Gov. Phil Murphy’s proposed fiscal year 2025 state budget includes $50 million more for the Motor Vehicle Commission to handle a deficit it says it can’t fill on its own. That boost in state aid, MVC officials said, will allow the agency to refrain from plugging the hole with money from drivers across the state.
“The MVC revenue can’t support its operations,” MVC Chief Administrator Latrecia Littles-Floyd told legislators during Thursday’s Senate budget appropriations committee hearing on transportation related budgets. Her report cited federal mandates and other costs that led to the deficit.
Though Littles-Floyd did not go into specifics for plans beyond this fiscal year, she told lawmakers the hope is to balance future budgets within the agency’s operations.
“We’ll implement cost saving measures to reduce waste and inefficiencies,” Littles-Floyd said. “We hope to be flat to avoid passing costs on to drivers.”
Despite the financial situation, MVC officials said that the agency is not considering closing any locations or inspection stations that serve customers.
“There is no fee increase for FY25,” said William Connolly, an MVC spokesman.
MVC Chief Financial Officer William Kelly explained that operating costs increased after the MVC upped its staffing over the past several years.
“We have had maximum staffing levels over the past years. Salaries increased, there have been major costs with benefits,” he said.
Those costs increased from $54 million in 2019 to a projected cost of $140 million in 2024, which is affecting the budget, Kelly said. Information technology costs are expected to increase by $2.61 million in the coming fiscal year’s budget over 2024, which won’t be covered by an earlier grant, according to MVC documents.
Approximately 10.15% of the deficit is from increased expenses, but about 11.28% due to drops in the revenue side of the ledger. The MVC saw a $23 million drop in surcharge revenue in fiscal year 2024, down from the $67.6 million collected in fiscal year 2023. That category of revenue has dropped since the coronavirus pandemic.
The financial situation comes as the MVC is making several large transitions, including approaching its goal of doing 80% of its transactions online.
Last year, the MVC did 71.6% or 8.9 million of its transactions online and by mail, according to backup documents supplied to the legislature. Online transactions increased by 400,000, while mail transactions dropped by 200,000 from 2022, Littles-Floyd said during her report.
The number of people going to motor vehicle agencies to do business dipped slightly by 11,000 between 2022 and last year. The MVC processed a total of 12.6 million transactions, up by 261,000 between 2022 and 2023.
Among the mandates the MVC is tasked with is meeting the federal standards of the new Real ID driver’s license and non-driver’s license ID’s which have required investments in computer and camera hardware and software. By May 7, 2025, only a Real ID compliant license acceptable for identification purposes for domestic air travel or to enter federal buildings, besides passports and other documentation.
The state fiscal year 2025 starts on July 1, 2024.
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Larry Higgs may be reached at lhiggs@njadvancemedia.com. Follow him on X @CommutingLarry.
