BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 941 (Monning) - Vessel operator cards.
Amended: April 22, 2014 Policy Vote: NR&W 7-1
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: April 28, 2014 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 941 would require the Division of Boating and
Waterways (division) to develop a vessel operator education
program and issue a vessel operator card, which would be
required for operating a vessel within state waters.
Fiscal Impact:
One-time cost of $4 million from the Harbors and Watercraft
Revolving Fund (HWRF) (special fund) for a loan to the
Vessel Operator Certification Account in 2015, with likely
repayments beginning in 2017.
One-time costs of $2.3 million from the Vessel Operator
Certification Account (special) for FY 2015-16 to the
division for the creation of the vessel operator and rental
operator card.
Unknown ongoing costs of at least $4 million from the
Vessel Operator Certification Account (special) beginning in
FY 2016-17 for the division to issue vessel operator cards
with a potential significant drop in costs after 2025.
Unknown ongoing revenues, likely in the low millions of
dollars to the Vessel Operator Certification Account
(special) beginning in 2017 from vessel operator card fees
with a potential significant drop in revenues after 2025.
Background: The division, within the Department of Parks and
Recreation (DPR), regulates the operation of vessels in the
state's inland and coastal waterways. Existing law states that
it is the state's policy to promote boating safety. To this end,
the division recommends that a boating safety class be taken
prior to boating. Existing law (§760 et seq.) also requires
operators of for-hire vessels that can carry passengers must
hold an operator's license. The division is primarily funded by
the HWRF, which consists of revenues from vessel registration
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fees, gas tax, yacht and ship salesmen fees, and interest and
loan repayments made to local governments.
Proposed Law: This bill would require the division to:
By December 31, 2017, develop a vessel operator and rental
operator card that is evidence of completion of a vessel
operator examination.
Develop and provide a vessel operator examination on its
website. The division would also be required to provide links
to other examinations approved by the division that are
administered by a vendor.
Develop a rental vessel operator examination and approve
site-specific rental vessel operator examinations.
Charge a fee for the vessel operator card that is sufficient
to cover the reasonable costs of the development,
establishment, and operation of the program. The bill also
sets an unspecified maximum fee amount. Fee revenues would be
deposited into the Vessel Operator Certification Account
within the HWRF.
Annually report to the Legislature beginning April 1, 2019 on
the number of vessel operator cards issued, the fees collected
and costs incurred by the division, the correlation between
the number of cards issued and the number of accidents,
injuries, and fatalities related to vessel operation, and the
number of citations for vessel operation without a card.
The requirement for an operator card to operate a vessel would
be phased-in by age beginning in 2018 for persons 20 years old
or younger and increasing in 5-year age increments until 2025 at
which point all persons would be required to hold a card to
operate a vessel. The requirement for an operator of a rental
vessel to have either a vessel operator card or a rental vessel
operator card would begin January 1, 2018.
This bill would also loan $4 million from the HWRF to the Vessel
Operator Certification Account, upon appropriation by the
Legislature, to develop and establish the program. The loan
would be prohibited from impairing the intended expenditure
purposes of the HWRF. The division would be required to repay
the loan within three years of the effective date of the
regulations.
Related Legislation: AB 1287 (Davis, 1999), AB 2110 (Duvall,
2008), and AB 1458 (Duvall, 2007) would have required the
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Department of Boating and Waterways to institute a boater safety
education program. These bills were vetoed, held on the Assembly
Appropriations suspense file, and stalled in Assembly
Appropriations, respectively.
Staff Comments: In order to develop the vessel operator and
rental operator cards, DPR estimates that it would need four PYs
at a cost of $524,000 plus $1.8 million for contracted work.
