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DMV Guarding Against Insurance Cuts

May 30, 2007

By Gary Fineout, The Miami Herald

May 31--TALLAHASSEE -- Florida lawmakers quietly tucked $25 million in the back of the 400-page state budget to keep driver's license offices open and state troopers on the road.

With just days left in the annual spring session, top Republicans were warned that the end of the state's no-fault auto insurance law this October could result in deep budget cuts for the state agency that oversees motorists.

"The potential cut is significant," wrote Electra Bustle, executive director of the Department of Highway Safety and Motor Vehicles in a e-mail sent to top aides in the office of Gov. Charlie Crist. "Without a comprehensive plan to deal with it, we will be cutting both driver license offices and programs and Florida Highway Patrol services. There is, unfortunately, no real way around that."

The reason for the cuts? Thousands of drivers whose licenses are suspended each year for not carrying auto insurance pay the state a fee to get their licenses reinstated.

But on Oct. 1, drivers in Florida will no longer be required to carry $10,000 worth of personal injury protection insurance, or PIP. Lawmakers ended the session without reaching an agreement on what type of insurance, if any, should remain in place.

The end of the auto insurance mandate also kills a requirement that insurance companies immediately report to the state when a driver's policy has been canceled. And the department has concluded that drivers won't have to have any type of auto insurance come October.

While major insurers such as State Farm dispute the notion that drivers will be able to forgo all auto insurance, Bustle told lawmakers that the end of PIP would cost her agency as much as $29 million a year.

She said in her e-mail that the state would be forced to close 36 driver's license offices -- roughly one-third throughout the state -- and lay off nearly 500 employees. The cuts would also force the agency to trim back $4 million in overtime costs for state troopers.

Those warnings prompted Republican legislators to place a $25 million emergency appropriation in the back of the state's $71.5 billion state budget that the agency can tap into if lawmakers fail to reinstate no-fault auto insurance by Oct. 1.

"We wanted to make sure we had some money set aside," said Rep. Ray Sansom, a Destin Republican and head of the House committee that writes the annual state budget.

But Rep. Ellyn Bogdanoff, a Fort Lauderdale Republican involved in negotiations over auto insurance, insisted that lawmakers still don't know if it will cost as much as the department has predicted.

"I know they panicked and they were worried," Bogdanoff said. "They are still going to have to justify the need for the money. Once mandatory coverage goes away, there's going to be some sort of reduction in the administrative functions."

Bogdanoff also has not ruled out that lawmakers could take up PIP during the June special session that will deal with property taxes. She said she is still negotiating with Senate lawmakers on a possible bill.

A coalition of insurers, led by State Farm, says the $25 million won't be needed because Floridians will still need to carry some form of auto insurance. State Farm plans to cut auto insurance rates by an average of 16 percent if the state's no-fault auto insurance law is eliminated.

"It's not good policy to keep a bad system around based on an assumption that law enforcement will no longer be able to collect fees," said Allison North Jones, a spokeswoman with Floridians for Lower Insurance Costs. "We believe the Legislature, in their wisdom, knew what they were doing in not extending the no-fault system and providing Floridians much-needed auto insurance relief."

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