CONSTRUCTION CODE FUND FEES H.B. 4843 (S-1), 4844 (S-1), 4846 (S-1), & 4848 (S-1): FLOOR SUMMARY
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House Bill 4843 (Substitute S-1)
House Bill 4844 (Substitute S-1)
House Bill 4846 (Substitute S-1)
House Bill 4848 (Substitute S-1)
Sponsor: Representative Kathleen Law (H.B. 4843)
Representative Mark Meadows (H.B. 4844)
Representative Gabe Leland (H.B. 4846)
Representative Bert Johnson (H.B. 4848)
House Committee: Appropriations
Senate Committee: Appropriations

CONTENT
The bills would increase temporarily the fees paid for licensing, registration, and examinations by various contractors and apprentices regulated under the State Plumbing Act, the Electrical Administrative Act, the Forbes Mechanical Contractors Act, and the Building Officials and Inspectors Registration Act. The current and proposed fees are shown in Table 1 (attached).


The fee increases would be in effect until September 30, 2012. After that date, fees would revert to the current amounts.


MCL 338.3541 & 338.3545 (H.B. 4843)
MCL 338.883 (H.B. 4844)
MCL 338.980 (H.B. 4846)
MCL 338.2313 (H.B. 4848)

FISCAL IMPACT
The bills would increase revenue to the Construction Code Fund established in the Department of Labor and Economic Growth (DLEG) for a period from the effective date to September 30, 2012. The Construction Code Fund receives revenue from various contractor licenses and permits issued by DLEG. The Fund supports the operations of the Bureau of Construction Codes, which administers licensure of contractors and the application of building codes.


Most licensees renew on a staggered three-year cycle; thus, revenue to the Construction Code Fund varies considerably from year to year depending on the profession renewing. The amount of revenue from permit activity also varies annually. Estimated revenue to the Construction Code Fund is shown in Table 2. The revenue influx every three years is typically carried forward to support the work of the Bureau of Construction Codes in the off years when license renewal revenue is lower.






Table 2

Estimated Revenue to Construction Code Fund
Under House Bills 4843, 4844, 4846, and 4848
    Estimated Revenue with Current Fees Estimated Revenue with Proposed Fees  
Difference
FY 2006-07 $12,702,100   N/A
FY 2007-08 $7,279,500   N/A
FY 2008-09 $7,810,100 $7,965,000 $154,900
FY 2009-10 $12,714,600 $15,649,900 $2,935,300
Source: Department of Labor and Economic Growth


In recent years, fee revenue to the Construction Code Fund has been insufficient to support expenditures. Revenue to the Fund has been constrained by economic conditions that have reduced permitting for construction projects. There also have been increased demands on the Construction Code Fund. For FY 2003-04 to FY 2005-06, approximately $3.7 million from the Fund was spent to support the operations of the fire safety program, which was then part of the Bureau of Construction Codes. The fire safety program has since been established as a separate bureau funded with GF/GP revenue.


In response to revenue constraints, the Bureau of Construction Codes reduced staffing, eliminating 17.0 FTEs and 4.0 student assistant positions in FY 2006-07. To prevent a deficit in the Fund in FY 2008-09, the DLEG budget (Public Act 251 of 2008) includes a one-time transfer of $3.0 million to the Construction Code Fund from Corporation Fees-Certification and Copy Fees Fund revenue. This transfer will allow the Department to maintain current staff and services in FY 2008-09, but will not address the ongoing imbalance in revenue and expenditures.


Assuming that the bills would be effective as of January 1, 2009, the proposed fee increases would provide additional revenue to the Construction Code Fund of an estimated $154,900 in FY 2008-09 and $2.9 million in FY 2009-10. It is projected that this additional revenue would bring the Construction Code Fund back into balance for the period until September 30, 2012, while the increased fees were in effect. Depending on the level of revenue and the requirements for expenditures from the Fund, the potential for a deficit in the Fund could arise again after the increased fees sunsetted at the end of FY 2011-12.


The Leadership Target Agreement on the FY 2008-09 budget included an increase of the Construction Code Fund fees to bring the Fund into balance.


Date Completed: 12-9-08 Fiscal Analyst: Elizabeth Pratt Maria Tyszkiewicz
Table 1

Current and Proposed Contractor Fees
Under House Bills 4843, 4844, 4846, and 4848
    Year of Last Fee Increase Current Fee Proposed Temporary Fee*
  HB 4843 (S-1)    
  Apprentice plumber, licensee fee 2003 $ 5 $15
Apprentice plumber, reinstatement fee 2003 $10 $20
Journey plumber, license fee 1989 $20 $40
Journey plumber, reinstatement fee 2003 $25 $50
Journey plumber, examination fee 2003 $50 $100
Master plumber, examination fee 1989 $50 $100
Master plumber, license and renewal fee 1989 $200 $300
Master plumber/Plumbing contractor reinstatement fee 2003 $85 $100
Plumbing contractor, examination fee 2003 $50 $100
Plumbing contractor, license and renewal fee 2003 $20 $300
Replacement license   $20 $30
     
  HB 4844 (S-1)    
  Apprentice electrician, initial registration fee 1991 $ 5 $15
Apprentice electrician/specialty apprentice registration renewal 1990 & 1992 $10 $15
Electrical contractor (three-year fee) 1989 $200 $300
Examination fee 1989 & 1992 $25 $100
Electrical journeyman, license fee 1989 $20 $40
Fire alarm contractor (three-year fee) 1992 $200 $300
Fire alarm specialty technician 1992 $25 $50
Fire alarm specialty apprentice technician 1992 $ 5 $15
Master electrician, license fee 1989 $25 $50
Sign specialist 1992 $20 $40
Sign specialty contractor (three-year fee) 1992 $120 $200
     
  HB 4846 (S-1)    
  Mechanical contractor examination fee 1984 $25 $100
Mechanical contractor license 1989 $75 $100
     
  HB 4848 (S-1)    
  Building officials, inspectors, plan reviewers registration 1986 $10 $25
*The proposed fees would be effective until September 30, 2012. After that date, the fees would return to current levels.
Source: Department of Labor and Economic Growth



Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. hb4843etal/0708