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Department of Revenue proposes $2 technology fee for motor vehicle services to fund new system upkeep
Summary
The Department of Revenue asked the committee to authorize a $2 technology fee on titles and registrations to fund ongoing maintenance, licensing and enhancements for a new motor vehicle system; proponents including auto dealers supported the user‑fee approach and the committee deferred action.
Rosie Yeager, Director of the Motor Vehicle Division, testified about Senate Bill 45, a request to authorize a $2 motor vehicle technology fee on titles and registrations to support ongoing maintenance and enhancement costs for a new statewide motor vehicle title and registration system.
Yeager explained the department received $25 million in 2023 to replace the legacy SDCarS system and will launch the new system imminently; however, the contract carries ongoing annual subscription, licensing and maintenance costs estimated at $1.7 million to $2.4 million per year over a ten‑year term plus periodic major upgrade costs (estimated $5.5–$8.0 million around years 5–7). The proposed fee would create a dedicated Motor Vehicle Technology Fund, continuously appropriated to the Motor Vehicle Division for maintenance, support and enhancement of motor vehicle technology services.
Auto dealer representatives and the South Dakota Auto Dealers Association supported SB 45, saying delays in titling harm commerce and dealers frequently carry vehicles on floor plans while titles are pending. Proponents argued the improved system will speed transactions, allow pre‑applications, online renewals and dealer portal functions, and improve security with role‑based accounts and audit trails.
BFM raised questions about fund balance management and whether license plate or other existing funds might be used; Yeager said the Motor Vehicle Technology Fund would retain collections for future system upgrades and that interest would remain in the fund until expended; the division would return to the Legislature for authority to spend significant sum(s) when upgrades are needed.
Committee members asked whether dealers and other users were consulted about paying and whether dealers already pay some fees when titling vehicles in dealership names; DOR and dealer witnesses said dealers do pay fees in certain transaction types but the fee will principally spread costs to all system users. The committee deferred action on SB 45.
