BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 270 (Nazarian) - Specialized license plates:  diabetes  
          awareness
          
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          |Version: March 16, 2015         |Policy Vote: T. & H. 11 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File. 







          Bill  
          Summary:  AB 270 would require the Department of Public Health  
          (DPH) to apply to the Department of Motor Vehicles (DMV) to  
          sponsor a diabetes awareness, education, and research  
          specialized license plate program, as specified.


          Fiscal  
          Impact:  
           Estimated DPH costs of $25,000 in 2015-16 for plate design,  
            and up to $50,000 in 2016-17 for staff time to collect the  
            initial 7,500 applications and fees for the establishment of  
            the plate program (General Fund).  These costs could continue  
            into 2017-18 if the requisite applications and fees are not  







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            collected within the first year and DPH applies to DMV for a  
            12-month extension.  There could be additional costs if DPH  
            executes a marketing strategy to attract applicants.  If the  
            license plate program is implemented, DPH would incur unknown  
            administrative costs that would depend upon the amount of  
            resources available for the program, potentially in the  
            hundreds of thousands annually.  To the extent expenses exceed  
            allowable use of plate funds for administrative costs, there  
            could be additional General Fund costs to support the  
            administration of the program.

           Assuming 7,500 pre-paid applications are collected by CDE, DMV  
            would incur initial administrative costs of $135,000 to  
            process the applications, and an additional $440,000 in  
            programming and other implementation costs, likely in 2017-18  
            or 2018-19, partially offset by pre-paid application fees of  
            $375,000, leaving a net cost of approximately $200,000 (Motor  
            Vehicle Account).  These net costs would be reimbursed in the  
            following fiscal year by registration renewal fees from  
            holders of the school violence prevention plates.  All ongoing  
            costs thereafter would be fully offset by fees from renewals  
            and issuance of new plates.

           Upon full implementation of the proposed plate program, there  
            would be ongoing revenues of approximately $300,000 annually  
            for use by DPH for diabetes awareness projects and programs  
            (based on 7,500 plate renewals, and not accounting for  
            administrative costs).

           Diversion of funding for personalizing a diabetes awareness  
            plate from the Environmental License Plate Fund to the  
            Diabetes Awareness Fund.  See staff comments.


          Background:  Prior to 2007, any new special interest license plate required  
          specific legislative authorization.  This practice was held to  
          be unconstitutional in that the Legislature approved some of the  
          plates, and rejected others, using no standardized or objective  
          criteria for those decisions.  Current law, as enacted by AB 84  
          (Leslie), Ch. 454/2006, authorizes any state agency to sponsor a  
          special interest license plate, and apply to DMV to establish a  
          new license plate program after collecting at least 7,500  
          applications and accompanying fees and submitting them to DMV.   
          The applications must be collected within one year, with an  








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          option to extend that timeframe by an additional year under  
          specified conditions.  The new specialized license plate must  
          have a design or contain a message that publicizes or promotes a  
          state agency, or the official policy, mission, or work of the  
          agency.  

          In addition to the regular fees for an original or renewal  
          registration, existing law requires payment of the following  
          fees for the issuance, renewal, or transfer of the specialized  
          license plate: $50 for original issuance; $40 for renewal; $15  
          for transfer to another vehicle; and $35 for substitute  
          replacement plates.  Once a specialized license plate program  
          has been implemented, all additional fee revenues associated  
          with the plate, after subtracting DMV administrative costs, are  
          deposited into the Specialized License Plate Fund, and made  
          available to the sponsoring agency upon appropriation by the  
          Legislature for projects and programs that promote the agency's  
          official policy, mission, or work.  A sponsoring agency may not  
          spend more than 25 percent of its license plate fee revenues for  
          administrative, marketing, and promotional costs associated with  
          the plate.  If an applicant wishes to personalize a specialized  
          license plate, the following additional fees would apply: $48  
          for original issuance, $38 for renewal, and $38 for transfer to  
          another vehicle.  Any fees paid for personalization would be  
          deposited into the California Environmental License Plate Fund  
          for expenditure on various environmental protection purposes.

          The Chronic Disease Control Branch (CDCB) within DPH supports  
          evidence-based programs to promote healthy behaviors and improve  
          the prevention, diagnosis, and treatment of chronic diseases in  
          California, including programs to address diabetes and heart  
          disease.  CDCB is located within the Division of Chronic Disease  
          and Injury Control, which contains other branches that focus on  
          risk factors for diabetes prevention, such as poor diet,  
          physical inactivity, and tobacco use.  CDCB collaborates on  
          diabetes prevention efforts with programs located in the  
          Nutrition Education and Obesity Prevention, Safe and Active  
          Communities, and California Tobacco Control Branches.


          Proposed Law:  
            AB 270 would require DPH to apply to DMV to sponsor a diabetes  
          awareness, education, and research license plate program  
          pursuant to the requirements of the specialized license plate  








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          program in existing law.  Plates issued under this program would  
          display the message "Cure Diabetes" under the numerical series,  
          and DPH would be authorized to use donated art from California  
          artists for the plate.  The bill would require additional fees  
          derived from the plate program to be deposited into the Diabetes  
          Awareness Fund, established by this bill.  Revenues would be  
          allocated to DPH, upon appropriation by the Legislature, to fund  
          projects and programs related to diabetes awareness and  
          prevention in California's diverse communities.


