Aldis Barsketis, an American expatriate, thought it was odd when he started noticing a lot of South Dakota license plates in Mexico.
He wondered, “Could there be that many South Dakota people living here?” So he started asking around.
As it turned out, South Dakotans were not flocking to Mexico. The plates belonged to expats from all over the United States who had discovered how easy and cheap it is to register vehicles online or through the mail in the Mount Rushmore State.
Non-expats have discovered it, too. Some out-of-state drivers have registered their vehicles in South Dakota merely to avoid their own state’s higher fees, or to avoid having to show up for emission tests or safety inspections, neither of which are required in South Dakota.
The practice has become so commonplace that there are now 58,334 vehicles registered in South Dakota that belong to people with out-of-state addresses, according to data from the state Department of Revenue and Regulation. That’s about 4 percent of the total number of 1.51 million registered vehicles in the state.
No county has more vehicle registrations from outside the state than Pennington, where the county seat is Rapid City. The county’s 19,661 registrations from outside the state comprise 11 percent of the total number of 186,761 vehicles registered in the county.
Ranking No. 2 in vehicle registrations from outside the state is Clay County, where there are 7,241 registrations with out-of-state addresses serviced by the Treasurer’s Office in Vermillion. That number comprises 28 percent of the county’s total number of 25,451 registered vehicles.
Barsketis is among the expats with a vehicle registered in Clay County.
“And I don’t even know where Clay County is,” he said.
No other county in the state has more than 5,000 vehicles registered to out-of-staters, but all of the state’s 66 counties have at least some out-of-state registrants (Mellette County has the fewest, with 17).
Millions in extra revenue
It’s unknown exactly how much extra revenue out-of-state registrants contribute to South Dakota’s state and local governments, which split the revenue based on formulas in state law.
An official with the state Department of Revenue and Regulation said the sum has not been calculated, and the effort would be complicated because of the wide range of registration fees depending on the type, age and weight of vehicles.
But a rough estimate can be gleaned from available data, including the statewide annual revenue from vehicle registrations and titles, which is about $173 million. If the out-of-staters who account for 4 percent of the registrations also account for 4 percent of the revenue, the money coming from out-of-staters would be nearly $7 million (when the Journal shared that estimate with a state revenue official, she declined to assess its accuracy).
Out-of-staters are allowed to register vehicles in South Dakota because state law does not expressly forbid the practice. Cathi Powell has been treasurer of Clay County for nearly 40 years and said she has handled registrations from outside the state for all of those years.
The phenomenon is a financial boon to South Dakota, but it’s a source of aggravation and lost revenue for other states, including some with laws that forbid their residents from registering vehicles elsewhere.
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South Dakota is not the only state that attracts vehicle registrations from outside its borders. In 2016, according to the Washington Post, an investigation by Virginia authorities identified 2,300 vehicles that were illegally registered outside of that state, including 742 in Maryland, where the lack of a vehicle property tax made registration cheaper.
California officials grew so perturbed by illegally registered vehicles that they created a program called CHEATERS, an acronym for “Californians Help Eliminate All The Evasive Registration Scofflaws.” On the CHEATERS website, Californians can anonymously report out-of-state license plates on cars that they suspect belong to fellow Californians. The program was created in 2004, and it had helped recover $11.5 million in unpaid registration fees by 2015, according to a report by the California Highway Patrol.
In South Dakota, Pennington County Treasurer Janet Sayler takes a passive approach to registrations from outside the state. She does nothing to attract them, she said, and she expects drivers to know the laws in their home state. If they get caught violating their own state’s laws, Sayler has no sympathy for them.
“I’ve had a couple of instances when people called and wanted their money back,” she said. “That doesn’t happen.”
Registrants from 'everywhere'
Sayler said she does not know why Pennington County has so many more out-of-state registrations than other counties. She theorized that it might have something to do with Pennington County’s lack of a wheel tax, which adds up to $60 to the cost of registering in other counties.
But there were seven other counties in South Dakota that also lacked a wheel tax as of 2017, and none of them has as many vehicle registrants from outside the state as Pennington County does.
Sayler said her willingness to accept the registrations and her comparatively large staff’s ability to handle them might also be factors. Some other county treasurers resist registrations from outside the state or lack the number of employees needed to process them.
When asked where the out-of-state registrations come from, Sayler said “everywhere.” She speculated that some of the registrants might be current or former service members associated with Ellsworth Air Force Base.
Some observers attribute the phenomenon to nomadic RVers, including clients who pay for mail-forwarding and other services at a business called Americas Mailbox in Box Elder, within Pennington County. But clients of Americas Mailbox have South Dakota addresses at the business, so they would apparently not be among the nearly 20,000 Pennington County vehicle registrations that bear out-of-state addresses.
In Clay County, Treasurer Cathi Powell estimated that 90 percent of her county’s 7,241 vehicle registrants from outside the state are American expatriates who spend much of their time in Mexico.
Barsketis is one of those expats. Rather than drive his car 2,400 miles back to Utah for a required emission check and safety inspection, he switched his registration to South Dakota by telephone and mail. He was so pleased with the experience that he used the internet to encourage fellow expats to follow his lead.
Powell said it’s that kind of word-of-mouth — not any advertising or recruiting, which her office does not do — that has made Clay County popular with expats.
Sayler said she does not know why Pennington County is so much more popular, but she knows state and county officials appreciate the extra revenue and are not likely to jeopardize it with a law change.
She expects to see South Dakota plates continuing to pop up everywhere.
“You can go on vacation in any state and see a set of South Dakota plates,” Sayler said, “and they’re people who’ve never even been here and have never driven on our roads.”