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Bottom Line: DMV Fees

Updated: Wednesday, March 20 2013, 12:55 PM EDT
ALBANY -- When you pay your insurance bills, you might not even see that it's there.  But that little-known fee we're paying is bringing in a whole lot
of money for New York State.
        
The amount collected for the New York Motor Vehicle Law Enforcement Fee was just raised, a few years ago - but exactly where is all that extra money going?  CBS 6's Dori Marlin followed the money to get The Bottom Line.

For Brendan Foley, our new
Executive Producer at CBS 6, it was something of a "welcome present."

"I recently moved to the state, bought a new car, got New York plates," he said.

Only, not so welcome.  He also had to switch over his insurance, and when he did, he saw this: New York State Vehicle Law Enforcement Fee - a total of $20 for the two vehicles combined on his policy.
        
"And I thought, 'Why am I paying $10 per car, for something that looks like it's going to the police?'"

In short, he is.

"It's every vehicle, on renewal," explains Rensselaer County Clerk Frank Merola.  "On a one-year policy, if you've got four vehicles, it's $40."
        
But it wasn't always that way.

Dori found out from the New York State Budget Division, when the fee first passed into law in 1992, the going rate was just $1 per vehicle.
        
Lawmakers then raised it to $5 apiece, in 2005.  And in 2009, when the law was set to sunset, they instead hiked it up to $10.

"It's money that the insurance companies collect, they get no commission off it, they turn it over to the state," said
Merola.

Now you probably know, New York State's got a lot of vehicles on the roads.  Add it all up, and this fee now brings in upwards of $115 million a year.

"It's been a good policy that's run amok, in my estimation," says Senator Jim Seward, who sits on the Senate Insurance Committee.

He told Dori the fee was created to help curb auto theft and insurance fraud in New York.  And money collected went into a special fund, which he says has been effective.  But, of that more than $115 million collected last year - only about $13 million went to the "Motor Vehicle Theft and Insurance Fraud Prevention Fund" and other related efforts - while the rest, more than $100 million, went to the New York State Police for general use.
  
     
"When it went to $10 in 2009-10 budget, I actually voted against that
budget," says Senator Seward, "But the issue at that time was that we needed more resources, at a time when state resources were scarce."

So our extra insurance dollars covered the gap.

Now that he chairs the Insurance Committee, Senator Seward told Dori he's vowed to change that.

"Now believe me, we need to have our State Police adequately funded.  I'm not begrudging that at all," he says.  "But I say at a time when we're all paying too much for our auto insurance, why do we add these extra fees?"

"So you're saying this coming session, you will introduce some sort of change regarding this fee?" Dori asked him.  Senator Seward answered, "Certainly,
I'm going to be fighting to do that."

A spokesperson for the New York State Police reiterated to Dori, the millions of dollars collected from this fee
are simply replacing budget money that had been coming from other revenue
sources - and are not being collected on top of its budget.

The State Comptroller's Office tells Dori, it is currently conducting an audit of the
fee.Bottom Line: DMV Fees


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