A proposal in Gov. Mike Dunleavy’s draft budget to cut funding for six rural Department of Motor Vehicle offices and replace them with offices run through a private-public partnership has run into opposition from rural and urban legislators.
On the southern Kenai Peninsula, Rep. Sarah Vance, R-Homer, said she remains undecided on cutting rural DMVs, including the Homer office, but in a phone interview last Friday, said she’s “erring on the side of caution right now with this proposal” and leaning toward keeping the local DMV open.
Vance emphasized that no decision has yet been made whether to close or keep the rural DMVs open.
A private DMV office, Homer Tags and Title, has already started the process to enter an agreement with the state to offer DMV services in Homer. Partners Jeremy Pawcio and Heather Temple have leased space in the Kachemak Center on Pioneer Avenue and are remodeling an office, with a planned opening later this spring. Temple, the owner of Flying Whale Coffee Shop, formerly at the Homer Airport, also plans to run her cafe next door to Homer Tags and Title.
In his budget, Dunleavy proposes to close or reduce service at DMV offices in Homer, Eagle River, Tok, Delta Junction, Valdez and Haines. With the exception of Haines, all of the individual offices bring in revenue above the costs to operate. According to budget documents prepared by the Department of Administration, the Homer DMV generated $497,921 in revenue for the state in Fiscal Year 2020.
At a meeting on March 11 with the Finance Subcommittee of the House Administration Committee, DMV Director Jeffrey Schmitz and Department of Administration Commissioner Kelly Tshibaka took a grilling from legislators skeptical of cutting rural DMV offices and replacing them, as Tshibaka and Dunleavy have proposed, with private DMV offices.
On Wednesday, Rep. Zack Fields, D-Anchorage, introduced House Bill 137, “An Act requiring the Department of Administration to maintain and operate certain offices that provide services related to motor vehicles; and providing for an effective date.” If passed, the bill would prohibit closing or contract for the operation of DMV offices in communities with 850 people or more.
“Alaskans rely on our vehicles to get to work and support families,” Field said in a press release announcing the bill last Friday. “We must preserve access and keep fees affordable.”
“The Department of Administration should hit pause on their privatization and price hike plan until there is adequate opportunity for oversight,” Rep. Jonathan Kreiss-Tomkins, D-Sitka, added in the press release.
Vance also introduced a DMV-related bill on Wednesday, HB 140, “An Act relating to expiration and renewal of driver’s licenses,” which would allow a person needing to take a vision test for a driver’s license to submit a certified statement from a license physician or optometrist saying the licensee met department standards.
While the private DMVs would offer almost all the same services as state DMVs, those outfits would add charges to the regular DMV fees. Because cutting the rural offices would eliminate overhead for building rentals and other costs, the state would stand to save $500,000 if they were privatized, Schmitz said.
That approach drew criticism from some legislators on the committee. Rep. Geran Tarr, D-Anchorage, noted that in large cities with private and public DMV offices, people have a choice. If rural offices are closed and replaced with private DMVs, they wouldn’t.
“It really looks to me this is more just an opportunity for some businesses in Alaska to make money at the expense of Alaskans,” she said. “… It’s basically a cost shift from an agency that runs itself and is self-sufficient, to Alaskans.”
Rep. Adam Wool, D-Fairbanks, who chaired the meeting, said, “The people in Tok are going to have to pay more for their services. Some services, they’re going to have to drive to Fairbanks. This is the essence of what we’re working with.”
Under questioning from the subcommittee, Schmitz admitted that even if the private offices were to open, not every required DMV service would be offered, such as Commercial Driver’s License testing. He said all but five services offered by DMV can be done online. Five services require in-person visits, including driver’s license renewals at age 69. That has stirred strong opposition to the proposal among senior citizen groups.
In a letter to the Senate Transportation Committee urging it to reject Dunleavy’s budget cuts, Seniors of Alaska Executive Director Peter Zuyus said services that would impose additional fees on seniors could violate the federal Elder Justice Act of 2010. In that letter, he wrote, “Discrimination against Seniors, Disabled, Rural, Lower Income and Native Alaskans should not be used as a punitive political tool for budgetary purposes.”
Even Vance’s parents, Coletta and Raymond Walker didn’t like the idea of closing the local DMV, Vance said. Truck drivers and fishermen with busy schedules might like the convenience of a private DMV if it meant not having to wait, she said. For seniors, that’s different.
“When I asked my parents what they thought about this proposal, they said, ‘Sarah, now that we are on a limited income, we don’t have all the money in the world, but we do have all the time in the world,’” Vance said. “… Thinking about that, I don’t think it’s time to close down our local DMV. I think there is a place for a private DMV in town and I hope it’s very successful.”
That’s also the hope of Pawcio and Temple. They started Homer Tags and Title after being frustrated trying to register a truck with the DMV.
“We thought we could do a better job for the community here,” Pawcio said.
At the committee meeting, Schmitz said 14 private DMVs are already in operation. One group, UMV, with offices in Anchorage and at Joint Base Elmendorf-Richardson, is owned by Einar and Krista Gonder of Wasilla. According to Dermit Cole, Krista Gonder is related to Adam Crum, commissioner of the Alaska Department of Health and Social Services. Rep. Fields raised the issue of a conflict of interest for a high-ranking Dunleavy administration official’s family to benefit from a budget cut that would benefit their business.
The Homer News sent an email and left phone messages with Tshibaka and her office asking about this potential conflict of interest and other issues, but Tshibaka did not respond in time for this article.
Pawcio and Temple have lived in Homer 11 years and aren’t someone coming down from Anchorage, they said. Pawcio works as a security guard at South Peninsula Hospital and Temple is a registered nurse there.
They said they approached the state about Homer Tags and Title being a partner.
At the committee hearing, Schmitz said there is no invitation to bid to solicit private-state partnerships. Any business can approach the state about running a private DMV, and if the owners qualify and pass criminal background checks, they can enter an agreement and get training. The state also grants that business access to the state DMV database.
“It’s a contract agreement stating you’re abiding by all the rules and regulations,” Temple said. “… Basically, anyone can apply. You have to be able to take the steps. It’s more like a typical government contract.”
Schmitz said private DMVs charge the same fees as state DMVs. Pawcio and Temple said they don’t make any money off the DMV fees, but off the filing fees they charge.
“We do feel terrible that it’s adding more money to the DMV process, but it’s also the cost of doing business,” Pawcio said.
Homer Tags and Title will operate whether or not the state closes the Homer DMV, Temple said.
As the governor’s budget proposal moves through legislative committees, Vance said remains skeptical.
“I really doubt it’s going to pass,” she said. “It’s really hard to tell, at least on the House side. I don’t think it has overwhelming support. There are too many concerns about access.”
Under questions last Thursday from Wool at the House subcommittee, Tshibaka said she would respect the Legislature on keeping or closing rural DMVs.
“You are the policy makers, not us,” she said. “If you don’t want to move forward with this (closing rural DMVs), we understand. … If you’re going to make a move like this, it has to be done with the advice and consent of the legislators in those communities.”
Reach Michael Armstrong at firstname.lastname@example.org.