BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 1242 (Lieu) - Bureau of Automotive Repair: sunset review Amended: As Introduced Policy Vote: BP&ED 9-0 Urgency: No Mandate: No Hearing Date: May 12, 2014 Consultant: Mark McKenzie This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1242 would subject the powers and duties of the Bureau of Automotive Repair (BAR) to sunset review by the Legislature as if their governing statutes were scheduled for repeal on January 1, 2019. The bill also makes several minor changes to the Automotive Repair Act. Fiscal Impact: Projected expenditures of approximately $195 million annually (Vehicle Inspection and Repair Fund, High Polluter Repair or Removal Account, Enhanced Fleet Modernization Subaccount), supporting 592.4 PY until January 1, 2019, fully offset by specified fee revenues and transfers of over $200 million, based on the proposed 2014-15 budget. Background: Under existing law, BAR licenses and regulates more than 36,000 Automotive Repair Dealers, 4,900 Smog Check Test and Repair Stations, 2,300 Smog Check Test Only Stations, 35 Smog Check Repair Only Stations, 4,000 STAR Certified Stations, and 2,100 Brake and Lamp Stations. Individually, BAR licenses some 6,500 Smog Check Inspectors, 5,600 Smog Check Repair Technicians, and 3,200 Brake and Lamp Adjusters. BAR is responsible for regulating the automotive repair marketplace and administering the smog check program. BAR also administers the Consumer Assistance Program (CAP), which provides for repair assistance and vehicle retirement payments to eligible vehicle owners if their vehicle fails a smog check. In cooperation with the Air Resources Board, BAR also participates in the administration of the Enhanced Fleet Modernization Program (EFMP), which provides voucher payments to owners of high-polluting vehicles in exchange for the retirement or replacement of those vehicles, as specified. Existing law also requires the Joint Committee on Boards, SB 1242 (Lieu) Page 1 Commissions, and Consumer Protection to hold a public hearing to evaluate and review the effectiveness and efficiency of BAR in 2003, and every 4 years thereafter, as specified. The Governor has the authority to appoint a chief of the BAR, subject to confirmation by the Senate, but must give due consideration to any person or persons recommended by the bureau prior to making the appointment. Proposed Law: SB 1242 would subject the powers and duties of BAR to review by the appropriate policy committees of the Legislature as if these provision were scheduled to be repealed on January 1, 2019. The bill would also delete an outdated requirement that BAR be reviewed in 2003 and every four years thereafter by a specified joint committee that is no longer in existence, and repeal a provision requiring the Governor to give due consideration to any person recommended by BAR when appointing a chief of the BAR. Related Legislation: This bill is one of six measures introduced this session to extend the sunset on licensing boards within the Department of Consumer Affairs - including SB 1243 (Lieu), SB 1244 (Lieu), SB 1245 (Lieu), SB 1246 (Lieu), and SB 1247 (Lieu). Staff Comments: The Department of Consumer Affairs indicates that subjecting BAR to review by the appropriate policy committees of the Legislature, as specified, and making updates to the Automotive Repair Act would have minor and absorbable costs within existing resources. BAR's operating revenues are provided from three primary sources: the Vehicle Inspection and Repair Fund (VIRF), the High Polluter Repair or Removal Account (HPPRA), and the Enhanced Fleet Modernization Subaccount (EFMS) within the HPRRA. According to the 2014-15 proposed budget, all of these funds are generally in balance with appropriate reserves, with the exception of the HPRRA, which has an imbalance of expenditures and revenues in 2014-15, but is authorized in existing law to receive transfers from the VIRF. The VIRF, which is funded primarily from BAR's regulatory licensing and permit fees, has revenues of $129.4 million (including a General Fund loan repayment of $14 million) and expenditures of $129.65 million in 2014-15, and is projected to end that year with a reserve of nearly $50 million. The HPPRA, which is funded by specified smog abatement fees charged to owners of new vehicles during the SB 1242 (Lieu) Page 2 first six years of registration, has revenues of $36 million and expenditures of $40.5 million in 2014-15, with a projected reserve of approximately $5.5 million. The EMFS, which is funded by a $1 fee on vehicle registrations, has revenues of $40.7 million (including a General Fund loan repayment of $10 million) and expenditures of $40.6 million in 2014-15, with a reserve of $1.8 million. Staff notes that there is an outstanding loan with a current balance of $40 million from the EFMS to the General Fund, $10 million of which is scheduled to be repaid to the subaccount in 2014-15. There is also an outstanding loan from the VIRF to the General Fund with a current balance of $139 million, $14 million of which is scheduled to be repaid in 2014-15.