This is based on the assumption that the division would develop
the exam, but contract out the exam administration. Once the
program is developed, DPR estimates that it would need seven PYs
at an annual cost of $910,000 plus $3.1 million for contracted
work to operate the vessel operator card program through 2025,
when the phase-in period ends. These costs are based on the
assumptions that are approximately 1.8 million vessel operators
in the state and that the age distribution of the vessel
operators is roughly even. (There are 815,216 vessels currently
registered with the Department of Motor Vehicles, but there is
no data on the number of operators, let alone the age of the
operators.) If these assumptions are not correct, revenues and
operation costs for the program may fluctuate, perhaps
substantially, during the card requirement phase-in period.
Staff notes that these costs are only based on administering
vessel operator cards and exclude potential costs of
administering rental operator cards. The division currently has
no information on number of people who rent vessels, and thus
has no estimate of the likely demand for rental operator cards.
Staff estimates that there will likely be millions of rental
operator cards issued annually.
Costs after 2025 are uncertain because it is unknown how many
new boaters there would be annually, though the number is likely
to drop substantially after the phase-in period because cards
are valid for the life of the person. Rental operator card
demand is likely to be more constant as the rental cards are
only valid for 30-days.
Revenues to the program are uncertain as this bill establishes a
cap on the vessel operator card fee and a cap on the cost for a
duplicate card, however the amount of that cap is not specified.
The bill does not suggest a cap for the rental operator cards.
Staff notes that the bill explicitly requires that the fees
shall be in amounts sufficient to cover the reasonable costs of
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the development, establishment, and operation of the program
without exceeding those costs. Given this requirement,
presumably revenues through 2025 should be in the millions of
dollars. However, if the bill ultimately specifies a cap amount
that prevents the collection of sufficient revenue for the
operation of the card program, this program will have cost
pressures on the General Fund. Staff recommends that given the
limitations of fee recovery under this bill, and the inherent
limitation on fees from Proposition 26, a fee cap is unnecessary
and should be deleted.
Staff notes that the phase-in period for the card requirement (8
years) does not correspond to the bill's three-year loan
repayment requirement to the HWRF. As a result, the fee for the
persons getting a card in the first few years will necessarily
be significantly higher in order to provide revenue sufficient
to cover both the loan repayment and ongoing operation costs
compared to the later years when the fee only needs to cover
ongoing operation costs. The relatively high cost for an
operator card in the early years may discourage people from
voluntarily obtaining a vessel operator card earlier than the
law would require. Staff recommends that the loan repayment
period and the phase-in period be better matched.
This bill requires the division to approve site-specific rental
vessel operator examinations. Presumably the beneficiaries of
such a site-specific test are the vessel rental companies in
that area. Staff notes that if the division anticipates a large
number of requests for site-specific examinations, it may be
appropriate to allow the division to charge a separate one-time
fee for this approval instead of having all boaters statewide
pay for this activity through card fees.
This bill requires the division to report annually on the total
number of violations of the card requirement and the number of
accidents related to vessel operation, among other things. Staff
notes that the division will have limited information for these
reporting requirements. In regards to accidents, under existing
law, the division is only required to be notified of accidents
that cause more than $500 in damage or complete destruction of
the vessel. In regards to violations of the card requirement,
local law enforcement is likely to issue most, if not all, of
the violations. This bill does not require local law enforcement
to notify the division of the violations and it is unclear
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whether all local law enforcement would track this data in the
absence of a state mandate. DPR notes that their ongoing costs
assumes one PY solely for the staff time that would be necessary
for this reporting requirement.
The bill requires that the Vessel Operator Certification Account
receive a $4 million loan from the HWRF upon appropriation by
the Legislature. Given that the HWRF currently has a reserve of
approximately $30 million, staff believes that a $4 million loan
can likely be made without impairing the intended expenditures
of the HWRF, which is a condition required by the bill.
Staff notes that there are technical issues that may need to be
resolved. Specifically, it is unclear if the requirement for an
operator of a rented vessel to have an operator card after 2018
overrides the phase-in date based on age. That is, for example,
would a 50-year old need an operator card to rent a vessel in
2018?
This bill constitutes a mandate because it creates a new crime.
However this mandate is not reimbursable.