Program Alternatives

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As we have seen, Texas’ Driver Responsibility Program has failed on virtually every front.  It has made the public less safe, increased costs to the public by increasing the number of uninsured motorists, and severely distorted the Texas court system.  It adds devastating financial strains to low-income Texans while burdening Texas’ middle class, and it has generated far less revenue than anticipated.

In testimony before the Senate Criminal Justice Committee, one expert – Judge David Hodges – summed up the program like this: “These surcharges are not changing behavior, not being collected, and are creating a new class of criminals each day by adding to the 1.2 million unlicensed and uninsured drivers in the state.”[i]

Furthermore, many Texans consider the DRP a kind of backdoor double jeopardy.[ii]   Levying an administrative penalty on top of a criminal one for the same offense violates the spirit of the constitutional protection against double jeopardy.  So, in addition to being ineffective and unfair, the DRP represents a significant expansion of state power at the expense of individual liberty.

Of the seven states that enacted drivers’ license surcharge programs, two states (Maryland and Virginia) have now repealed them, and a third (Michigan) has eliminated some of the fees.  In Virginia, over 100,000 citizens signed a petition demanding that the surcharges be abolished because of their disproportionate impact on certain individuals, and because of the lack of judicial discretion in levying the fines. [iii]

“There are a lot of people barely […] able to pay their bills, and they get into a situation where they get a fine and it becomes involuntary servitude to the state.” – Michael G. Lowe, Chairman of the Matthews County Republican Party, regarding Virginia’s now abolished driver license surcharge program.

The Texas Criminal Justice Coalition believes the DRP is a fundamentally flawed program.  Attempts to improve collection rates and soften the program’s blow on Texans have been largely unsuccessful.  Therefore, we recommend that the Legislature repeal the program in its entirety and create a fairer, more sustainable funding stream for Texas trauma hospitals.  

However, if the Legislature chooses not to abolish the program, below are recommended changes that would help mitigate some of its biggest failures.

(1)   Grant judges the discretion to reduce or waive DWI surcharges for probationers who voluntarily participate in treatment and monitoring programs.  This would boost public safety by increasing participation in programs demonstrated to reduce recidivism, while lessening the financial burden on cash-strapped drivers.  Furthermore, lowering surcharge amounts to manageable levels may increase collection rates.

(2)   Make certain offenses non-jailable, at the discretion of the judge, including Driving While License Invalid (suspended license) and Failure to Maintain Financial Responsibility (no insurance).  Because the DRP has vastly increased the number of Texans charged with these two misdemeanor offenses, granting judges discretion to waive jail sentences would reduce jail overcrowding and county costs associated with enforcing the DRP.

(3)   Revise the Indigence Program.  Because the current program only reduces surcharges for people earning less than 125% of Federal Poverty Guidelines (FPG), it has only minimally improved collection rates. We recommend revising the Indigence program to waive surcharges for people earning less than 125% of the FPG, and reduce surcharges for persons earning less than 300% of the FPG.

(4)   Minimize the impact of license suspensions.  Many of the adverse effects of the DRP (including the financial burden on low-income families, increased cost of accidents with uninsured motorists, and additional county costs) result from driver’s license suspensions.  These impacts could be mitigated by either lengthening the time period before a license is suspended for unpaid surcharges from 105 to 180 days or by limiting the suspension period to one year.



[i] Hodges testimony in Senate Committee Interim Report, p. 22-23.

[ii] John Henry, “Texas drunken driving surcharges meet economic reality,” Fort Worth Star Telegram, December 6, 2010.  Online at: http://www.mcclatchydc.com/2010/12/06/v-print/104791/texas-drunken-driving-surcharges.html.  See also Brandi Grissom, “Rep. Berman files bill to end DPS surcharges,” Texas Tribune, November 18, 2010.  Online at: http://www.texastribune.org/texas-local-news/driver-responsibility-program/rep-berman-files-bill-to-end-dps-surcharges/

[iii] Tim Craig, “Va. Driver Fees Now Election Weapon,” Washington Post, July 17, 2007.  Online at: http://www.washingtonpost.com/wp-dyn/content/article/2007/07/16/AR2007071601934.html.  The petition is available at: http://www.petitiononline.com/va3202/petition.html

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Saddled with hundreds of millions of dollars in uncompensated care costs, hospitals receive approximately 40% of DRP revenue in the form of reimbursements for emergency medical services provided to Texans in need.[i]  Uncompensated care costs are a tremendous strain on Texas hospitals and taxpayers, and lawmakers are right to look for ways to defray some of those costs.  But for all the reasons stated above – and especially in light of the even greater public costs arising from accidents among uninsured drivers – the failed Driver Responsibility Program is not the solution to that problem.

