Crossfire - January 2009

State the Issues

Should the Department of Motor Vehicles be privatized?

YES

Should the DMV be privatized? That is like asking if kids should eat their vegetables.

If you ask the average citizen to name the three most inefficient, aggravating organizations to deal with, you will likely get back, in no particular order, the post office, the IRS and the DMV. It is no coincidence that all three are government-run operations. And at the heart of the problem is the fact that the DMV has no competition. It is a government-enforced, government-run monopoly no matter how hard it tries to promote itself otherwise.

The Nevada DMV’s 2008-2009 Strategic Plan promises to, “Deliver progressive, responsive service to our customers…” This makes the DMV sound like it is a Wal-Mart. A real “customer” has the freedom to buy a product or service or not buy a product or service. In addition, a real “customer” has the option of buying a product or service from a variety of competitive providers.

No such choices are available when it comes to the DMV. Drivers are trapped. We are “customers” in the same way a kidnapping victim could be called a “house guest.”

While ensuring that the public roads are populated with safe drivers and safe cars is arguably a legitimate government concern, that does not necessarily mean the government should provide the services itself.

The general functions of the DMV are vehicle registration, license plates, driver’s tests, driver’s licenses and title transfers. In reality, all of those “services” could be provided by private vendors under government guidelines and oversight. This would allow the DMV to shrink its taxpayer-funded workforce to almost nothing, while also shuttering unnecessary, redundant and expensive taxpayer-funded satellite offices.

There is simply no reason in the world why DMV functions cannot be performed – better, more efficiently and at a lower cost – by private operations such as insurance companies, car dealers, automobile clubs, credit unions, chambers of commerce, the AARP and even independent operators located in shopping centers and grocery stores - much like those cellular phone kiosks you see everywhere.

Just as restaurants provide a wide variety of menu choices, prices and hours – some are even open 24/7 – privatizing the DMV, or at least most of its services, would be a win-win for Nevada’s drivers and taxpayers. So let it be written; so let it be done.

Chuck Muth is president of Citizen Outreach, a non-profit public policy grassroots advocacy organization.

NO

You mean more than it already is?

There are times when the privatization of government functions makes financial sense and sometimes when it does not. The Nevada DMV has carried out successful projects going both ways.

The DMV’s successful self-service kiosks are an example of a successful public-private partnership. The program required no capital investment on the part of the state and has been an effective time saver for both the public and the department. Another good partnership requiring no capital outlay by the state is vehicle registration renewals at emissions stations.

The Nevada DMV also has examples of the government doing the job better than the private sector. The DMV designed and built a superior new system for handling emission test results and monitoring emission stations, eliminating a private contractor that charged $2.06 per test. The DMV is also about half-way through projects to eliminate private contractors in the areas of fuel tax collections and motor carrier licensing. Though not glamorous or high-profile, these efforts, when completed, will save Nevada taxpayers more than a million dollars a year, every year.

Privatization is not a panacea. It needs to be carefully considered and implemented only where and when it makes sense. For example, privatizing the front-counter functions at the DMV would be a disaster. For evidence of that, one needs to look no further than the state which tried it.

In 1995, New Jersey privatized its DMV. According to a state legislative report in 2002, privatization resulted in “…poor, disjointed and confused service delivery without consistency…which has led to confusion and frustration in the minds of New Jersey citizens.” The report also noted that privatization “…resulted in poorly paid employees who have received inadequate benefits, resulting in a high turnover rate at DMV agencies.” In 2003, New Jersey gave up the experiment and returned the DMV to state control.

Straight-out privatization has proved to be a bad idea at motor vehicle agencies, but public-private partnerships have proved to be a cost-effective way to increase services. The Nevada DMV continues to seek partnerships that result in better service to Nevada motorists and savings to Nevada taxpayers.

Ginny Lewis is the director of Nevada Department of Motor Vehicles.