BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 270 (Nazarian) - Specialized license plates: diabetes awareness ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 16, 2015 |Policy Vote: T. & H. 11 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- 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 AB 270 (Nazarian) Page 1 of ? 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 AB 270 (Nazarian) Page 2 of ? 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 AB 270 (Nazarian) Page 3 of ? 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. AB 270 (Nazarian) Page 4 of ? 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 AB 270 (Nazarian) Page 5 of ? 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 -- END --