Specialty License Plates: the Ultimate in Picking Winners & Losers (video)

Arizona specialty plate

Love ’em or hate ’em specialty license plates are a bipartisan issue. People on both sides of the aisle sponsor license plate bills, and people on both sides (like me) have vowed to vote against all of them.

Vehicle owners can pay additional fees to customize their license plates by having custom text and/or a specialty plate design. This video focuses on the proliferation of specialty plates. The Arizona Legislature has approved more than 60 specialty plates. Other states like Maryland and Texas have hundreds of specialty plates. What’s up with that?

How are specialty plate designs proposed and created? A Legislator introduces a bill to create a specialty plate design of behalf of a group, organization, or nonprofit that fits such a tight definition in statute. This tight definition ensures that only one entity qualifies to receive $17/plate/year fee from sale of the plate. Only the connected need apply. That is why I say specialty plates are the ultimate in picking winners and losers.

Some Legislators may sponsor only one license plate during their tenure in the Legislature, but there are a few who sponsor one or more plates per session to benefit organizations in their districts. My guess distribution of specialty plate fee pass-throughs is uneven across Arizona. Where is the money going and who is benefiting? There is little or no oversight.

The recipients of the plate fee pass-through are not vetted, there is no competition for the privilege of receiving funds through a state government service, and the pass-through to the originally designated organization continues forever with no sunset. This is not a fair system.

In addition, vehicle owners don’t really know what they are paying for. When purchasing a specialty plate, the design is promoted — not the charity that will received $17 of the $25 fee annually for as long as the consumer owns that plate. Much of the language is vaguely worded. There is no list of supported charities and organizations. There is no accounting of how much each plate has made and how the money was spent.

The last time I saw a report on specialty plates, per-design earnings were all over the map because some of the plates have been around for more than 10 years and earning money continuously. Some plates had made very little, perhaps because they were new or perhaps people didn’t like the design or the cause didn’t resonate with consumers. Beyond brand loyalty to one of the universities or sports teams, I think design has a lot to do with sales. Some of the designs are quite striking, and people obviously are willing to pay $25 extra annually for the privilege.

Since specialty plates are popular, I would suggest several reforms in this system to clean it up and make it fairer and more transparent. Here are some suggestions:

1- phase out the charitable donations and offer specialty plates at a dramatically reduced rate to consumers. The state gets $7/plate now. What if the state charged $15/plate for specialty plats and the extra $8/plate went to infrastructure and other highway costs. Cap the number of plates at the current level and rotate in new designs. This would eliminate the problem of writing laws to get around the gift clause, keep a program that is popular with consumers, and lower the fee.

2- If lawmakers want to keep the pass through, charities must be vetted; the system should be transparent, competitive, and equitable; there should be an assurance of statewide distribution of financial benefits; each beneficiary gets a maximum of five years and the plate proceeds move to another organization vetted to be appropriate for the category.

3- if a reformed system is adopted, I still think there is room for lowering fees OR breaking down the $25 to $7 for state cost, $8 for highway costs, $10 charity. I think this would be the best all the way around.

It’s time to reform or eliminate this inequitable system. [If anyone wants to put some or all of these ideas into a striker, let’s do it. Let’s fix this.]

This video was recorded on February 3, 2022. All of my video updates are available on YouTube and Facebook.