BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
787 (Hill)
Hearing Date: 8/12/2010 Amended: 7/15/2010
Consultant: Bob Franzoia Policy Vote: T&H 8-0
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BILL SUMMARY: AB 787 would increase from $1,500, or more, if
cost effective, to $2,000, the amount to be paid by the Bureau
of Automotive Repair (BAR) within the Department of Consumer
Affairs to the owner of a vehicle that has failed its most
recent smog check inspection. This bill would require the
department to permit vehicle retirement for any motor vehicle
that has been continuously registered in the state for at least
two years prior to vehicle retirement, and that fails any type
of legally required smog check inspection. This bill would make
the test only station repair assistance program available only
to low income participants whose income does not exceed 300
percent of the federal poverty level.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Expanded vehicle retirement Up to $11,000 to $22,000
annually* Special**
program
BAR program administration $1,675 to $3,350*** annually
Special**
Reduction in eligibility Estimated savings of
($4,066) annually Special**
for vehicle repair assistance
* Assumes 22,000 vehicle retirements at $500.00 to $1,000.00
over current payment.
** High Polluter Repair and Removal Account (all costs beginning
July 1, 2011). For 2009-10, this account will end the year with
a projected fund balance of $2,240,000. This account made a $20
million loan to the General Fund in 2008-09 and is proposed by
the Governor's Budget to be repaid in 2010-11.
*** Based on 25 to 50 percent increase in participation
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STAFF COMMENTS: SUSPENSE FILE.
According to the Air Resources Board (ARB) there are currently
over one million vehicles retired in the state every year as
part of normal fleet turnover with the state's low-emission new
car standards dependent on this turnover for emission
reductions. However, extra emission reductions benefits can be
achieved through the early retirement of fully functional but
high emitting vehicles. The BAR vehicle retirement program
retires roughly 22,000 older vehicles annually and local air
districts scrap an additional 5,000 vehicles, primarily for air
quality benefits. By 2010, vehicles 15 years and older will
account for about 20 percent of the fleet (and about 14 percent
of the
miles traveled), but still be responsible for over 62 percent of
the smog-forming emissions from cars.
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AB 787 (Hill)
The CAP provides financial assistance for qualified consumers
whose vehicles fail the biennial Smog Check. The statutory
authority for CAP is implemented through
regulations adopted by BAR. Participation in CAP is limited to
available funds and under the following options:
Repair Assistance
Qualified consumers can receive financial assistance toward
emissions-related repairs to help their vehicles pass their Smog
Check inspection. Approved applicants must take their vehicles
to a Gold Shield repair station for repairs. Gold Shield
stations are licensed Smog Check facilities that are
independently owned and under contract with BAR. There are two
ways to qualify for repair assistance.
(1) Income Eligible - Qualified consumers whose household
incomes meet the income guidelines (derived from the federal
poverty guidelines) can receive financial assistance toward
emissions-related repairs. A copayment is required and is
applied toward diagnosis and emission-related repairs.
(2) Directed Vehicle Eligible - Certain vehicles are
directed to Test-Only or Gold Shield stations for their initial
smog tests. If a Department of Motor Vehicles registration
notice requires a test at a Test-Only or Gold Shield station,
and the vehicle fails, the owner may qualify for financial
assistance toward emissions-related repairs at a Gold Shield
repair station. Test-Only stations cannot perform repairs. A
copayment is required and will be applied toward diagnosis and
emissions-related repairs.
Vehicle Retirement
Eligible consumers can receive payment to retire their
high-polluting vehicle. There are no income or Directed Vehicle
eligibility requirements. Approved applicants must take their
vehicle to an authorized dismantler. The vehicle must pass a
visual and operational inspection before it is retired.
Chapter 761/2006 (AB 1870, Lieber) increased the maximum amount
BAR may pay a vehicle owner to retire his or her vehicle and
authorized BAR to increase the amount up to $1,500 if it deems
doing so is cost-effective. (BAR's administrative costs for
this bill would be $0 if it determines the increase is not
cost-effective to $2,574,900 to $5,149,800 annually if it
determines otherwise.) BAR prepared a regulation package to
increase the VIR incentive to $1,500 for low-income consumers.
This proposed regulation was rejected by the Department of
Finance (DOF).
Staff notes participation in the Air Resource Board's (ARB)
Enhanced Fleet Modernization Program (EFMP) would be affected by
this bill. As noted, the CAP program addresses the retirement
of vehicles failing a biennial Smog Check. The EFMP handles the
retirement of off-cycle vehicles (the vehicle does not need to
fail a smog check). Both programs use the same application and
not raising both retirement incentives to the same level would
draw vehicles away from the program that offers the
lesser incentive. (ARB was planning to raise the EFMP threshold
from $1,000 to $1,500 but delayed action when DOF rejected the
BAR proposed regulation.) Staff recommends this bill be amended
to set the incentive threshold for both programs at
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AB 787 (Hill)
the same amount.
A total of 88,000 vehicles have been retired since the program's
inception. In 2005-06, 2006-07, 2007-08, and 2008-09, 15,536,
16,906, 21,909, and 22,331 vehicles respectively, were retired.
BAR projects the retirement of 20,025 vehicles in 2009-10.
In addition, 352,121 vehicles have received repair assistance
since 2000-01, which includes a projected 59,084 for 2009-10.