          Related  
          Legislation:  Over the past five years, 13 bills have been  
          introduced directing a state agency to sponsor a specialized  
          license plate for a variety of causes, and eight of these bills  
          were enacted.  Most recently, the following four bills were  
          signed into law in 2014: AB 49 (Buchanan), Ch. 351/2014, for  
          breast cancer awareness; AB 1096 (Nestande), Ch. 353/2014, for  
          Salton Sea restoration; AB 2321 (Gomez) Ch. 358/2014, for  
          domestic violence prevention and sexual assault awareness; and  
          AB 2450 (Logue), Ch. 359/2014, which requires DPH to apply to  
          DMV to sponsor a kidney disease awareness plate.
          There are three other specialized license plates pending in this  
          Committee:  AB 63 (Bonilla) would require the Department of  
          Education to apply to the DMV to sponsor a school violence  
          prevention license plate program; AB 192 (Allen) would require  
          the State Coastal Conservancy to apply to the DMV to sponsor a  
          coastal conservancy awareness license plate program, and make  
          specified changes to the Pet Lover's specialized plate program;  
          AB 932 (Daly) would require the Department of Parks and  
          Recreation to apply to DMV to sponsor a professional sports  
          franchise license plate program, as specified.




          Staff  
          Comments:  As noted above, any state agency may sponsor a specialized  
          license plate program and apply to DMV to issue the plates upon  
          collection of 7,500 pre-paid applications without legislative  
          action.  Rather than allow DPH to sponsor a plate at its  
          discretion, this bill would require the department to apply to  
          DMV to sponsor a diabetes awareness plate program.









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          As a sponsoring entity, existing law requires DPH to design a  
          plate, apply to DMV to sponsor a plate program, and collect  
          7,500 pre-paid applications within 12 months.  If the requisite  
          number of applications has not been reached within a year, DPH  
          has the option of either returning all fees and deposits to  
          applicants, or notifying DMV that it intends to continue  
          collection efforts to obtain the minimum 7,500 applications  
          within the subsequent 12 months.  If DPH elects to continue  
          collection efforts, it must contact applicants who submitted  
          applications and fees to determine whether they would prefer to  
          continue the application or have their deposits and fees  
          refunded.  Staff notes that only two of the 12 specialized plate  
          programs signed into law since 2000 have successfully met the  
          minimum threshold of 7,500 pre-paid applications.

          Staff estimates that DPH would incur initial costs of  
          approximately $25,000 in 2015-16 to design the diabetes  
          awareness license plate and apply to DMV to sponsor the plate,  
          and additional costs of up to $50,000 in 2016-17 to collect  
          applications and fees.  If 7,500 applications have not been  
          received within 12 months of applying to DMV, DPH may incur  
          similar costs in 2017-18 if it chooses to apply for an  
          extension.  There could be additional costs to the extent DPH  
          implements a marketing strategy to attract applicants, although  
          that is not an explicit requirement in the bill or current law.   
          Staff notes that there is no requirement that DPH incur costs  
          beyond the initial 12 month period if less than 7,500  
          applications have been collected.  If the program is fully  
          implemented, DPH indicates it could incur annual costs of  
          approximately $500,000 to administer the program.  It is  
          unlikely that the program would generate sufficient funds to  
          justify these expenditures, and staff estimates that actual  
          costs would be determined in the future and would depend upon  
          the amount of available revenues and size of the program.   
          Regardless of the amount generated by the plate program,  
          administrative expenses are likely to exceed the specified  
          maximum of 25 percent of plate funds that may be used for  
          administrative costs.  Costs in excess of these amounts would be  
          a General Fund expense.

          All DMV costs are contingent upon receipt of 7,500 pre-paid  
          applications, as specified above.  If the requisite number of  
          applications are not received within the specified timeframes,  
          the diabetes awareness plate program would not be implemented  








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          and there would be no further costs or revenues derived from the  
          bill.

          If the license plate program is implemented, it would generate  
          at least $300,000 in annual revenues for diabetes awareness and  
          prevention projects and programs (assuming the minimum 7,500  
          plate holders paid a $40 renewal fee).  After deducting DPH's  
          allowable administrative costs, there would likely be less than  
          $250,000 in available funding for these purposes.

          Existing law requires specified additional funds related to  
          personalizing a specialized license plate must be deposited into  
          the California Environmental License Plate Fund.  This bill  
          requires DMV to deposit all additional fees collected from the  
          sale of the diabetes awareness plate into the Diabetes Awareness  
          Fund, after deducting administrative costs.  This would appear  
          to result in the diversion of any revenues associated with  
          personalization from the Environmental License Plate Fund to the  
          new fund for expenditure by DPH.

          Staff notes that the Senate Transportation and Housing Committee  
          authored, and the Senate approved, SR 28 last year to declare a  
          moratorium on legislation to increase the number of specialized  
          plate types that DMV may issue until the Legislature can assess  
          the full and long-term impacts of the ongoing increase in  
          license plate types.  The resolution requested DMV to establish  
          a task force to study plate proliferation and make  
          recommendations to the Legislature and Governor by July 1, 2015.  
           That report is still pending, and the proposed moratorium has  
          apparently not prevented new plate proposals from moving forward  
          in the current Session




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