[dougweltman]

Minor correction that does not detract from your point:

DMV actually nets out a surplus in most states given the fees it collects.

When states cut its operating budget, it's because they're looking across the budget for ways to cut costs. This is only irrational from a budgetary, as opposed to service delivery, POV if the cuts somehow undermine revenue collection, like reducing the number of IRS auditors.