2009-10 Budget Analysis Series: Transportation

Department of Motor Vehicles— Real ID

Reject Real ID Request

What Is Real ID? The federal Real ID Act requires states to implement certain driver license and identification card issuance procedures and security enhancements aimed to prevent fraud. If a state does not comply, it will forfeit the ability of its citizens to use such forms of identification for federal purposes (such as boarding airplanes or entering federal facilities). Under the act, states are required to issue Real ID–compliant cards to all existing cardholders by December 2017.

Most, if not all, of California’s 28 million driver license and identification cardholders could ultimately be required to visit a DMV field office to verify their identity and prove that they are legally in the United States before obtaining the new cards. Among other things, the act requires states to verify the authenticity of each applicant’s identification documents—such as birth certificates, Social Security numbers, and passports—with the issuing agency. It also requires states to verify that the applicant does not already possess a driver license issued by another state or territory. This verification is to be accomplished through the establishment and use of several national verification systems. (For more information on the Real ID Act, please see our Analysis of the 2008–09 Budget Bill, page A–72.)

Administration Proposes to Issue Real ID Cards in 2010. The Governor’s budget requests $4.2 million from MVA (and 45 positions) specifically to implement Real ID in 2009–10. Under the administration’s plan, DMV would start issuing Real ID cards beginning in January 2010. Specifically, the department proposes to issue the cards to all original driver license applicants and to give driver license renewal applicants the option of having a Real ID card or a “noncompliant” card. Renewal applicants who wished to obtain the Real ID card would be required to go into a field office, so that DMV could reestablish the applicant’s identity, residence, and legal presence in the United States, as required by the act. Renewal applicants who choose not to obtain a Real ID card would still be able to renew their driver license online. The department has indicated that it plans to introduce legislation seeking authorization to issue two card types: a Real ID complaint card and a noncompliant card.

In addition, the Governor’s budget is requesting funding in the current year and budget year ($11 million from MVA) to initiate a new contract to continue the production of the driver license, identification, and salesperson cards. The department proposes to fund the current–year costs using existing resources. However, because the contract costs are higher than originally anticipated, the administration has submitted a budget Control Section 11 letter for legislative review. At the time this analysis was prepared, we were still reviewing the administration’s Section 11 request. Finally, the budget also proposes to increase the driver license fee by $3 to cover the costs of the contract, as well as partially fund implementation of the Real ID Act.

California Can Apply for a Second Extension. Under the act, states were originally required to be in full compliance—including reissuance of all driver license and identification cards—by May 2008. In recognition of the unrealistic timeframes adopted in the act, as well as many unresolved implementation issues, the U.S. Department of Homeland Security (DHS) extended the compliance date to as late as December 2017. In so doing, the federal agency established a process whereby states may file for an extension to be exempt from the original May 2008 deadline.

The DMV was granted such an extension. This extension, however, expires in December 2009, unless the state requests a further extension by October 2009. Under the regulations developed by the former federal administration, states are required to show progress toward compliance with the act in order to qualify for the second extension. States are not required to start issuing the Real ID cards by January 2010 (as DMV proposes) to receive a second extension. States that receive extensions, however, are still required to reissue Real ID compliant cards to all driver license and identification cardholders by 2017. The administration has indicated that it plans to seek a second extension.

Analyst’s Concerns. We think the department’s proposal is premature for a couple of reasons. First, a state must be deemed compliant with the Real ID Act by the U.S. DHS before it can begin issuing Real ID compliant cards. At the time this analysis was prepared, DHS had not made any such determination about California’s proposed issuance process, or in regard to the security features that would be used in the proposed new cards. Second, given the change in the federal administration, we think it makes sense to hold off on implementation of Real ID until more is known about the new administration’s position on this hugely expensive and unfunded federal mandate. Finally, states are not required to begin issuing Real ID compliant licenses until May 2011. There would still be time for the state to come into compliance with this requirement by the federal deadline if the Legislature chose to reconsider this budget request next year.

LAO Recommendation. For the reasons discussed above, we recommend the Legislature reject the request at this time and reduce the budget by $4.2 million. The Legislature could reconsider this proposal as part of next year’s budget process. We recognize that this delay could result in increased costs if the state decides later to implement Real ID. However, under our recommendation, the Legislature would have additional time to learn more about the intentions in this area of the new federal administration, including whether the federal government intends to cover any of the costs related to Real ID. At this time, we are withholding recommendation on the proposed increase in the driver license fee and the driver license production contract as we are still reviewing the administration’s current–year request.

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