs to implement a quality control process, offer vehicle owners reimbursements, make a decision on how to address people who underpaid, and so on.

You can download a copy of the audit here (PDF).

CORRECTION, 4:00 pm on 5/26: I initially reported that title and registration fees made up “about $1 billion” in ODOT annual revenue. That is wrong. I confused biennial budget numbers of with annual collections. I also said the amount was not far behind what they bring in with gas tax revenues. That was also wrong. I regret any confusion my errors caused.

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Matti
Matti
6 months ago

When vehicles are registered or emissions tested, I think they should be checked for compliance with state regulations for window tinting. There are too many vehicles out there with illegal black out glass! For road users on bikes or pedestrians, this makes it impossible to make eye contact with drivers at intersections.

Steve Scarich
Steve Scarich
6 months ago
Reply to  Matti

I agree. It is becoming endemic, once drivers realize that there is zero enforcement of the law. It is one of those laws, like kids wearing helmets, that gets no enforcement from cops. Out of curiosity, I checked to see how hard it was to remove. Surprised that it is just like removing an unwanted decal from a bike. Not sure if that is true of factory tint, though. My newest car has tint on second row windows and rear window. I like it because my bike is not visible when I have it in the back of my SUV. Also, car does not warm up as fast.

Mark in NoPo
Mark in NoPo
6 months ago

Our multi-year failure to require current plates (or any plates at all) has cost the DMV far more money, and has been instrumental in driving the city’s huge leap in auto thefts — a crime category in which we already led the nation.

Mark in NoPo
Mark in NoPo
6 months ago
Reply to  Mark in NoPo

(To say nothing of the multiple homicides that have occurred due to resulting confrontations.)

JP
JP
6 months ago
Reply to  Mark in NoPo

Agreed. In the past couple years in Portland, it’s become optional to pay transit fair, optional to return your library books on time, and optional to have license plates. It’s bad policy. What’s the point in having rules while broadcasting that the rules will not be enforced?

Middle of the Road Guy
Middle of the Road Guy
6 months ago
Reply to  Mark in NoPo

But the cones and diverters have kind of mitigated that!

Champs
Champs
6 months ago

Lucky thing that ODOT doesn’t prioritize driving or have a maintenance backlog.

It’s all part of a frustrating pattern. Gas taxes are no longer a useful proxy for road use, so now we need VMT. Nobody seems interested in actively enforcing norms, so instead we get cameras. Working from home, but now your computer has monitoring software. The list of new problems with invasive solutions goes on.

Johnny Bye Carter
Johnny Bye Carter
6 months ago

So if you don’t drive very often you’ll want to own a huge/old vehicle with bad mileage so that the DMV fees are low. Then we have the less experienced drivers using the most dangerous vehicles when they feel they need to drive.

Watts
Watts
6 months ago

Unless you don’t drive much, which is the premise of the comment.

Pockets the Coyote
Pockets the Coyote
6 months ago
Reply to  Watts

Quick maths: 19mpg vs 40mph at $5/gallon, 10 gallons gets 190 miles vs 400 miles at a cost of $50. It will cost $105.27 to drive the 19mpg vehicle 400 miles.

If we only pay $30 for gas over the registration period, which is the difference between the highest and lowest tiers, that would afford us 114 miles of travel. $30 buys 6 gallons at 19mpg gives us 114 miles. If we’re driving less than 114 miles in two years then mileage can be ignored in favor of saving $30 in vehicle registration.

This ignores other vehicle costs, but a used 1st gen Prius from 2007 still gets 40mpg so we can ignore the argument of used v new vehicles. A bigger concern in my book is when a person faces the reality of being in a position where they feel they must drive, but cannot afford an upfront cost difference of $30 for vehicle registration.

Watts
Watts
6 months ago

We probably need to quantify “don’t drive much”.

9watts
6 months ago

What the staggered DMV fees misunderstands is that vehicle weight and fuel consumption track each other pretty well. Weight corresponds to road damage, and a fuel tax takes care of this differential without any administrative burden. Layering in a fuel economy penalty in the form of staggered and apparently difficult to enforce or stay-on-top-of fee scale is so idiotic and unnecessary. I bet it costs more to administer badly than it brings in.

ivan
ivan
6 months ago

Why does ODOT care about this? Because title and registration fees make up about $1 billion (with a “b”) of their annual revenue, a sizable chunk of the $6.8 billion total and not too far behind what they make in gas taxes.

I just want to unpack this a little. This means that ODOT’s budget is $1bn title/reg fees, and a little more than $1bn in gas taxes.

This means that the majority — two-thirds, in fact — of ODOT’s budget comes from other sources.

I really think that should put the lie to this idea that people driving high-MPG vehicles need to pay more to compensate for “their fair share” and thus be negatively-incentivized against driving more efficient vehicles.

We are all — drivers and non-drivers alike — paying for the majority of ODOT’s budget through general state funds, i.e. income taxes.

(And yes, roads are used for more than personal vehicle travel; and yes, focusing on high-MPG vehicles and electric vehicles ignores the environmental consequences of car-centric production & development regardless of their means of locomotion. I don’t own a car and I hope more and more people will be able to have that as a viable way of life through protected bike infrastructure, pedestrian-centric development and adequate transit. I’m just pointing out that in this, as in everything, ODOT is presenting the numbers in such a way as to specifically make environmental impacts even worse.)

