Last week, we talked about how Tennessee’s transportation system is supported by federal, state, and local funding, with fuel tax accounting for the largest source of federal and state highways. Just behind fuel tax is state vehicle registration and licensing fees. Today, we take a look at what Tennessee charges for vehicle registration and licensing fees and how that money is used in the funding of state roads.
Motor Vehicle Registration
Tennessee law establishes an annual state motor vehicle registration fee, which varies by type of vehicle and license plate. Fees range from $21.50 for a passenger motor vehicle to $1,368.75 for a freight motor vehicle with a declared maximum weight of 80,000 pounds. County clerks collect the fees and remit them to the Tennessee Department of Revenue, which distributes the funds according to a series of legislative directives. In general, state law directs that 98 percent of revenues derived from motor vehicle registration fees are to be distributed to the highway fund and 2 percent to the general fund but several other legislative directives must first be fulfilled.
Two of the directives include appropriating funds annually to cover the cost of issuing the plates and collecting $1 per registration to cover the cost of making the plates reflective. In 2013, out of the total monies distributed from receipt of motor vehicle registration fees (about $255 million), the Department of Revenue distributed about 82 percent (about $208 million) to the highway fund. Other funds and uses to which motor vehicle registration fees are statutorily directed, prior to distribution to the highway fund, include those shown in Exhibit 11.
Tennessee also sells specialty and personalized license plates, the purchase price of which includes the base $21.50 plus $35 for either a specialty plate (i.e., for a university, charity, cultural organization) or a personalized plate (or $70 for both). Most of the funds for specialty and personalized plates go to the applicable organization and/or the Tennessee Arts Commission; 10 percent of the revenue from certain specialty plates and 20 percent of the revenue from cultural plates go to the highway fund.
The bulk of the state’s motor vehicle registrations (62 percent) come from standard license plates for regular automobiles. The total number of current license plates registered in Tennessee as of July 2014 was about 6.8 million; more than 4 million of these were for automobiles with traditional plates. Trucks account for about 1.5 million license plates, about 22 percent of registrations.28
Tennessee state law also authorizes the collection of fees for issuing a certificate of title for a motor vehicle. No portion of the $5.50 fee is allocated to the Highway Fund; $1.50 of the fee is earmarked for debt service on a state parks bond issue and $0.50 is earmarked for enforcement action against odometer fraud. The remainder of the $5.50 is earmarked for capital projects at state parks.
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