BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 459 (Pavley) - Vehicle retirement: low-income vehicle owners.
Amended: April 25, 2013 Policy Vote: T&H 10-0
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Mark McKenzie
SUSPENSE FILE.
Bill Summary: SB 459 would establish a one-year pilot program to
provide financial assistance to low-income vehicle owners for
the voluntary retirement of a gross-polluting vehicle. A
participating vehicle owner would not be required to provide
proof of vehicle registration for the previous two years, but
would need to provide specified proof of operation.
Fiscal Impact:
Estimated costs to the Bureau of Automotive Repair (BAR) of
approximately $100,000 to adopt regulations to implement the
pilot program that allows other forms of proof of historical
vehicle operation (High Polluter Repair and Removal Account
- HPPRA).
Pilot program vehicle retirement costs of approximately $1
million, assuming participation by an additional 700
low-income vehicle owners (HPPRA).
BAR administrative costs of $28,646 annually to engage in
enhanced outreach to underserved communities.
Background: Existing law establishes the Motor Vehicle
Inspection Program, commonly known as the smog check program,
which generally requires vehicles to be tested every two years,
with specified exceptions. The Department of Consumer Affairs
(DCA) administers this program through BAR. A vehicle owner
whose vehicle fails a smog test can obtain financial assistance
through the Consumer Assistance Program (CAP). In addition to
specified repair cost waiver and repair cost assistance
programs, BAR offers a vehicle retirement program through CAP.
Under this program, eligible vehicle owners may apply for up to
$1,500 in assistance towards a replacement vehicle in exchange
for the vehicle that failed the smog check as long as the
SB 459 (Pavley)
Page 1
vehicle has been continuously registered for two years prior to
the application, as specified. The vehicle is then destroyed by
a BAR-approved vehicle dismantler.
Existing law requires DCA, in consultation with the state Air
Resources Board (ARB), to identify target populations and
disseminate information about the smog check program by all
feasible means, including advertisements in various media and by
using grass roots community networks.
Existing law also establishes the Enhanced Fleet Modernization
Program (EFMP), administered by ARB in consultation with BAR for
vehicle retirement, and in consultation with local air districts
for vehicle replacement. This program provides for the
voluntary retirement of passenger vehicles and light- and
medium-duty trucks that are high polluters. Under this program,
a vehicle owner whose vehicle has failed a smog check may apply
to BAR for vehicle retirement assistance; BAR determines whether
the owner is eligible for CAP or EFMP (or neither).
Proposed Law: SB 459 would require DCA to establish a one-year
pilot program by July 1, 2014 to provide financial assistance to
low-income vehicle owners for voluntary retirement of a
gross-polluting vehicle. Rather than the requirement in
existing law that a vehicle must have been continuously
registered for two years prior to acceptance into the program,
the bill would allow an applicant to demonstrate that the
vehicle has been continuously operated over that period by
providing either proof of insurance or vehicle repair and
maintenance records and proof of residence over the previous two
years. The bill requires DCA to report to the Legislature by
January 1, 2016 on the number of vehicles retired pursuant to
the pilot program. The bill also authorizes BAR to provide
other forms of financial assistance in the ongoing vehicle
retirement program, and requires DCA to engage in multilingual
outreach to underserved communities as part of its general smog
check public information program.
Related Legislation: SB 787 (Hill), Chap 231/2010 authorized BAR
to pay up to $1,500 to a low-income vehicle owner and up to
$1,000 to others who retire a vehicle under the smog check
program or EFMP.
Staff Comments: Currently, CAP requires a vehicle owner to
SB 459 (Pavley)
Page 2
provide proof of two continuous years of vehicle registration in
order to qualify for vehicle retirement assistance. The intent
of this requirement is to help ensure that owners of
out-of-state vehicles and vehicles that are not being operated
do not take advantage of the program. EFMP regulations
authorize participation in the vehicle retirement program by
vehicle owners who provide either proof of insurance for the
last two years, or proof of vehicle repairs and maintenance for
the past two years along with proof of the owner's residence in
the state for the same period. SB 459 would establish a
one-year pilot for the CAP using the same criteria that is
available for the EFMP.
According to a Supplemental Report provided by BAR to the Joint
Legislative Budget Committee on January 28, 2013, the CAP and
EFMP programs resulted in the retirement of 13,672 vehicles and
25,741 vehicles, respectively, in the 2011-12 fiscal year, for a
combined total of 39,413 vehicles. Total assistance provided to
vehicle owners through the retirement program was nearly $52
million. BAR estimates that an additional 700 low-income
vehicle owners would participate in the vehicle retirement
program as a result of this bill, at a cost of approximately $1
million. Staff notes that the HPPRA will have a projected
balance of only $472,000 at the end of the 2013-14 fiscal year,
and that state operations costs from the fund exceed revenues by
about $4.6 million annually, according to the Governor's revised
budget. This bill would exacerbate the imbalance in the fund.
BAR indicates that the authority to provide additional forms of
financial assistance for vehicle retirement would not add costs
because the language does not provide explicit authority for
them to use loan guarantees or other forms of assistance that
might incentivize increased participation. Staff notes,
however, that this provision could create cost pressures to
establish other forms of assistance.