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Licensing staff outline shrinking reserves, propose combining funds and future fee changes
Summary
Department staff told the Commerce & Insurance board that two licensing funds are drawing down reserves and proposed combining them to extend runway; board members were alerted that fee increases may be needed in coming years.
Department staff told the Commerce & Insurance licensing board on Sept. 23 that the agency administers two distinct funds for contractor licensing — one for contractors and home improvement and a separate fund for limited license entities (LLE and LLP) — and that reserves are decreasing.
Staff presented a four-year revenue-and-expense summary and said combining the two funds into one could extend the funds' runway. Staff said, without combining the funds, the contractors and home-improvement fund "could run out sometime in FY28"; combined, the two funds would extend runway to about FY31–FY32. Staff stressed the department is not in immediate dire straits and that no fee change was adopted at the meeting, but that fee adjustments across the board should be considered in the near future.
Staff also said the department had previously contributed $250,000 yearly to a separate Go Build initiative but that the Department of Labor now funds that program, which had been one factor contributing to recent budget shortfalls. The department noted that some proposed rule changes to add fees on certain application types (a retrospective rulemaking hearing was mentioned) could have generated between about $75,000 and $100,000 in recent years if they had been in effect, but that such changes would not fully resolve the funding gap.
Board members asked about the number of active licensees and new application volume; staff said there are about 35,000 active contractors statewide and that new applications and reinstatements have been rising, with 2025 year-to-date initial applications roughly at last year's total with three months remaining in the year.
Staff said any fee changes would require internal review, Attorney General review for constitutionality and legislative review; board members emphasized that any future rulemaking would require strong justification and advance notice to stakeholders.
No fee increases or rule changes were adopted at the Sept. 23 meeting; the discussion was recorded to inform future consideration of fund consolidation and potential fee adjustments.
