License Plates Could Be Untapped Source for State Revenue

With public calls for tax cuts, substantial state budget shortfalls, and legislative moves to cut state government spending, state governments are going to have to start getting creative in raising funds. One way in which state governments could raise a good amount of funding could be through the marketing and auction of specialty license plates. One example of a successful vanity license plate marketing campaign was in Texas at the Great Plate Auction in January 2011. At the Great Plate Auction, various vanity license plates such as COWBOYS, RANGER, or GO HORNS were auctioned off to the tune of

. Willing bidders opened their wallets to claim their desired vanity plates to commemorate hobbies, sports, cars, and other aspects of life. The highest bid at the Great Place Auction in Texas was for FERRARI at $15,000. The proceeds from the auction went to the State of Texas, charities, and various agencies. In order to make vanity license plates marketable at auction in some states where the idea may seem foreign, there would most likely have to be changes in the way in which license plates are assigned and distributed. One example of such a system is in the United Arab Emirates, which distributes license plates by numerical digits. At state auctions for license plates, bidders pay the highest for the lowest digits. In 2008,

reported that a businessman named Saeed Abdul Ghafour Khouri paid a record $14.3 million for the license plate numbered "1.” In everyday apple pie America, $14.3 million may seem a bit steep for a unique license plate, but in 2008, a man paid a whopping $675,000 at a state license plate

. The $675,000 license plate was labeled with the number "6" in a comparable system as to that of the United Arab Emirates. Thus, if the concept were to spread, state auctions for specialized vanity license plates might prove to be worthwhile when states are struggling for cash. Taken a bit further, this concept could further spread to various other advertising campaigns by corporations, schools, and sports teams with a portion given to the state and a portion given to the consumer. One has to wonder how much a specialized license plate would fetch at an auction were non-letter, non-numerical symbols such as "$," "#," or "@" thrown into the mix. With willing citizens prepared to put up thousands of dollars for a piece of metal with a particular number or particular set of letters on it, maybe supply does create its own demand after all. The cost of a state license plate auction would most likely be minimal in comparison to the substantial revenue that could be generated. The real crux of the concept comes down to creating demand for the unique plates, which, if properly marketed, could easily manifest itself. And with states being cash-strapped and declining tax revenue owing to the Great Recession, state license plate auctions may very well be a viable solution for the problem of troublesome budgets.