Doug Allen
Doug Allen
6 months ago
Reply to  ivan

You are leaving out motor carrier (truck weight-mile taxes) revenue and federal funds from the equation, but I agree, charging higher registration fees for vehicles that use less fuel seems like a bad approach.

Watts
Watts
6 months ago
Reply to  ivan

Very little if any income taxes go to pay for upkeep of Oregon’s roads. Look at the ODOT budget and see where the dollars come from. It’s almost entirely vehicular sources.

9watts
6 months ago
Reply to  Watts

last I knew this was ODOT’s line but difficult to actually verify. We tried to u pack this back when the Street Trust/BTA stepped in it with their ill-executed infographic.
https://bikeportland.org/2013/11/12/do-bikes-get-a-free-ride-advocates-infographic-shows-why-not-96950

maxD
maxD
6 months ago

I wish they were less concerned about “creating equity for people driving EV’s” and more concerned about capturing fees based on size/weight/studded tires.

Boyd
Boyd
6 months ago
Reply to  maxD

Studded tires should be outlawed

Chris I
Chris I
6 months ago
Reply to  Boyd

Or at least taxed at $50 per tire at the point of sale.

Team Chuck
Team Chuck
6 months ago
Reply to  Chris I

$100 per axle per year with studded tires. Getting caught without paying for the year, 3X the fee.

Team Chuck
Team Chuck
6 months ago
Reply to  Boyd

Not according to Les Schwab. Doing the right thing for 70 years. When you see rutted freeway and pot holes in the street, think Les Schwab.

Steve Scarich
Steve Scarich
6 months ago
Reply to  Boyd

Over here in Bend, there are still quite a few cars with studs still on…yes, true. Not sure how many…I would guess that maybe 25% of cars are studded in November, and maybe 5% now. I suspect part of the reason is that fee for swapping tires has gone up drastically the past two years, from $40ish to over $70, and, at twice a year, it is now real money. We actually ‘needed’ serious traction somewhere between five and ten times this non-Winter in town.

PS
PS
6 months ago
Reply to  Steve Scarich

So it takes about 2 years to pay off having the studs mounted to steel wheels for winter and being able to change the tires in your driveway with a $40 jack from harbor freight.

Steve Scarich
Steve Scarich
6 months ago

You might want to factor in the inaccuracy of MPG ratings. My last two vehicles (2011 Ford Crown Victoria and 2007 Saturn Vue), both get over 10% above the mpg ratings. I went on-line and this is very common. I know nothing about mpg ratings, but it appears that they mean little, in relationship to reality. So, I might be paying too high a ‘rate’ for my 24 mpg Saturn, but I am getting 27-28 mpg in the real world. Justice is done.

Watts
Watts
6 months ago
Reply to  Steve Scarich

It depends how you drive. If you believe in heavy acceleration and heavy brake use, you will get much worse mileage than if you drive like a sane person. A vehicle’s MPG rating is based on some standardized driving program that may not reflect the way you drive. As they say, your mileage may vary.

Steve Scarich
Steve Scarich
6 months ago
Reply to  Watts

I was talking highway mpg, where acceleration and braking are minor factors. Speed, of course, would be a factor. I drive about 10% over the speed limit, which is about what it takes to not impede traffic and not get a ticket. Confession: I once owned a big Lexus and drove the ‘loneliest highway in America’ at an average of 105 mph for four hours, and my gas mileage went down about 20%. In my younger, more irresponsible days.

9watts
6 months ago
Reply to  Steve Scarich

“i drive about 10% over the speed limit, which is about what it takes to not impede traffic and not get a ticket…”

I’m not following your logic. can you explain?

J_R
J_R
6 months ago

With that level of errors and the need for more training, the administrative costs of this system is far too high. It’s obviously too complicated. The system of relying more on license, title, and other fees is because the legislature was afraid to implement what was really needed — higher gas taxes.

Big vehicles that use more gas should pay higher fees. They cause somewhat more wear on the roads, occupy more space when parking on the streets, and are more dangerous for occupants of other vehicles as well as bicyclists and pedestrians. They should pay more! Trying to balance things out so that high mileage vehicles pay their “fair share” is not really making it fair when all costs are included.

Todd/Boulanger
6 months ago

“Results of the audit found a high rate of error,” ODOT Director Kris Strickler wrote.

And I wonder if anyone at ODoT has done any statistical analysis (ANOVA etc.) by region or by type of registration office (public or contract station)…to tease out if this is an administration/ training, regional, or other reason.

Middle of the Road Guy
Middle of the Road Guy
6 months ago
Reply to  Todd/Boulanger

This state is lousy at any kind of post-mortem analyses.

Matt S.
Matt S.
5 months ago

I won’t pay my registration until the police start enforcing plates and tags, consider it a silent protest. I’m tired of being penalized for being able to do the right thing. I’m currently going on three years expired registration on my 2015 Subaru. When police start issuing tickets again and requiring people to actually comply with the law, then I’ll register. The system is broken and too many people are getting away with driving with no plates/tags/registration/insurance/license.