Vehicle registration fee protections for localities

January 14, 2020

In remarks made presenting his 2020-2022 budget proposal, Governor Ralph Northam proposed reducing the state’s vehicle registration fee by half.  Virginia Code currently permits local governments to levy license fees on vehicle registration that shall not be greater than the annual fee amount imposed the state. This maximum amount varies by vehicle class, but for passenger vehicles weighing below 4,000 pounds, the state registration fee is $40.75. Local governments can currently levy registration fees of their own up to that amount.

By proposing to halve the state’s fee, many local governments would potentially see a reduction in revenues from their own vehicle registration fees as they would be prohibited by code from maintaining registration fees in excess of $20 per vehicle. Furthermore, any local government with a current fee rate lower than that amount would be prohibited from raising future fee rates above $20. Such limitations would impose significant and unexpected financial hardships on local governments, who already struggle with limited means of generating revenues to provide core services.

VACo staff contacted the Secretary of Transportation’s office with our concerns and reviewed the Administration’s introduced legislation. We were pleased to see and receive confirmation that the proposed legislation maintains local governments’ ability to levy vehicle registration fees at the amount it currently stands as of January 1, 2020. Localities in which the vehicle registration fee is lower than the maximum rate currently allowed by law will retain the ability to raise rates to the current maximum rate if they so choose in the future.

In order to ensure that this outcome survives the legislative process this session, VACo staff in collaboration with VML have secured patrons in both the House and Senate for budget amendments. If the language contained in the proposed amendments is included in the passed budget, this will provide additional security for local governments to retain their existing registration fee capacity.

VACo Contact: Jeremy R. Bennett

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