Gov. Kevin Stitt has made government modernization a centerpiece of his first year in office.

In his State of the State address, he gave state government a “D+” in digital transparency and pledged to centralize government services online. Up ahead, he said, were digital orders for driver’s licenses, a single portal for most state services and a click-of-the-mouse look at all state spending.

But that vision could falter when applied to one of the state’s long-time service providers: local tag agencies.

Oklahoma’s 283 tag agencies, comprising a system that has been around for decades, are a critical cog in any modernization of licensing and registering of vehicles, boats or drivers. A digital transformation would seem primed to leave tag agents behind.

But Stitt’s office is not suggesting that will happen. Instead, the administration suggests that tag agencies, which are privately owned and receive government subsidies, could be allowed to expand into new services, even while playing a lesser role in others.

Any major change, however, could hit resistance. Tag agents provide local jobs in many legislators’ districts and offer an in-person service in rural areas where high-speed internet is scarcer.

What They Do

Tag agents offer a varying range of services to customers, depending on their location. They provide help with driver’s licenses, vehicle registrations, turnpike passes, title transfers, notary services and boat tags. State agencies duplicate many of those services, online or at state offices.

For decades, tag agencies have had a monopoly on driver’s licenses. If a person wants to drive, they have to obtain a license at a tag agency. Oklahoma is the only state that handles driver’s licenses exclusively through privately owned, state-subsidized businesses.

However, this monopoly looks to be loosening – although not going away – under the state’s upcoming Real ID conversion.

Real ID-compliant digital driver’s licenses have substantial security needs – something tag agencies aren’t equipped to handle. Yet, even under Stitt’s proposal, a tag agency or a local Department of Public Safety office would be a required stop for anyone who needs a license or renewal. And Stitt plans to give them additional services, such as issuing hunting and fishing licenses, and selling state merchandise.

“Digital transformation is about making state government cost efficient, but more importantly customer-centered and transparent.  It is important for Oklahoma to catch up with the innovation and modernization taking place in states around us that are allowing individuals to receive state services with a click of a button on their phones,” said Donelle Harder, a spokeswoman for Stitt. “In an era of digital transformation, we see a future where tag agencies are doing more than just assisting people with motor vehicles.”

Facing Threats

The threat from online technology is something tag agents have faced before. In 2010 the Tax Commission began allowing Oklahomans to renew motor vehicle tags online.

Yet the tag renewal system allows users to have their application processed through their local tag agent so they keep the processing fee and thus keep one of their largest revenue streams flowing.

According to Tax Commission records, in 2018 there were 3,127,423 automobiles registered with the state.  By law, tag agents are allowed by law to keep $3.56 of each renewal, which for the 2018 vehicle registrations adds up to $11.1 million.

In 2018, tag agents overall reported revenues from fees totaling $52,415,727.20.  This represented a nearly 3 percent drop from 2017, or almost $1.5 million.

“We used to get anywhere from five to 15 [tag renewals] a day and today we haven’t had one,” said Micki Selanders, who owns Woodcrest Tag Agency in southern Logan County. “Not one renewal, and yesterday we had none.”

Woodcrest also sells Pikepass and has opened her office as a location for another business’ ATM to help keep the doors open.  After being involved with tag agencies for more than 40 years, Selanders says she believes they will remain, but she doesn’t know what the future holds.  She says the potential to sell more state licenses or merchandise would help declining revenues.

“It [staying open] gets harder and harder, but we hang in there.”

Like its peers across the state, Woodcrest is independently owned but receives a subsidy from the state in the form of computers, printers, the paper used to print licenses and other items needed to run an agency. DPS values the equipment at $3.1 million per agency. No one can own more than one tag agency. The state Tax Commission and DPS share oversight of the agencies, whose fees are capped under state law. The state also pays for network lines and high-speed Internet access. The Tax Commission and DPS split the $780,000 annual bill.

Preparing for Real ID

With the upgrades needed for REAL ID, the state will have to spend another million dollars to bring tag agencies’ equipment up to date.  After the upgrades are installed, the annual bill for maintaining the system will rise to $2.94 million.

How to upgrade and incorporate privately owned tag agencies was one of the issues the DPS faced when trying to implement REAL ID.  Jeff Hankins, director of driver license services at DPS, said the security requirements for REAL ID are more stringent and trying to get more than 200 private businesses located in all corners of the state on the same page in terms of security proved challenging.  As a result, the tag agents will take on less of a role in the coming months.

Moving to REAL ID will mean Oklahomans can no longer walk into a tag agent and get a printed license.  Hankins said with REAL ID, DPS will move to “central issuance.” That means the process to get a federally compliant ID will require Oklahomans to wait for that new ID to come in the mail.

But tag agencies will still be involved. They will process the paperwork and provide a paper temporary ID for people applying for a REAL ID, but they will not print the ID on site.  However, the change will also mean you can skip the tag agent altogether by applying for the license at a local DPS office.  This change will also allow DPS to keep the fees that traditionally go to tag agents.

“We will do everything and more that a tag agency can do,” Hankins said.

By law, tag agents are allowed to keep a portion of each transaction.  The amount varies depending on what type of service is provided.  For processing a driver license application and printing the ID card, a tag agent can keep $4 of each license.

Hankins said DPS issues about 1.1 million licenses each year, which means tag agents together collect $4.4 million from processing and printing associated with driver licenses.

When the state moves to REAL ID, tag agents will be able to keep $6 per license, even though they are not printing any physical ID card at their location.  If you get the card from a DPS office, the state agency will be able to keep that $6 fee. Hankins said DPS badly needs to the additional money.

Right now DPS has one inspector to ensure every tag agency is following all security procedures. The agency plans to increase the number of inspectors with the coming of REAL ID.

“Technology is changing and we are trying to make it more convenient for the public,” Hankins said.

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