In 2012, Texas trauma hospitals incurred a total of $234 million in uncompensated care costs[ii] but received only $55 million in reimbursements from the state in the form of DRP surcharge revenue.[iii]  In each of the past five fiscal years, the DRP has covered between 23% and 33% of hospitals’ uncompensated care costs, amounting to 30.6% of total uncompensated care costs between fiscal years 2008 to 2012.[iv]  Because statute designates roughly half of DRP surcharges for the General Revenue (GR) fund, the DRP has also generated approximately $85 million per year for general purpose use by the state.  While the DRP provides a modicum of relief for Texas hospitals, their funding gap is much bigger than the DRP can fill.

Compounding the situation for Texas hospitals, hundreds of millions of dollars in collected surcharges have never been distributed to those trauma centers, instead building up in the state treasury for use in balancing the state’s biennial budget.  As of August 31, 2012, the “Designated Trauma Facility & Emergency Medical Services Account” had a balance of $371,554,005.[v]  The long-standing practice in Texas of allowing fee revenue (collected for statutorily designated purposes) to accumulate in GR-dedicated accounts for use in balancing the budget runs counter to the principles of budget transparency and has been heavily criticized by conservatives and liberals alike.[vi]

Given the multiple failures of the Driver Responsibility Program, Texas must seek out better ways to fund trauma centers.  We strongly recommend that the Legislature repeal the failed DRP and replace hospital revenue with a fairer and more robust funding stream.  Below are a few options that lawmakers could consider.

Moderately Increase the Cigarette Tax

When the Legislature created the DRP in 2003, part of the rationale for using driver’s license surcharge revenue to fund Texas hospitals was that automobile accidents are responsible for a significant share of emergency room costs.  The same is true for smoking.  Increasing the cigarette tax would be a smarter way to fund Texas trauma centers, since smoking adds substantially to public healthcare costs in Texas.[vii]

  • The Legislature could raise the cigarette tax by approximately $0.15 per pack, for example, and generate sufficient revenue to replace most of the funds that hospitals currently receive from the DRP.[viii]
  • The Legislature could also close a loophole to ensure that all cigarette manufacturers pay fees to the State of Texas for the sale of their product in Texas.

Increase Alcohol Tax Collections

Just like smoking, consumption of alcohol imposes substantial medical costs on society.[ix]  The current tax rate of $0.11 per six-pack ($6.00 per barrel) has been in place since 1984.

  • The Legislature could increase the beer tax by approximately $0.06 per six-pack (to a $0.164 total rate per six-pack) and generate sufficient revenue to replace most of the funds that hospitals currently receive from the DRP.[x]
  • The Legislature could also expand the hours or days during which alcohol may be sold in Texas to generate additional revenue for trauma centers.

Levy a Modest Junk Food Tax

Food and drinks with high sugar content contribute to obesity, which in turn leads to increased healthcare costs associated with diabetes and heart disease.  Texas could join 19 other states by taxing carbonated soft drinks, and use the revenue generated to replace hospital funds lost to a repeal of the DRP.

  • The Legislature could levy an approximate 1% tax on carbonated soft drinks and generate sufficient revenue to replace most of the funds that hospitals currently receive from the DRP.[xi]

Draw Down the “Designated Trauma Facility & Emergency Medical Services Account” Balance

As mentioned above, a significant portion of the surcharge and other revenue deposited in the “Designated Trauma Facilities & Emergency Medical Services Account” has never been distributed to Texas hospitals.[xii]  Instead, the funds have been allowed to accrue for use in certifying the state budget.  With increasing calls to improve transparency in the state budget process, those funds should be used for the purpose for which they were collected.  If the Driver Responsibility Program was abolished by the Legislature without creating a new funding mechanism for Texas trauma centers, the $370 million fund balance could be drawn down gradually over the next few budget cycles, giving legislators additional time to identify a new funding source for Texas trauma centers.

