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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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ENVIRONMENTAL SERVICES AGENCY
Agricultural Commissioner/Sealer Division
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DATE:
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November 14, 2005
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BOARD MEETING DATE:
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December 6, 2005
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SPECIAL NOTICE/HEARING:
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10 Day Publication
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Marcia Raines, Environmental Services Agency Director
Gail Raabe, Agricultural Commissioner/Sealer
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SUBJECT:
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Amendment to the San Mateo County Ordinance Code to increase Annual Device Registration Fees for Commercial Weighing and Measuring Devices
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RECOMMENDATION:
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Adopt an ordinance amending Sections 5.124.020 and 5.124.030 of the San Mateo County Ordinance Code to increase annual device registration fees for commercial weighing and measuring devices and waiver of reading the ordinance in its entirety.
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VISION ALIGNMENT:
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Commitment: Responsive, effective and collaborative government.
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Goals 20 and 24: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain. Residents accept individual responsibility for contributing to the quality of life of the County as a whole.
These fee increases contribute to the commitment and goals by maintaining a proper relationship between costs and revenues and by assuring that those who utilize County services pay the cost of providing those services, rather than receiving a subsidy from taxpayers and thereby diverting resources from other needed programs without a source of cost recovery.
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BACKGROUND:
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Device registration fees are utilized by county Weights and Measures agencies to fund consumer protection regulatory programs that involve the testing and inspection of commercially-used weighing and measuring devices. Over 17,000 gasoline dispensers, retail scales, taximeters, vehicles scales and other devices at 1,273 San Mateo County businesses are tested for accuracy and “sealed” to ensure equity in the market place. In FY 2004-05 the Division’s revenue from Annual Device Registration Fees totaled $126,000.
Section 12240 of the Business and Professions Code of California (BPC) authorizes each county board of supervisors to establish, by ordinance, an annual device registration fee to recover the sealer’s cost of inspecting or testing commercial weighing and measuring devices. Section 12240 sets forth the maximum annual fees which counties can charge based on the number of devices at each location. In 1984, the Board adopted County Ordinance Section 5.124.010 which enacted annual device registration fees for commercial devices in San Mateo County. The fee schedule was amended in January 1994 (Resolution No. 57900) following an increase in the “Maximum Annual Charges” set forth in Section 12240. An amendment to the ordinance on June 17, 2003 (Ordinance No. 04178) aligned the County’s fees with the maximum fee schedule allowed under state law for certain devices.
On October 5, 2005, the Governor signed Assembly Bill (AB) 889, the provisions of which will become effective January 1, 2006. The legislation renews authorization for county boards of supervisors to establish and charge device registration fees. It further amends Section 12240 of the Business and Professions Code by establishing a revised registration fee structure that includes both a per-location and a per-device fee and increases the total maximum annual charges.
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DISCUSSION:
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With the enactment of AB 889, the authority for county sealers to charge an annual device registration fee has been extended through January 1, 2011. This legislation also recast the fee structure set forth in BPC Section 12240 to require that the annual registration fee include both a business location fee and a per-device fee. This new fee structure addresses long-standing inequities in the current fee ranges which are based on the number of devices. The ranges (1-3 devices, 4-9 devices, etc.) resulted in businesses at the lower end of each range paying a disproportionately higher fee than businesses at the high end with more devices. Additionally, the fees for businesses with devices requiring the use of specialized inspection equipment and/or very technical testing procedures were not adequately covering the actual costs of the county inspection. The new per-location, per-device registration fee will make adjustments that ensure each business is assessed for the actual number and types of devices inspected at each location.
The original intent of the annual device registration fee was to provide cost recovery for county device inspection programs; however, since 1994, counties have been precluded from making annual incremental adjustments to registration fee schedules to cover increasing program costs. In FY 2004-05, San Mateo County’s device registration fees covered only 40% of the $299,000 annual cost of the inspection program.
Industry representatives recognized the significant fee increases that would be necessary to bring the respective county device programs up to current cost recovery. During negotiations on AB 889, they requested that the increase in annual fees authorized under BPC Section 12240 be phased-in over a three-year period at 60%, 80% and 100% of the maximum fees specified for 2008.
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To ensure that San Mateo County businesses also benefit from a phase-in of the fee increases, the fee schedules proposed for 2006 and 2007 are established at a level that would provide an equivalent three-year phase-in for the registration fee changes. The proposed fee schedule for 2006 would provide approximately 64% program cost recovery. Cost recovery would increase to 85% in 2007. During the fall of 2007, program costs would be reevaluated and a recommended fee schedule that provides full program cost recovery for the third year, effective January 1, 2008, would be brought to the Board for consideration.
An example of the proposed annual registration fees for a small retail business with one computing scale is outlined below. The maximum fee allowed under BPC Section 12240 is included for comparison.
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Annual Registration Fee for Single Business Location with One Device
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Current Fee: $40.00
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Proposed Phase-In
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Maximum Allowed Under BPC 12240
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2006
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$60 ($50/location,$10/device)
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$72 ($60/location, $12/device)
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2007
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$78 ($65/location,$13/device)
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$96 ($80/location, $16/device)
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2008
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$96 ($80/location,$16/device)*
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$120 ($100/location, $20/device)
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The proposed new fees for 2006 would be incorporated into the annual device registration billing notices that will be mailed to businesses in January. The additional unanticipated revenue could be applied to vehicle replacement costs for the five device inspection trucks that the Division has been unable to fund in recent years.
Alternatives
An alternative would be to implement the fee increases over a two-year period, with the bulk of the increase (78% program cost recovery) effective in the first year. The remainder of the increases would be achieved in 2007. This would result in an additional $44,000 in revenue in 2006 and an additional $45,000 in 2007 as compared to a three-year phase-in. The Division does not recommend this option because it does not support the industry’s requested three-year phase-in. The additional year will soften the impact of the fee increases to County businesses.
The Board could also elect to make the changes in fee structure required by the new law (charging per location and device as compared to a range based on the number of devices) yet not raise fee revenue. The fee revenue collected by the Division would continue to cover only 40% of the costs associated with the program. The General Fund would need to contribute $173,000 on an on-going basis, therefore the Division does not recommend this option.
The proposed ordinance amendment has been reviewed by County Counsel. A second reading of this proposed ordinance will be scheduled for the next Board of Supervisors meeting.
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FISCAL IMPACT:
If the Board adopts the ordinance amending the fee schedule for device registration as set forth in Attachment B, new charges would be in effect for the 2006 calendar year registrations. Revenue from device registration fees for FY 2005-06 would increase an estimated $64,000 to an annual total of $190,000 which would provide recovery of 64% of the Division’s current annual program costs. This proposed Unanticipated Revenue has not been included in the Division’s FY 2005-06 Adopted Budget. The fee schedule adopted for the 2007 calendar year registrations would generate an additional $128,000 in revenue for an annual FY 2006-07 total of $254,000 which would provide recovery of approximately 85% of the Division’s annual program costs for 2007.
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ATTACHMENTS:
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A.
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Comparison of Current and Proposed 2006 Annual Device Registration Fee Schedules
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B.
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Proposed 2006 and 2007 Annual Device Registration Fee Schedules
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C.
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Maximum Annual Commercial Weighing and Measuring Device Fees Pursuant to BPC Section 12240
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