February 17, 2006
Dear Attorney General Lockyer:
Pursuant to Elections Code Section 9005, we have reviewed
the proposed statutory initiative related to contractor licensing
(File No. SA2006RF0010).
Contractors’ Licenses. Individuals involved with the construction of homes—such as builders and contractors—must be licensed by the Contractors’ State Licensing Board (CSLB). A contractor is required to report a construction-related civil court judgment to CSLB within 90 days. Contractors can have their licenses suspended if they do not resolve these judgments (for instance, by paying the person owed money). A license remains suspended until the judgment is resolved. The CSLB, which is funded from licensing fees, spends more than $50 million annually for its activities.
The measure expands the conditions under which contractors could have their licenses suspended. In any three-year period, if a licensee had more than one judgment of over $100,000 related to “intentionally, willfully, or recklessly” failing to comply with construction requirements, the license would be suspended for five years.
CSLB Costs. By adding new responsibilities for CSLB, the measure would increase CSLB’s costs. The number of future judgments meeting this measure’s standard (over $100,000 and intentional, willful, or reckless actions) would determine how much additional workload CSLB would experience. The CSLB, however, does not currently track this information. While unknown, we would expect any increase in costs to be relatively minor. These costs would be covered by fees.
Other Possible Effects. Since CSLB does not currently track the number of judgments that would fall under the measure’s standard for suspending a license, it is unknown to what extent the measure would increase license suspensions in the future. Given that judgments would have to meet both the $100,000 threshold and the intentional, willful, or reckless actions criteria, we would expect relatively few additional suspensions. If, however, the measure resulted in a large number of suspensions, it could have a significant effect on the building industry (and potentially state and local tax revenues).
Fiscal Summary. This measure would have the following fiscal impact: