DMV delay cost SC $18M in trucker payments meant for road repairs, audit says

The South Carolina Department of Motor Vehicles failed to collect more than $18 million during a six-month period from out-of-state trucking companies, money meant to help repair roads around the state, according to an Inspector General’s report.

The DMV was unable to set up a system on time to collect the fees, the report said, an issue that came to light during budget hearings this month when state senators questioned whether the DMV needed additional employees.

In 2019 and 2020, the Inspector General looked into the program after county government officials contacted lawmakers about why collections from truck companies were lower than previous years.

Trucking companies from within the state previously paid property taxes collected by the state Department of Revenue. But the Legislature tasked the DMV to start collecting fees from trucking companies, including those registered form outside South Carolina starting in 2019 as part of a larger road infrastructure package passed in 2017.

Under state law, trucking companies pay fees based on the value of the truck and the number of miles traveled in the previous year. Counties get 75% of the fee, and the rest goes to the state Department of Transportation for road maintenance.

The move by the Legislature allowed South Carolina to collect money from out-of-state truckers, giving the state access to more dollars from drivers who put wear and tear on the roads.

The DMV should have collected $25.3 million during the first six months of the program, according to the Inspector General’s Office.

But the agency only collected $7 million.

“What should have been an economic boon for counties, ended up being a shortfall,” said state Sen. Thomas McElveen, D-Sumter.

The DMV did not have computer programming in place necessary to collect out-of-state money by the deadline set by the Legislature, the Inspector General’s report said. And, although the DMV was able to collect the fees from intrastate trucking companies, the agency did not fully implement the program until April 2020.

Acknowledging the delay in collection, DMV Executive Director Kevin Shwedo told The State the program is now fully implemented and money has been coming in at a better clip than anticipated.

“We just couldn’t get there,” Shwedo said. “There wasn’t enough time to get there and do it fairly, accurately or even through the computing system. But it actually has turned into a gold mine in terms of what it has produced.”

South Carolina’s Inspector General Brian Lamkin said the DMV had challenges, such as having two different computers systems trying to work together and turnover in personnel.

In order to collect the fee, the DMV had to set up a computer system which included charging out-of-state trucking companies. That new fee had to be reported to the International Registration Plan, a reciprocal agreement among states and some Canadian provinces created to avoid the requirement of motor carriers registering in every jurisdiction where they operate.

The DMV did not finalize its road-use fee schedule until November 2019. It then notified the agreement group, which then had 120 days to implement the change.

Lamkin said if the DMV was going to collect the fee on time, the agency would have needed its computer programming and fees in place by September 2018 to ensure it was added to its system.

The DMV had the system fully in place by April of last year.

During discussions on the Senate floor, legislators were critical of the DMV for missing out on the cash, saying the money would have helped fix roads in disrepair.

“I get complaints every day from my constituents about roads that need fixing,” said state Sen. Dick Harpootlian, D-Richland. “Some of that money would have come to Richland County, Lexington County to fix the roads.”

McElveens said he questioned why DMV had not brought up the need for additional staffing when it knew changes were coming.

“One question I had was over the last three years has there been new asks as far as new employees or FTEs (full-time equivalent employees) for the DMV?” McElveen said. “The answer I got was, ‘No.’ If you knew the change was coming in 2017, and you need to implement the change ... (then) sometimes you’ve got to spend money to make money, but it just wasn’t implemented.”

The fee has been a windfall for the state since it went fully operational in April 2020.

Between April 2020 and September 2020, the DMV brought in 16% more cash than the first 15 months of the program.

For the current fiscal year, which ends June 30, the Inspector General estimated the DMV would rake in $47.8 million through the program. As of last month, with three quarters of the fiscal year completed, the DMV had collected $40 million, Lamkin said

“As things progressed and kept building the system up, it picked up momentum,” Lamkin said.