The North Carolina House has officially taken a first step toward privatizing the infamously mismanaged Division of Motor Vehicles (DMV), as issues and customer complaints have persisted for years.
The proposed budget released on Monday includes a provision that would begin the process of privatizing DMV services by creating a new pilot program to allow third-party vendors to handle driver’s license renewals, a function traditionally managed solely by the state.
The reforms come amid increasing legislative pressure to modernize DMV operations. State leaders have repeatedly criticized the DMV’s operations, arguing that the division “would be out of business if it were in the private sector.” With no notable improvement in sight, Rep. Jake Johnson, R-Polk, has been behind the push for legislative action. Earlier this year, he proposed overhauling the DMV’s structure by taking it out of the Department of Transportation.
Under the latest budget proposal, the pilot program would begin in Guilford and Harnett counties on Jan. 1, 2027. Private vendors selected would be authorized to renew Class C regular driver’s licenses — the most common license type for passenger vehicle drivers. State-run DMV offices in the selected counties will continue to operate alongside the private vendors during the pilot.
The pilot proposal marks the first major step toward outsourcing current DMV functions out of the hands of the government to private companies. License plate services are already available through private contractors. The pilot is focused not only on cost but also on customer service benchmarks, including regular reports on performance, complaint resolution processes, and quarterly evaluations submitted to the DMV.
Related Pilot Programs Signal Broader Reforms
This privatization push is part of a broader effort by the House to reform and modernize DMV services:
- In Forsyth County, another pilot will test in-home license renewals, provided either by the DMV or authorized private vendors. These vendors could charge up to double the standard renewal fee for the added convenience of home visits.
- A separate pilot program will authorize commercial driver training schools to administer driver’s license exams, including knowledge and road tests. These schools would operate under strict state oversight and be limited to a few selected counties.
The pilot programs come at a time when long lines, backlogs, and digital service issues have plagued DMV offices, especially in urban counties, as the state population grows at a record level.
The DMV is required to report to the Joint Legislative Transportation Oversight Committee in 2027 and 2028, providing analysis on cost-effectiveness, vendor performance, and whether to continue, expand, or terminate the program.
The pilots could lay the groundwork for broader reforms across North Carolina’s DMV system. But with a built-in sunset clause expiring Jan. 1, 2029, lawmakers are leaving themselves room to pull the plug — or make the changes permanent, depending on performance.
With private vendors not set to begin operations until 2027, the budget provides additional short-term aid to the DMV. During a press conference on Tuesday, state leaders pointed to additional ways they are addressing the problems North Carolinians face when interacting with the DMV, including more funds for staffing and hiring flexibility.
The budget would provide $800,000 in fiscal year 2025-26 and $1.85 million in fiscal year 2026-27 to help the DOT create 61 new driver license examiner positions. Additionally, the DMV may hire up to 30 new administrative specialist II positions to support its Customer Contact Center.
The proposal also supports DMV IT modernization efforts, including electronic credentialing for commercial driver’s licenses and a new system to track and report licensing activity by county.
Leaders hope the changes will alleviate DMV workload and cut wait times for North Carolina drivers.
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