BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 465 (Hill) - Contractors' State License Board: licensees:
bond requirement.
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: April 21, 2015 |Policy Vote: B., P. & E.D. 9 - |
| | 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 11, 2015 |Consultant: Mark McKenzie |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 465 would extend the sunset on the Contractors'
State License Board (CSLB) and the registrar of contractors
(Registrar) until January 1, 2020. The bill would also revise
the financial security requirements placed on contractors.
Fiscal
Impact: Projected expenditures of approximately $63 million
annually (primarily Contractors License Fund), supporting 405.6
PY, until January 1, 2020, partially offset by annual fee
revenues of approximately $55-56 million, based on the proposed
2015-16 budget.
SB 465 (Hill) Page 1 of
?
Background: The CSLB, within the Department of Consumer Affairs, is
responsible for the implementation and enforcement of the
Contractors State License Law, including the laws and
regulations related to the licensure, practice, and discipline
of the construction industry in California. All businesses and
individuals who construct or alter, or offer to construct or
alter, any building, highway, road, parking facility, railroad,
excavation, or other structure in California must be licensed by
the CSLB if the total cost (labor and materials) of one or more
contracts on the project is $500 or more. The CSLB licenses
approximately 290,000 contractors in 44 license classifications
and two certifications, and also registers an additional 9600
home improvement salespersons who are engaged in the sale of
home improvement goods and services. The CSLB issues
approximately 15,000 new licenses each year, and renews more
than 121,000 existing licenses. Existing law provides for a
sunset of the CSLB and the Registrar on January 1, 2016, which
provides for continued legislative oversight the regulatory
board's activities.
Existing law requires all applicants for a new or renewed
license to demonstrate, as evidence of financial solvency, that
his or her operating capital exceeds $2,500. Existing law also
requires that a contractor, as a condition of licensure, have on
file at all times proof of a $12,500 contractor's surety bond,
and authorizes the CSLB to temporarily require an applicant to
post a bond of twice this amount it he or she has been convicted
or cited for certain violations.
Proposed Law:
SB 465 would extend the sunset of the CSLB and the term of the
Registrar until January 1, 2020. The bill would also delete the
requirement that contractors maintain $2,500 in capital, and
increase the surety bond requirement from $12,500 to $15,000.
Related
Legislation: This bill is one of five measures introduced this
session by the Senate Business, Professions, and Economic
Development Committee to extend the sunset on licensing boards
within the Department of Consumer Affairs - including SB 466
(Hill), SB 467 (Hill), SB 468 (Hill), and SB 469 (Hill). Five
SB 465 (Hill) Page 2 of
?
additional bills that extend the sunset on DCA licensing boards
and bureaus are being considered by the Assembly this year.
Staff
Comments: The Department of Consumer Affairs indicates that the
provisions of the bill that extend the sunset on the CSLB, and
revise the financial security requirements for contractors are
minor and absorbable.
Staff notes that the Contractors License Fund, which supports
the operations of the CSLB, is in a declining condition.
According to the fund condition statement in the proposed
2015-16 budget, expenditures have been outpacing revenues by
approximately $3 million to $6 million annually in recent years,
and expenditures are expected to exceed revenues by nearly $7.7
million in 2015-16. The fund's reserve has declined from $26.4
million at the end of 2013-14, to $19.2 million at the end of
the current year. The reserve is projected to be at $11.5
million at the end of the 2015-16 fiscal year, which the
equivalent of a two month reserve. At the current pace, and
without corrective action or adjustment, the fund will be
insolvent sometime during the 2017-18 fiscal year, which is
approximately two years before the sunset date specified in the
bill.
-- END --