States may face higher costs for Real ID

SEATTLE – The cost of implementing federal provisions that are expected to strengthen the security of driver’s licenses nationwide could be much higher than initially estimated, a state official said.

Earlier this year, Congressional Budget Office officials said nationwide implementation of the Real ID Act would cost $100 million in five years. The act would establish minimum national standards and physical features, including biographic and biometric data, for machine-readable driver's licenses and personal identification cards within three years.

But Larry Dzieza, budget director of Washington state’s Department of Licensing, estimated the state might need to spend $97 million during the next two years to implement the mandated provisions. He said Pennsylvania officials estimated the cost for their state would be $100 million, while Virginia officials estimated $232 million, including $167 million as a one-time expense and $66 million in ongoing annual costs.

Dzieza said the biggest costs are verification of documents and staff salaries. Under the law, applicants must submit three documents that verify their identities to get a license. But motor vehicle agency officials must then authenticate those documents, which could be passports, Social Security cards or birth certificates.

For example, Dzieza said he’s not sure whether everyone would want to have a driver’s license under the new law. If a state does not comply, federal officials could bar anyone carrying a license or ID card from that state from entering a federal facility or flying on an airplane. Many states also have questions about additional staff, longer lines, equipment and existing facilities’ capacity.

He said agency officials would need professional experts or contractors to verify documents. It could cost up to $5 per verification using another source, and those costs could be passed on to applicants, he added.

In addition, states would have to assume costs for scanning and retaining those documents for up to 10 years. However, some costs are dependent on a number of factors and regulations that the Homeland Security Department must decide. The department is responsible for managing the initiative.

Reed Stager, vice president of corporate licensing, marketing and public policy at Digimarc, which provides secure identity products and services, said Washington state has done some of the most complete analyses regarding the cost implications of the Real ID Act. But he added officials still won’t know what the changes are until DHS comes out with the proposed regulations.

“For example, the state of Washington assumes the types of machine readable technology on the credential will be the same as what states are already using,” he said. “But until the standards are released, the real final cost analysis can’t be done.”

Jonathan Frankel, DHS’ law enforcement policy director, told several state lawmakers during a session yesterday at the annual National Conference of State Legislatures (NCSL) conference in Seattle that the department is planning a meeting with state officials and other experts in September.

He said DHS takes its responsibility seriously, and isn’t pretending to know all the answers or all the state systems. DHS will seek help from several organizations, including the Transportation Department, the American Association of Motor Vehicle Administrators and others.

The Real ID Act has been a controversial measure since it was introduced and enacted this spring without a public hearing.

Privacy representatives fear it would create a national database through interlinked state information databases allowing possibly thousands of state employees to access personal information. Without proper security measures, hackers could access personal data on millions of motorists.

“This is the sweetest honey pot for an identity thief,” said Tim Sparapani, legislative counsel at the American Civil Liberties Union.

State officials also fear the federal government may not provide enough money to help pay for the act’s provisions. The House has proposed $100 million for fiscal 2006 to help pay for some costs, while the Senate has proposed $40 million.

“There is some federal money coming,” said Cheye Calvo, NCSL’s transportation committee director. “It’s not going to be enough.”