BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 787|
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THIRD READING
Bill No: AB 787
Author: Hill (D)
Amended: 7/15/10 in Senate
Vote: 21
PRIOR SENATE VOTES NOT RELEVANT
SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-0, 6/29/10
AYES: Lowenthal, Huff, DeSaulnier, Harman, Kehoe, Pavley,
Simitian, Wolk
NO VOTE RECORDED: Ashburn
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Emmerson, Walters, Wyland
ASSEMBLY FLOOR : Not relevant
SUBJECT : Smog check: vehicle repair assistance and
retirement
program
SOURCE : Author
DIGEST : This bill increases the amount of money from
$1,500 to $2,000 that the Bureau of Automotive Repair may
pay to a person who retires his/her vehicle under the smog
check program, provided the vehicle has been continuously
registered in the state for the previous two years, deletes
the provision of law that provides for repair assistance to
CONTINUED
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vehicle owners whose vehicles have been directed to a
test-only smog check station, and directs the resulting
savings to the vehicle retirement program.
ANALYSIS : To meet federal air quality standards,
existing law requires California-registered,
gasoline-powered vehicles and certain diesel-powered
vehicles to undergo biennial smog inspections to measure
motor vehicle-related pollutants. New vehicles six model
years old and newer, vehicles with a pre-1976 model year,
electric vehicles, motorcycles, and large commercial
vehicles are exempt from the smog check program.
Upon initial registration and upon a change of ownership
and registration of a vehicle, the vehicle owner must
submit to the Department of Motor Vehicles (DMV) a valid
certificate of compliance indicating that the vehicle has
passed its smog inspection. If a vehicle fails any
component of a smog inspection, the vehicle owner must,
with some exceptions, repair the vehicle and pass a
subsequent smog inspection before being able to register or
renew the registration of the vehicle.
Each year, the Bureau of Automotive Repair (BAR) directs a
certain percentage of vehicles that it deems to be "high
emitters" (currently, approximately 42 percent of vehicles
subject to the program) to specified "test-only" stations.
Test-only stations are those that test, but do not repair,
vehicles.
Under existing law, BAR administers a Consumer Assistance
Program that provides financial support to assist vehicle
owners who have failed their smog inspection. Vehicle
owners have the following options:
1. Repair cost waiver . A waiver allows a vehicle owner to
register his or her vehicle, even if it does not pass a
smog inspection. A vehicle owner qualifies for a repair
cost waiver after he or she spends at least $450 for
repairs, including parts and labor. For low-income
vehicle owners, defined as persons whose income does not
exceed 185 percent of the federal poverty level, the
vehicle owner qualifies for the repair cost waiver
(known in this case as an "economic hardship extension")
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if an estimate for repairs exceeds $250. A vehicle
owner may apply for only one repair cost waiver for the
life of a vehicle. Failures resulting from emissions
control equipment that is missing or that has been
tampered with are not eligible for a repair cost waiver.
2. Repair assistance . Two categories of vehicle owners
are currently eligible for repair assistance under this
program. The first consists of low-income vehicle
owners, defined as persons whose income does not exceed
185 percent of the federal poverty level, which BAR has
authority to increase to 225 percent, whose vehicles
fail their smog inspection. The second category of
eligible vehicle owners consists of persons who were
directed to a test-only facility and whose vehicles fail
the smog inspection. Under the repair assistance
program, BAR will pay up to $500 for repair costs,
subject to a co-payment of $20 for low-income persons
and $100 for all other persons.
3. Vehicle retirement . The vehicle retirement program
provides vehicle owners compensation to voluntarily
retire (or scrap) their vehicles that have failed a smog
inspection. Under this option, a vehicle owner applies
to BAR and receives an approval letter by mail. The
owner then takes the approval letter to a vehicle
dismantler under contract with BAR for retirement and
payment. The vehicle is removed from operation and
dismantled. Existing law allows BAR to pay an owner who
elects to retire his/her vehicle up to $1,500 and to opt
to pay more than $1,500 if it determines that doing so
will be cost-effective. Currently, BAR provides $1,000
to a vehicle owner who retires his/her vehicle and is
working in cooperation with ARB to amend BAR's
regulations to provide $1,500 owners who are low-income.
