Check for one penny points to need for change in DMV refund law

Cahal O'Doherty says he wasn't sure whether to laugh or be outraged when a check from the Nevada Department of Motor Vehicles arrived.

The check, framed and hanging on the wall at David's Furniture on Hot Springs Road, is for one penny.

It was issued to store owner Richard Tilton, but it was O'Doherty who insisted on framing it for display.

"I told him there's no way we're cashing this check," he said. "Every time I look at that thing hanging on the wall, it spikes my blood pressure a notch or two."

It's been there more than a year. But the whole issue came back recently when O'Doherty sold a car. His refund check for the old vehicle's license plate was a check for 67 cents.

"It's ridiculous," he said. "What kind of idiots do this?"

The folks at DMV as well as the controller's office aren't arguing with Doherty. Both have asked the Legislature to change the 1997 law which permitted everyone cashing in an old license plate to get a refund for the unused portion of the registration year. The state is required to make the refund no matter how small.

"We're issuing over 100 penny checks a year," said DMV's Chief Administrative Deputy Dennis Colling.

"Last year, my office issued 9,118 checks for less than one dollar," said Controller Kathy Augustine.

Many of them are so small, she said 1,222 weren't even cashed.

"I love that someone called about getting a one-cent check because I'm trying to get rid of them," said Augustine.

She said it costs her office a minimum of $5 to issue each of those checks.

Colling said that doesn't count the expense of paperwork and personnel time to process all those checks before they even get to the controller's office.

Lawmakers are looking at two pieces of legislation designed to fix the problem. Assembly Bill 30 would simply eliminate the refunds. That bill was amended to eliminate refunds under $100, but Augustine said she would prefer it was restored to original form -- eliminating all refunds.

DMV took a different approach. Assembly Bill 477 would eliminate the cash refunds but allow anyone with credit remaining on a registration to apply that credit toward a new registration and license.

Colling said it's not just the tiny checks. He said more than 101,000 checks were issued in 2002 averaging about $49. That means the refund program is costing the state, local governments and school districts a total of $5 million a year.

The registration portion of the refund comes from the Highway Fund, a direct cost to the state of $1 million in 2001 and $1.35 million in 2002. He said it will come to $1.5 million this year.

The larger portion of the refunds come from the Governmental Services Tax, which is divided among local governments and school districts. Colling said that means local governments are getting hurt by the refunds. But since the state guarantees per-pupil funding for schools, the amount districts would lose is another cost to the state.

The refunds cost the Governmental Services Tax $2.8 million in 2001 and $3.1 million in 2002. Colling estimated the cost at $3.5 million for 2003.

"Typical bureaucracy," said O'Doherty when told the law requires the refunds.

He said if government would stop doing things like that, maybe they wouldn't have to raise taxes as much.

Both Colling and Augustine said they are urging lawmakers to fix the problem this session.