Smog plan to benefit car sellers Auto dealers stand to save millions on tests.

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Fresno Bee (California)

SACRAMENTO — Gov. Schwarzenegger’s smog reduction budget proposal contains a provision that insiders say would save auto dealers millions of dollars, prompting some to question the governor’s political motivation.

Schwarzenegger’s plan would allow Californians to sell cars newer than four years old without having to get them tested for smog emissions regulations. Dealerships sell about 90% of used cars four years old or newer, according to consumer watchdog groups.

If lawmakers accept the governor’s proposal, auto dealers stand to save tens of millions of dollars they otherwise would have spent to test their cars’ smog emissions system — and dealers don’t have to pass the savings on to buyers.

Many say the provision doesn’t belong in an air quality plan and question whether Schwarzenegger is cozy with auto dealers.

“What is publicly presented as a pollution reduction program, which we all would want to support, in fact provides a hidden benefit worth millions to the car dealers,” said Richard Holober, executive director of the Consumer Federation of California. “That is a very devious way of doing public policy.”

The auto dealership industry has pumped about $1 million into Schwarzenegger’s campaigns, according to the Foundation for Taxpayer and Consumer Rights.

During his first week in office, Schwarzenegger celebrated his rollback of vehicle license fees at Galpin Ford in Southern California, where he urged Californians to buy cars. The family that owns the dealership donated more than $50,000 to Schwarzenegger committees.

Schwarzenegger also abruptly fired Steve Gourley, the director of the Department of Motor Vehicles who was known for cracking down on auto financing scams.

Terri Carbaugh, a spokeswoman for Schwarzenegger, said the smog reduction plan, released this month, benefits consumers and the fight to clean California’s air. If dealerships also benefit, so be it.

“What’s wrong if the consumer benefits and the industry benefits? I’m not understanding where the problem is,” Carbaugh said.

Brian Maas, director of government affairs for the California Motor Car Dealers Association, acknowledged that Schwarzenegger’s plan benefits dealers, but he said his group did not ask for the change-of-ownership provision. The plan, he said, also benefits consumers.

“I don’t think it’s payback to anybody other than the voters who elected him,” Maas said.

Dealers will still have to test cars that need smog emissions system repairs and are under warranty. And, said Carbaugh: “There’s nothing that prevents a [buyer] from seeking a smog test should they desire. Nobody’s hands are tied.”

Consumer advocates fear that some buyers unknowingly will purchase cars with smog emission problems and be stuck with massive repair bills. Such repairs average $135, but costs can run several hundred dollars.

“If you buy a car not knowing that it won’t meet smog, and later down the road you have big repair costs, that could be a big problem,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety.

Chris Walker, representing the California Service Station & Automotive Repair Association, said the car modification market is huge. An owner could tamper with a smog emissions system, then sell the car to someone who might not recognize the change.

Automobile owners have been required since 1989 to provide purchasers with valid smog certificates. The requirement protects buyers from purchasing cars that don’t meet smog emissions guidelines.

Consumer advocates, though, say Schwarzenegger’s plan has redeeming qualities.

Under the proposal, car owners would have six years instead of four before having to get new vehicles checked for smog emissions standards. That, coupled with the change-of-ownership exemption, would save consumers $48.5 million annually, according to the administration.

In return, owners would pay a yearly $12 smog abatement fee — double what they pay now.

In all, Schwarzenegger’s plan puts $67.8 million per year toward improving air quality. About $6.8 million per year would go toward the Bureau of Automotive Repair’s effort to retire gross-polluting vehicles and help low-income families afford smog-related vehicle repairs.

The remaining $61 million would feed the Carl Moyer Program, which has helped pay to refurbish or replace 1,500 soot-spewing agriculture engines in the San Joaquin Valley, and about 4,900 engines statewide. The change has kept about 4,650 tons of nitrogen oxides — an ingredient in ozone — from California’s air each year, which is equivalent to emissions from 37 large power plants, according to the California Air Resources Board.

Jerry Martin, a spokesman for the board, said Schwarzenegger’s plan would, by 2010, cut about 30 tons of nitrogen oxides from the air per day. That amounts to about 40% of the nitrogen oxides California’s power plants emit each day.

He said it also would take some pressure off local air districts, including San Joaquin Valley’s, that are struggling to meet federal requirements.

The change-of-ownership exemption in Schwarzenegger’s plan doesn’t help the air pollution control effort — but it doesn’t hurt it either, Martin said. Cars newer than four years old rarely fail smog emissions tests.

Some say Schwarzenegger’s plan is more helpful than harmful.

“In the end, we have more funds for Carl Moyer, more savings for individual consumers and cleaner air,” said Sen. Dean Florez, D-Shafter, who pushed through five clean-air laws last year. “While the consumer groups may criticize the deal, they can’t dispute the air quality benefits.”

Sources close to the plan said the Schwarzenegger administration formed its proposal after one offered by a Senate budget committee was opposed by the oil industry.

The Senate plan would increase gas and vehicle registration fees, amounting to about $200 million per year that would go to Carl Moyer and other air-related vehicle programs.

Carbaugh would not discuss the Senate’s plan or say whether Schwarzenegger feared the oil industry’s opposition.

Lawmakers late last week still were considering the plans, but sources said Schwarzenegger’s likely will get the nod.

John White, representing the Sierra Club, said the governor’s plan isn’t the best, but it is better than nothing at all.

“We’re out of money,” White said of Carl Moyer. “It’s like bringing water to a thirsty man.”

The Legislature created the Carl Moyer Program in 1998 with a $25 million budget allocation and named the fund in honor of a key figure in developing state air quality measures. The state continued to feed the pot until 2002, when voters approved Proposition 40, giving $50 million to the Air Resources Board to distribute to local air districts.

But the money soon will be gone.

Walker, representing businesses that perform smog emissions checks, said Schwarzenegger’s plan to fund Carl Moyer is flawed. Shop owners who recently spent thousands of dollars to upgrade smog-check equipment would see a drop in business.

“When I first heard about it, I thought, ‘Gosh, that sounds like a win-win for consumers and taxpayers in the state,’ ” Walker said. “But when you start pulling it apart and looking at it, it’s a real problem. We believe there are better ways to fund Carl Moyer.”
The reporter can be reached at [email protected] or (916) 326-5541

Consumer Watchdog
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