Local license agents: Offices risk closing without fee hike

Missouri’s rural license offices risk being tagged with financial losses under contracts with the state that could lead to increasing closures of such offices.

Without a change in state law, more and more communities could find themselves without a license bureau, state Rep. Rick Francis, R-Perryville, said.

The state used to operate license bureaus, and others were awarded through political patronage.

But that is no longer the case. They are now operated by private entities who bid to operate the offices.

Most of the money collected by these offices goes to the state. License office operators receive revenue from transaction fees. The state sets the fees.

From left, Hanna Burger, assistant manager, and Maddy Kinder, manager of the Marble Hill License Office, pose for a photo Monday behind the counter of the license bureau in Marble Hill, Missouri.KASSI JACKSON

Francis has proposed legislation to aid the operators of small license offices by allowing them to keep more of the revenue they collect.

House Bill 512 would allow license operators to turn over less money to the state if the office collects less than $20,000 in transaction fees over a three-month period.

The license office could then retain an amount equal to the fee revenue collected for that office up to a maximum of $10,000.

If an office collects $12,000 for its operation from transaction fees in a three-month period, for example, the office would be able to keep another $8,000 in revenue that otherwise would go to the state, Francis explained.

Francis said his bill would help the small license offices without raising fees for the consumer.

Marian Hutchings, contract manager of the Marble Hill License Office, poses for a photo Monday outside the building in Marble Hill, Missouri.KASSI JACKSON

He questioned whether the public would “find it tolerable” to raise fees.

But he added, “Maybe fees do need to go up,”

State Sen. Sandy Crawford, R-Buffalo, thinks so. She has introduced a bill to increase the maximum fee for various transactions from the current $2.50 or $3, depending on the transaction, to $6.

There are about 174 license offices across the state, employing about 1,700 people, according to the Missouri Association of License Offices.

That group wants lawmakers to raise license fees on everything from license renewals to titling of vehicles.

Marian Hutchings, contract manager of the Marble Hill License Office, leafs through paperwork Monday at the front counter of the license bureau in Marble Hill, Missouri.KASSI JACKSON

The state implemented a new process for choosing license agents in 2009, the association said.

Since then, the state has shifted more costs to license agents on everything from paper and postage to fax lines and toner.

It’s been nearly two decades since the last fee increase for license bureaus. The last increase occurred in 1999, the association said in a fact sheet provided by Francis.

The minimum wage in 1999 was $5.15 an hour. It now stands at $8.60 an hour and will increase to $12 an hour within the next four years, the association wrote.

Titling vehicles is “probably the most time-consuming service offices provide,” the association wrote.

On average, it takes more than 12 minutes to process a title, with complicated titles taking as much as 30 minutes per transaction, according to the association. A license office receives only a $2.50 fee for such a transaction, the association said.

Francis said several Southeast Missouri communities have struggled to retain license offices.

Marble Hill, Missouri, was without a license bureau for two years, forcing Bollinger County residents to travel to Jackson and other cities to obtain or renew their driver’s licenses and license plate tags.

Marian Hutchings of Hutchings Funeral Home opened a license office in Marble Hill in December 2017 after submitting a successful bid to the Missouri Department of Revenue.

But she said she loses money on the operation even though Bollinger County government provides the office space, and, for the first year, paid utility costs.

“They are very generous to me,” she said.

But it’s still a losing proposition, said Hutchings, who operates the only license office in Bollinger County.

In its first year of operation by Hutchings, the license office, staffed with two employees, collected just more than $44,000 from the transaction fees, but expenses totaled more than $45,000, she said.

“If I don’t have $200 a day, I am not paying my bills,” Hutchings said.

She has a five-year contract with the state to operate the license office. But if the next four years financially are like the just completed year, Hutchings said she may not bid again for the office.

The state mandates the size of license offices and hours of operation, based on the estimated volume of transactions, Hutchings said.

Her Marble Hill office space barely meets the square-footage requirement, she said.

Gina Raffety operates four license offices in Southeast Missouri — Cape Girardeau, Perryville, Charleston and Farmington.

In all, she has 21 employees.

Raffety said it is increasingly difficult to make a profit.

“It has become more and more difficult because the profit margins are currently very low and get lower every year,” she said in an email to the Southeast Missourian.

Making a profit typically requires a license operator to manage multiple offices, Raffety wrote.

Having more than one office allows for bundling insurance premiums and sharing employees between offices as needed, she explained.

She said her offices receive more than $681,000 annually for more than 203,000 transactions

“It is a very high-volume business. That is why contractors want bigger offices,” Raffety wrote.

But there are plenty of costs, too.

“The biggest expense by far is cost of employees,” she said.

“When your revenues can never rise, then things have to be cut (like health insurance) and wages have to remain low,” Raffety said.

Few business, she said, could remain profitable over 20 years if they have “no way to increase revenue.”

“Most office expenses used to be covered by the state. Now, they are all on us,” she wrote.

Both Hutchings and Raffety said their license offices also face competition from Missouri’s online renewals that eliminate the need for the consumer to visit their local license office.

Raffety said online renewals likely will increase in the coming years.

Francis said as many as 1.2 million or 1.3 million Missourians today are obtaining license services online.

At some point, maybe in a decade, all licensing services may be handled online, Francis said. There could be computer kiosks set up at county courthouses, too, he envisions.

But for now, Francis said, lawmakers need to improve funding for license offices or risk future closings.

Raffety and Hutchings agreed.

Raffety said, “It has already happened. Marble Hill, Kennett and Caruthersville have all closed and reopened with new agents. Fredericktown is in the process of reopening under a new contract agent,” she wrote.

Raffety favors raising the transaction fee to $6 per transaction.

“If something doesn’t happen with the fees soon, I think you will see smaller offices close because the operating costs are too high to be profitable,” she said.

mbliss@semissourian.com

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