Panel gives due-pass to bill limiting health boards’ fee balances and requiring public review

Senate Bill 1037, which would require health professional regulatory boards and licensing authorities to review fund balances and fees in public meetings and cap fund balances at two years of operating expenses plus 5%, received a due-pass recommendation from the Committee of Regulatory Oversight.

The measure, described to the committee by staff, would require each health board or licensing authority to review in a public meeting its fund balance and each fee authorized by statute before setting fee amounts for the next fiscal year. The bill specifies that a board’s fund balance may not exceed two years of its annual operating expenses plus 5 percent; if a balance exceeds that amount the board must reduce or eliminate fees until the balance falls below the allowable amount. Staff noted a fiscal note is attached to the bill.

Ryan Sullivan, speaking on behalf of the Arizona Dental Association, told the committee the association supports SB 1037. "This legislation establishes a mechanism to prevent boards from collecting revenue beyond their expenditure authority," Sullivan said, adding that excessive balances can lead to state fund sweeps and later fee increases to make up swept funds. Sullivan also argued that reducing fees could ease the cost burden for people entering or remaining in regulated professions.

Senator Kavanaugh, the bill sponsor, spoke in the committee and said the bill is "an attempt to get some control over the fund sweeps." He described fund sweeps as a recurring fiscal practice he wants to limit and characterized the bill as a step toward that goal.

A committee member asked whether capping balances could create an incentive for boards to increase spending rather than reduce fees. Staff and the sponsor discussed the point, with the sponsor noting many of the funds are fees collected from licensees and that boards sometimes use those funds for activities members support.

The committee passed a motion to return SB 1037 with a due-pass recommendation. Roll call recorded five ayes, zero nays (Representative Contreras — Aye; Representative Hernandez — Aye; Representative Kishol — Aye; Vice Chairman Collinan — Aye; Chairman Chaplet — Aye). The motion was moved from the vice chair and called for a due-pass recommendation.

No additional amendments or formal amendments were recorded in the hearing.

SB 1037 will next proceed according to the Legislature’s scheduling procedures; the committee record shows a fiscal note and public testimony in favor by a trade association representative.