More than 80% of the fines Louisiana collects from drivers come from when they have to reinstate their licenses for lapsed auto insurance coverage, according to a new analysis that suggests state lawmakers might want to reduce those penalties.

The same report from the Louisiana Legislative Auditor said state officials also might think about a higher reinstatement fee for first-time driving while intoxicated offenses.

Auditors evaluated all fees the state Office of Motor Vehicles charges to issue and reinstate licenses and compared them to information available from other states. Louisiana’s OMV is largely self-funded through these fees, which accounted for 92% of its $74.4 million budget in fiscal year 2024.

The cost to issue or renew a driver’s license in Louisiana is comparable to other states, but its maximum reinstatement fee for insurance cancellation is higher than all but one state auditors reviewed. Only Delaware, which has no cap on its insurance reinstatement fee, exceeded the ceiling of $525 in Louisiana, where the minimum fee is $150.

Insurance cancellation fees generated $103.8 million, or 83.2%, of the license reinstatement fees the OMV collected last fiscal year. By comparison, reinstatement fees for DWI offenses generated $354,100 in 2024 – or less than 0.3% of total fees.

“Reinstatement fees for insurance cancellation violations are more expensive than other violations,” the audit report said, “the amount owed increases the longer a lapse in insurance coverage continues, and one lapse in coverage can result in multiple violations.”

Do fees delay license reinstatements?
The auditor’s evaluation included all the reasons Louisiana can suspend or revoke a driver’s license, including for failure to pay child support, pay income taxes, appear in court or maintain vehicle insurance.

As of June 2024, 9.1% of the state’s 2.81 million personal driver’s licenses were suspended and/or revoked. Insurance cancellations were, by far, the top reason why those licenses had been pulled, accounting for nearly 80% of the total. 

Even if a driver fulfills every other obligation to have their license reinstated, it will remain suspended until the OMV fee is paid. 

“The secondary requirement of paying reinstatement fees can therefore become the primary obstacle that delays compliant drivers from regaining an active license,” the audit report said. 

Its research found that 58.1% of drivers’ licenses that were suspended or revoked as of June 2022 were still inactive two years later, meaning more than half of drivers could not resolve their violations. Also, 35.7% of those licenses expired during the two-year period and weren’t renewed by June 2024. 

Unlike other unpaid fees, the OMV sends unremitted insurance reinstatement fees to the state Office of Debt Recovery, a division of the Louisiana Department of Treasury, for collection. The auditor noted that while this is intended to encourage drivers to pay outstanding fees, it also increases the amount they owe to get their license back – and it’s an uncommon practice among the surveyed states.

The Louisiana Office of Motor Vehicles had to refer all overdue cancellation fees to the Office of Debt Recovery until last year, when lawmakers voted to limit the practice to insurance reinstatement fees. 

To collect money owed to the state, the Office of Debt Recovery can take it from a driver’s tax refund, garnish their wages or place a levy on their bank account. In addition, the office adds a 15% processing charge to the balance the driver owes.

Drivers paid $11.6 million to the Office of Debt Recovery last fiscal year in addition to the insurance cancellation fees they owed. 

The Louisiana Legislature created a Reinstatement Relief Program for insurance cancellation fees in 2024 to allow drivers to have the amounts they owe lowered based on their income, financial obligations and other factors that limit their ability to pay. The audit suggests state lawmakers might consider expanding the program to cover all reinstatement fees, as well as extending the grace period for all insurance cancellation violations.

Similar programs in Georgia and Ohio waive fees or provide amnesty for drivers who are indigent or rely on public assistance, according to the audit report. 

DWI fee comparisons
The auditor also found Louisiana’s first-offense DWI reinstatement fee of $100 is 46.5% lower than the $187 average of the other 28 states from which it was able to obtain comparable data. Louisiana increases its reinstatement rate to $200 for a second DWI and $300 for third and subsequent offenses. 

First DWI offenses accounted for 81.3% of the 2,853 DWI-related license suspensions last fiscal year in Louisiana. Had the state collected the $187 average for its reinstatement fee, the OMV could have potentially collected an additional $202,807, according to the auditor’s calculations.

“The increase could not only raise additional funds for OMV operations, but could also serve as an additional deterrent for committing DWI offenses,” the auditor wrote.

From the group of 28 states evaluated, 23 states charge more than Louisiana for a first-time DWI reinstatement. The range from $45 in Missouri to $680 in Minnesota, which are both flat rates for all DWI offenses.

Louisiana’s fee increases to $200 for a second DWI offense and $300 for third and subsequent occurrences. 

More considerations
Another consideration for the legislature would be to revisit which offenses that require a driver’s license suspension, according to the audit report. It cited a 2021 report from the American Association of Motor Vehicle Administrators that concluded that while suspending licenses for dangerous driving is appropriate, taking the same action for otherwise safe drivers has a negative impact on communities through unemployment, lower wages, fewer hiring choices and higher insurance costs.

The National Council of State Legislatures reported last year that at least 25 states have approved largely bipartisan laws to curb or eliminate driver’s license suspensions and the loss of driving privileges for unpaid fines and fees, the report noted.

The legislative auditor also said the legislature might want to consider using certain economic factors such as inflation to set its OMV fees. Louisiana was one of three states out of 33 studied without a provision in state law that sets a timeline for updating the charges.

Two states base their fees on the Consumer Price Index, while California calls for annual updates, and North Carolina requires revisions every four years. In West Virginia, fees can be adjusted every five years as long as increases don’t exceed 10%. 

Louisiana hasn’t updated its license fees since 2014 when it last increased the insurance cancellation reinstatement fee.