SB 1902 is projected to have no direct impact on the state’s General Revenue Fund through the biennium ending August 31, 2027. However, the bill will require significant expenditures from the Texas Department of Motor Vehicles (TxDMV) Fund No. 10 due to increased costs associated with manufacturing new license plates and updating TxDMV’s automated systems.

The most significant cost factor stems from the requirement that license plates be removed and either reassigned or disposed of when a vehicle is sold. TxDMV estimates that approximately 1.2 million vehicles annually will need new license plates under this new process, resulting in the production of around 2.4 million plates per year. With a unit cost of $1.81 per plate, this translates to an annual expenditure of $4,345,920 beginning in fiscal year 2026. Additionally, there will be a one-time information technology cost of $264,600 in 2026 to update TxDMV’s automated systems to accommodate the bill’s provisions.

Overall, while there is no impact on the General Revenue Fund, the changes introduced by SB 1902 will lead to ongoing operational costs for TxDMV, totaling over $4.3 million annually. No significant fiscal implications are anticipated for local governments.

SB 1902 serves as a corrective measure to address unintended consequences from the previously enacted HB 718 (2023), which mandated that licensed dealers issue metal license plates at the time of sale to combat fraudulent paper tags. This law inadvertently created logistical and security issues for dealerships, which are now required to store large quantities of metal plates on-site. SB 1902 provides a practical solution by allowing individuals to retain their license plates when selling or trading in a vehicle. If a new vehicle is acquired within 10 days, the plates can be transferred; otherwise, unassigned plates must be properly disposed of by the dealer under Texas Department of Motor Vehicles (TxDMV) regulations​.

The bill also strengthens enforcement against fraudulent use of dealer-issued license plates by authorizing TxDMV to revoke database access for dealers engaging in misconduct. These provisions reinforce accountability while ensuring that legitimate businesses and individuals can navigate vehicle sales more efficiently. The bill grants TxDMV rulemaking authority to implement these changes, allowing for necessary regulatory oversight​.

From a fiscal perspective, the legislation is neutral concerning the General Revenue Fund but incurs ongoing costs of approximately $4.3 million annually to TxDMV for manufacturing new license plates. A one-time $264,600 investment will be required to update TxDMV’s systems to reflect the revised license plate management process. While these costs are notable, they are outweighed by the benefits of reducing fraud and improving efficiency in vehicle transactions.

Considering its alignment with individual liberty, personal responsibility, and private property rights—while placing minimal regulatory burdens on businesses—the bill upholds core liberty principles. The enhanced enforcement mechanisms ensure fair competition and prevent misuse of the dealer-issued license plate system. Given these considerations, Texas Policy Research recommends that lawmakers vote YES on SB 1902 as it balances regulatory oversight with operational flexibility for both dealers and vehicle owners.