BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 435 (Pavley) Hearing Date: 4/27/09 Amended: 4/13/09 Consultant: Mark McKenzie Policy Vote: T.&H. 7-3 _________________________________________________________________ ____ BILL SUMMARY: SB 435 would, commencing January 1, 2012, require the Bureau of Automotive Repair (BAR) to include specified motorcycles in the biennial smog check program. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund Smog check expansion ($1,017) Special* (revenue gains) full-year revenues of over $2,000 annually beginning in 2012-13 (see staff comments) BAR program costs -Administration $200 $400-$500 Special* -Consumer Assistance Pr. $500Special** annual repair/retirement costs of about $1,000 beginning in 2012-13 (see staff comments) DMV administration $430 $370 Special*** ____________ * Vehicle Inspection and Repair Fund (VIRF) ** High Polluter Repair or Removal Account (HPRRA) *** Motor Vehicle Account _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Existing law requires motor vehicles, with specified exceptions, to undergo a biennial smog inspection, administered by BAR, to measure motor vehicle-related pollutants. As a condition of initial registration, upon change of ownership, and renewal of vehicle registration, 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. Existing law exempts motorcycles from smog check requirements until BAR implements test procedures applicable to motorcycles. DMV defines a motorcycle as any vehicle with no more than three wheels, weighing 1500 pounds or less, with an engine displacement of over 150 cubic centimeters (cc). SB 435 would, commencing January 1, 2012, require BAR to include model-year 2000 and newer Class III motorcycles (280 cc or greater) in the biennial smog check program. The bill would also require BAR, in consultation with the California Air Resources Board (ARB), to develop regulations by July 2, 2011 for incorporating motorcycles into the smog check program. Motorcycles subject to inspection shall be tested using procedures determined to be appropriate by BAR in consultation with ARB. Page 2 SB 435 (Pavley) As of March 31, 2009 there were approximately 575,000 registered motorcycles with a model year of 2000 or newer. DMV does not have the ability to determine how many of these are classified Class III motorcycles because their records do not currently track engine size. This may result in implementation challenges for DMV to identify owners of Class III motorcycles for notification of the new smog check inspection requirements. The ARB estimates that as of October of 2008 there were approximately 493,000 motorcycles that would be subject to the requirements of this bill. Since an inspection would occur every two years, SB 435 would integrate an additional 246,500 motorcycles into the smog check program each year. Based on an $8.25 certificate fee for each inspection, this bill would generate $2,033,625 in revenue annually to the Vehicle Inspection and Repair Fund beginning January 1, 2012. BAR would incur one-time costs for development and adoption of regulations and procedures for smog check inspection of motorcycles, equipment for the state's 36 referee centers, and ongoing staffing costs for administration of the program. At the time of this analysis, BAR had not yet completed an assessment of the costs and revenues associated with this bill. Staff estimates BAR's administrative costs to be approximately $200,000 in 2010-11, with ongoing costs in the range of $400,000 to $500,000 annually. Assuming motorcycles would be eligible for the Consumer Assistance Program (CAP), there would also be increased costs to the repair assistance and vehicle retirement options of the CAP. These costs are not currently available, but would depend upon the number of vehicles that fail inspections, the number of motorcycle owners who qualify for participation in CAP, average vehicle repair or retirement costs, and BAR's administrative overhead. Staff estimates the overall CAP costs to be in the range of $1 million annually beginning in 2012. DMV would incur one-time programming costs of approximately $430,000 to alter the vehicle registration process to track motorcyles for smog check notification. Ongoing DMV administrative costs would be in the range of $370,000 if 246,500 vehicles are subject to inspection every year. DMV costs are typically reimbursed by BAR from smog certificate fees (Vehicle Inspection and Repair Fund) pursuant to a Memorandum of Understanding. SB 435 would require ARB to work with BAR in the adoption of regulations to implement the inclusion of motorcycles into the smog check program, and in the determination of appropriate procedures for inspection of motorcycles. ARB estimates that costs to consult with BAR would be minor and absorbable.