The SDC collection policy would bring in an additional $76.43 per case; the average revenue generated per case through the suspension policy is approximately $105.50, compared to about $181.93 from the SDC collection policy.
In Wisconsin, driver’s licenses are suspended for failure to pay legal financial obligations. This report highlights the negative economic ramifications of this policy, particularly for low-income drivers. To provide an alternative to this ongoing practice, researchers conducted a cost-benefit analysis of pursuing debt recovery through Wisconsin’s State Debt Collection (SDC) program instead of driver’s license suspension. The analysis evaluates the fiscal, administrative, and social impacts of eliminating license suspensions for nonpayment, focusing on consequences for individuals, government agencies, and the broader public. It concludes that suspending a driver for failure to pay forfeitures is an inefficient enforcement strategy and recommends a collection-only approach, which would offer net benefits.
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Key Findings:
- In 2022, FTP was the most common reason for license suspension in Wisconsin, accounting for 141,044 suspensions.
- In the first year after eliminating driver’s license suspensions for FTP and shifting to the SDC program, both individuals and government agencies are estimated to experience substantial cost savings:
- Drivers would avoid an estimated $77 million in lost wages, reflecting reductions in both job loss and reduced work hours associated with license suspension.
- The Wisconsin Department of Motor Vehicles (DMV), which currently administers license suspensions and reinstatements, would avoid an estimated $1.48 million in administrative costs.
- Law enforcement agencies would avoid approximately $650,000 in police costs, reflecting reduced traffic stops, citations, and enforcement activity related to driving while suspended.
- On a per-person basis, the shift from license suspension to SDC is estimated to result in: $6,837.77 in avoided wage loss, $316.66 in avoided transportation loss, $24.64 in avoided diversion of police resources, and $66.55 in avoided court filing costs.
- Overall, eliminating driver’s license suspensions for failure to pay forfeitures and collecting debts through the State Debt Collection program is estimated to generate annual net benefits of approximately $200.6 million, based on modeled results.