The costs keep coming for lawmakers on Virginia’s budget committees, now faced with an estimated $16.4 million operating shortfall at the Department of Motor Vehicles and a bill of $1.1 million — and counting — for repairing and ultimately rebuilding the Virginia State Police’s stricken email network.

The DMV estimated Monday that its shortfall could total $66.5 million for 2016 to 2022, a figure that had been almost $28 million higher before Gov. Terry McAuliffe gave executive approval earlier this year for a $1 fee increase on information products provided by the state’s most visible government operation.

DMV Commissioner Richard D. Holcomb said the solution is either to raise the agency’s share of fees for vehicle titling, registration or driver’s licenses, or allow it to keep more of the money it collects for other state agencies, such as the Department of Transportation and the Department of Health.

“We collect billions of dollars for the commonwealth, but we don’t have sufficient funds to operate,” Holcomb told the House Appropriations Committee on Monday.

Appropriations Chairman S. Chris Jones, R-Suffolk, advised the commissioner to skip the portion of his presentation about possible redistribution of transportation money from fuel and sales taxes as “a non-starter.”

Holcomb acknowledged hearing the same message from his boss, Secretary of Transportation Aubrey L. Layne Jr.

“My secretary is not interested in taking money from the VDOT road program to help with our shortfall, he said.

That leaves three proposed solutions, he said:

  • double the vehicle title fee from $10 to $20 to generate $26.1 million a year;
  • increase the driver’s license fee by $1.25 per year, or $10 over the eight-year term of a license, to generate $21.6 million in the next three fiscal years and $15 million in the following three years; or
  • increase the DMV share of the vehicle license fee by $3 from its current $4 share of the $40.75 fee that goes primarily to VDOT, along with emergency medical services and state police.

Holcomb made a similar presentation in June to the Senate Finance Committee, but the estimated shortfall has climbed since then from $13.4 million to $16.4 million.

The reasons for the shortfall include:

  • the 3 percent pay raise that took effect July 1 for state employees, which the DMV must cover;
  • higher payments to the Virginia Information Technologies Agency for the cost of transitioning from Northrop Grumman to new IT providers;
  • increasing health care costs for agency employees; and
  • fees for processing customer credit card payments.

Jones, who owns a pharmacy in Suffolk, said credit card fees have become a normal cost of doing business.

“It’s just the way the world works,” he told Holcomb.

However, the chairman and other legislators were generally sympathetic to the DMV, a high-profile customer-service agency with wide-ranging responsibilities, including the impending implementation of the federal Real ID law for enhanced security of state-issued driver’s licenses and other identification.

The DMV chose a voluntary approach to complying with the law by October 2018, so that Virginia residents can choose to receive identification that will be accepted at federal military installations and security checkpoints for boarding aircraft.

The agency expects about 40 percent of current ID holders to apply for a REAL ID in the first 24 months, or an additional 2.6 million customers. The application process will be time-consuming because it requires customers to apply in person and produce proof of legal status, state residence and a Social Security card, Holcomb said.

It also will be costly — an estimated $20.7 million for the DMV to buy scanning equipment, verify documents electronically and hire additional staff members.

Holcomb has asked the governor to increase the agency’s line of credit to cover the costs and charge a one-time $10 surcharge on driver’s licenses to repay the loan.

State police

The Virginia State Police agency faces a different set of challenges related to its IT system. State police are still cleansing office computers of a malware infection from a cyberattack April 21 that forced the law enforcement agency to shut down its email system and clean hundreds of computers.

Secretary of Public Safety Brian J. Moran said the agency is scanning and cleaning the last 183 potentially affected computer work stations, but the “containment of known malware is complete.” He said the agency has restored email and limited internet access to work stations.

Northrop Grumman Corp., the state’s current IT contractor, has billed $1.1 million to the state for its work in helping state police address its malware problem, and VITA has paid more than $300,000 of the bill. Earlier this year, the state estimated the cost of the short-term work to resolve the problem at $1.9 million, but Moran said Monday that assessment apparently was high.

However, the big costs lie ahead. Mandiant, a cybersecurity company based in Alexandria, began work Monday to assess the state police information technology systems and security. The firm will recommend how to rebuild the network and whether it should become fully part of the VITA-run state system or remain largely independent.

Moran told House Appropriations members that the agency will have to rebuild the network but won’t know until November what the potential cost would be.

“It’ll be significant,” he said.

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