To be eligible for any of these consumer assistance
options, the vehicle must have failed its smog inspection
and have been continuously registered for at least 24
months, with some exceptions, in an area where vehicles are
subject to biennial smog inspection.
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This bill:
1. Deletes the provision that vehicle owners directed to
test-only smog facilities are eligible for repair
assistance and makes conforming changes.
2. Directs the savings resulting from the elimination of
repair assistance for directed vehicles to the vehicle
retirement program.
3. Increases the maximum payment that BAR may offer for
vehicle retirement from $1,500 to $2,000.
4. Requires a vehicle be continuously registered in the
state for two years prior to retirement.
5. Establishes that a "low-income motor vehicle owner" is a
person whose income does not exceed 300 percent of the
federal poverty level.
Similar legislation . This bill is very similar to AB 823
(Hill), which was vetoed by the Governor. In his veto
message, the Governor encouraged the author to direct any
savings achieved by the bill to the vehicle retirement
program, which this bill does. Comparing this bill to AB
823, this bill also clarifies that vehicle retirement is an
option for any person whose vehicle fails its smog
inspection and increases the income, from 225 to 300
percent of the federal poverty level, that qualifies a
person as "low income" for purposes of participating in
BAR's Consumer Assistance Program.
Benefits of vehicle retirement . By incentivizing the early
retirement of fully functional vehicles, vehicle retirement
programs accelerate emission benefits that would have
otherwise occurred by the natural turnover of the fleet.
Accelerating emission reductions will help to improve air
quality and public health, and further the state's ability
to attain federal air quality standards. In addition to
these environmental and public health benefits, vehicle
retirement programs have economic benefits by incentivizing
the purchase of new or newer vehicles. Automobile
manufacturers and dealers are likely to benefit by
accelerated vehicle purchases, which may be particularly
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valuable in the state's current economic climate.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Expanded vehicle Up to $11,000 to $22,000
annually*Special**
retirement program
BAR program administration $1,675 to $3,350***
annually Special**
Reduction in eligibility for Estimated savings
of ($4,066) annually Special**
vehicle repair assistance
* Assumes 22,000 vehicle retirements at $500 to $1,000
over current payment.
** High Polluter Repair and Removal Account (all costs
beginning July 1, 2011). For 2009-10, this account
will end the year with a projected fund balance of
$2,240. This account made a $20 million loan to the
General Fund in 2008-09, and is proposed by the
Governor's Budget to be repaid in 2010-11.
*** Based on 25 to 50 percent increase in participation.
SUPPORT : (Verified 8/16/10)
AAA of Northern California
Alliance of Automobile Manufacturers
Association of International Automobile Manufacturers, Inc.
Automobile Club of Southern California
California New Car Dealers Association
Department of Consumer Affairs
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ARGUMENTS IN SUPPORT : The author argues that 75 percent
of vehicular pollution is caused by just 25 percent of the
vehicle fleet. Unfortunately, BAR's vehicle retirement
program is continually raided for General Fund expenditures
instead of being used to retire high polluting vehicles.
In addition, the author asserts that not enough
Californians are utilizing the vehicle retirement program.
There are over three million vehicles 15 years old or older
in California, yet only approximately 22,000 vehicles are
retired through the program annually. Because vehicle
retirement programs are one of the most productive ways to
reduce air pollution, this bill authorizes BAR to increase
the incentive so that more people may participate in the
program and prevent funds intended for vehicle retirement
from being used for other purposes.
This bill also eliminates repair assistance for vehicle
owners who are directed to test-only facilities and whose
vehicle fails its smog inspection. This form of repair
assistance does not have an eligibility criterion based on
income; any owner who is directed to a test-only facility
and fails is eligible. In fiscal year 2007-08,
approximately 46 percent of total expenditures for the
repair assistance program were for vehicle owners who were
directed to test-only facilities. (BAR notes that some of
these may have been eligible under the income provision but
chose not to specify their income.) The author argues that
this is an unnecessary subsidy for those who are otherwise
likely able to afford vehicle repairs. This bill closes
that loophole and limits participation in the repair
assistance program to vehicle owners whose income level
does not exceed 300 percent of the federal poverty level.
JJA:mw 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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