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

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.

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.

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.