BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2286


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          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        |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Increases the fee cap for the Contractors State  
          Licensing Board (CSLB) fee schedule, authorizes a fee for making  








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          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;









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             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:








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          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  








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          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  








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          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.










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          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