  • The Legislature could draw down the existing fund balance in the “Designated Trauma Facility & Emergency Medical Services Account,” which contains sufficient funds to maintain disbursements to trauma hospitals at their current levels through 2019. 

In summary, while Texas trauma centers deserve additional revenue to help cover uncompensated care costs, there are better ways to help hospitals recover those costs than with a program that decreases public safety, distorts the Texas court system, and generates even greater costs to the public.



[i] Figure derived from “Designated Trauma Facility and Emergency Medical Service Account: FY05-FY12 Disbursements,” prepared by the Texas Department of State Health Services and “Allocation of Driver Responsibility Revenues: FY04-FY12” prepared by the Comptroller of Public Accounts. Data available upon request.

[ii] “Calculated Uncompensated Trauma Care Costs Reported in DSHS Uncompensated Trauma Care Funding Application (2004 – 2012),” prepared by the Texas Department of State Health Services.  Data available upon request.

[iii] “Designated Trauma Facility and Emergency Medical Service Account: FY05 – FY12 Disbursements,” prepared by the Texas Department of State Health Services. Data available upon request.

[iv] Figure derived from data referenced in notes 40 and 41.

[v] “State of Texas Annual Cash Report, Revenues and Expenditures of State Funds for the Year Ended August 31,2012,” prepared by the Texas Comptroller of Public Accounts.  Online at: http://www.window.state.tx.us/finances/pubs/cashrpt/

[vi] Texas Public Policy Foundation, “TPPF Commends Speaker Straus for Shining Spotlight on GR-Dedicated Accounts,” news release, October 9, 2012.  Online at: http://www.texaspolicy.com/press/tppf-commends-speaker-straus-shining-spotlight-general-revenue-dedicated-accounts.  See also remarks by Dick Lavine, Center for Public Policy Priorities, before the House Committee on General Revenue Dedicated Accounts, Nov. 7, 2012.  Online at: http://www.house.state.tx.us/video-audio/committee-broadcasts/committee-archives/player/?session=82&committee=283&ram=12110713283

[vii] According to a recent proposal to ban smoking in public venues in Texas, smoking adds $30 million in annual Medicaid costs and $200 million per year in overall healthcare costs and lost productivity in Texas.  See Bill Analysis for HB 670 (2011). Online at: http://www.legis.state.tx.us/tlodocs/82R/analysis/pdf/HB00670H.pdf#navpanes=0

[viii] Figure estimated based on the fiscal note for HB1810 (2011).  Online at: http://www.legis.state.tx.us/tlodocs/82R/fiscalnotes/pdf/HB01810I.pdf#navpanes=0.  Note that the suggested cigarette tax increase would not replace revenue lost to the General Revenue Fund if the DRP were abolished.

[ix] According to the National Institute on Alcohol Abuse and Alcoholism, medical costs associated with alcohol abuse in the United States totaled $26 billion in 1998.  Adjusting for inflation, that’s $36 billion in 2011 dollars.  See “10th Special Report to the U.S. Congress on Alcohol and Health,” prepared by the National Institute on Alcohol Abuse and Alcoholism, June 2000.  Online at: http://pubs.niaaa.nih.gov/publications/10report/intro.pdf

[x] “Taxing Sin,” Center for Public Policy Priorities, January 14, 2009.  Online at: http://library.cppp.org/files/7/SinTaxes.pdf.  Based on the Comptroller’s estimate for 2012 beer consumption in Texas, raising the beer tax by $3.50 per barrel (or 16.4 cents per six-pack) would generate approximately $66 million in revenues.  Data available upon request.

[xi] According Beverage Digest, national carbonated soft drink sales totaled $75.7 billion in 2011.  Assuming roughly equal per capita consumption, Texas consumption in that year was approximately $6.3 billion.  So a 1% tax on soda sales would generate approximately $63 million per year.  See “Soda Consumption Down Again, Revenues Up,” United Press International, April 2, 2012.  Online at: http://www.upi.com/Business_News/2012/04/02/Soda-consumption-down-again-revenues-up/UPI-32701333344089/

[xii] In addition to DRP surcharge revenue, 32% of the State Traffic Fine is allocated to Account 5111 as well.  Online at: http://www.lbb.state.tx.us/Interim_Budget_Docs/GRDFunds/5111%20-%20Trauma%20Fund.pdf