BILL ANALYSIS Ó AB 2286 Page 1 ASSEMBLY THIRD READING AB 2286 (Mullin) As Introduced February 18, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Business & |13-1 |Salas, Baker, Bloom, |Dahle | |Professions | |Campos, Chávez, Dodd, | | | | |Eggman, Gatto, Gomez, | | | | |Holden, Mullin, Ting, | | | | |Wood | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |11-0 |Gonzalez, Bloom, | | | | |Bonilla, Bonta, | | | | |Calderon, Daly, | | | | |Eggman, Roger | | | | |Hernández, Quirk, | | | | |Santiago, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Increases the fee cap for the Contractors State Licensing Board (CSLB) fee schedule, authorizes a fee for making AB 2286 Page 2 changes to the personnel associated with a license, and provides the CSLB the authority to adopt regulations to provide for expedited processing of license applications. Specifically, this bill: 1)Increases the maximum fees the CSLB may set by regulation for: a) An application for an original license in a single classification from $300 to $360; b) An application for each additional classification, as specified, from $75 to $300; c) The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee, from $75 to $300; d) The initial license fee for an active and renewal for an inactive license from $180 to $220; e) The renewal of an active license from $360 to $430; f) The registration of a home improvement salesperson (HIS) from $75 to $90; g) The renewal of a HIS registration from $75 to $90; h) The application for an asbestos certification examination from $75 to $90; AB 2286 Page 3 i) The application for a hazardous substance removal or remedial action certification examination from $75 to $90; and, j) The delinquency penalty for a HIS registration renewal application that is not postmarked or received by the registration's expiration from $25 to 50% of the renewal fee. 2)Specifies that the application fee for each additional classification applied for in connection with an original license to be limited to no more than $75. 3)Specifies that the application fee to add personnel, other than a qualifying individual, to an existing license is to be limited to no more than $150. 4)Requires the CSLB to establish by regulation, an expedited process for applications for registration as a HIS for applicants; authorizes the CSLB to establish by regulation the criteria for approval of this expedited process. 5)Exempts from these regulations an application that is required to be expedited pursuant to other law, including, but not limited to, the applications of applicants who have, among other things, served as an active duty member of the Armed Forces of the United States (AFUS) or have a specified relationship with such an active duty member. FISCAL EFFECT: According to the Assembly Appropriations Committee, increasing the statutory caps on several fees for the CSLB will lead to: AB 2286 Page 4 1)An anticipated increase in fee revenue of approximately $12 million (Contractor License Fund) beginning in Fiscal Year (FY) 2017-18 and on-going, if the CSLB's fees are increased to the proposed statutory caps and include the new fees, and regulations are adopted, but would be less to the extent that some fees are increased to less than the proposed caps; 2)A one-time cost of approximately $3,500 for Information Technology costs associated with increasing the fees. The CSLB indicates these costs are minor and absorbable; and, 3)Minor and absorbable costs for adopting regulations. COMMENTS: Purpose. This bill increases the fee cap for the CSLB fee schedule, authorizes a fee for making changes to the personnel associated with a license, and provides authority to adopt regulations to provide for expedited processing of license applications. This bill is sponsored by the CSLB. According to the author, "this proposal raises the statutory cap on CSLB's authorized fees. CSLB will need to adopt regulations to set actual fee amounts, and will continue to work with industry and interested parties through that process. If CSLB is able to obtain approval for a fee increase, [it] will be able to continuing working to provide online license application and renewal services, which will benefit all licensees. If CSLB is not able to implement a fee increase, [it] will have to reduce costs in Enforcement. These cuts will begin with cuts to [its] proactive enforcement program. Certain positions will be held vacant AB 2286 Page 5 which will lead to backlogs in license application and complaint handling processing." Background. The CSLB was established as a board within the Department of Consumer Affairs (DCA) and upholds its mission to protect consumers by regulating the construction industry through licensure, enforcement, and education. The CSLB regulates contractors in 43 license classifications and two certifications, which amounts to approximately 285,000 licensees. The CSLB receives no General Fund support, relying solely on fees set by statute and collected from contractors and applicants. Renewal fees constitute the main source of revenue, and are collected every two years from contractors with active licenses. Active contractor licenses expire two years from the last day of the month in which the license was issued. When a board or bureau under the DCA requests a fee increase, the Assembly Committee on Business and Professions (Committee) requests that the board or bureau complete its "Fee Questionnaire." The information provided on this questionnaire is the result of the board or bureau working with the DCA's Budget Office throughout the year. The Budget Office can help to prepare expenditure projections and fund conditions, as well as monitor these projections to manage and watch for imbalances. Expenditures that are projected to exceed revenues do not always indicate that a program is in need of a fee increase. The DCA works closely with each program that appears to have potential reserve shortages to understand the potential implications. Fund Condition. According to the CSLB and its responses to the Committee's questionnaire, the CSLB will face a deficit of approximately $6 million by FY 2018-19. The most significant AB 2286 Page 6 contribution to this deficit is increased costs in personal services, which includes salary, benefits, and retirements, the DCA Pro Rata, and Enforcement. In the current budget year, the CSLB is expected to spend approximately $61 million. Of that increased spending, $8.5 million, nearly half went to personal services. During that time period, the CLSB added four positions, which were approved through the annual budget process. The amount the CSLB pays to the DCA recently increased by $2 million. A significant portion of that $2 million increase is due to DCA's new BreEZe system - a computer upgrade system that centralizes licensing and enforcement. While the CSLB was previously scheduled to be included in Release 3 of the BreEZe system, it is now not currently scheduled to be included. The boards have no control over the Pro Rata charges regardless of the quality or quantity of services provided by the DCA. The DCA's pro rata calculations are based on position authority rather than the actual number of employees, which may ultimately inflate pro rata charges. The CSLB also had increased enforcement costs of about $2 million, the majority of which were costs for the use of services by the Attorney General's (AG) Office and the Office of Administrative Hearings. This increase is in part due to reporting requirements of the AG's office as a result of SB 467 (Hill), Chapter 656, Statutes of 2015. This bill required the AG's office report on specific statistical information regarding accusation matters referred to the AG for each constituent entity within the DCA represented by the Licensing Section and Health Quality Enforcement Section of the Office of the AG, and additionally extended the operation of several boards within the DCA. AB 2286 Page 7 Veteran's Assistance Program. SB 1226 (Correa), Chapter 657, Statutes of 2014 required boards under the DCA, beginning July 1, 2016, to expedite the initial licensure process for veterans, and requires boards and bureaus to accept military experience towards licensure. This bill sought to assist veterans transitioning into civilian life by reducing licensure delays and making it easier to find work by giving them credit for the skills developed during their time in the military. Related Prior Legislation. SB 1953 (Figueroa), Chapter 744, Statutes of 2002 increased the statutory limit for all fees for the CSLB. The CSLB promulgated regulations to implement this fee increase in 2011. Analysis Prepared by: Gabby Nepomuceno / B. & P. / (916) 319-3301 FN: 0002769