Bureau projects dwindling reserves, starts fee study to address structural gap

The Bureau of Household Goods and Services reported on Oct. 16 that it closed fiscal year 2024–25 with an estimated fund balance of about $10.86 million and roughly 8.8 months in reserve, and projects a 2025–26 ending balance near $8.2 million, or about 6.5 months in reserve.

“1 of the main factors driving expenditure increases in the future is a result of personal service adjustments,” said Jennifer Tompkins, budget analyst with the California Department of Consumer Affairs (DCA), noting the budget office includes an ongoing 3% expenditure increase assumption to account for salary and retirement adjustments. Tompkins presented the bureau—und condition based on the 2025 Budget Act and fiscal month 13 accounting.

DCA staff and bureau leaders told the advisory council that several prior-year fund balances will transfer into the consolidated fund (per SB 814) and that the total remaining balances subject to transfer are approximately $5.7 million, though that number could change as prior-year unpaid invoices are resolved. Claire Goldstein, deputy chief at the bureau, said those transfers should increase months in reserve when they occur but cautioned that the bureau expects structural pressure from rising costs and largely static revenues.

Council members urged caution about using fee increases as the only remedy. “An increase in fees can also result in a decrease in participation,” said Pascal Bagnamini, a council member, adding that raising fees could shrink the license base and depress revenue over time. Tom Keepers suggested pairing any fee analysis with process improvements to reduce staff burdens and avoid discouraging applicants.

Goldstein said the bureau will conduct a program-level fee study that examines each regulated program separately and considers whether fee changes would create barriers to licensure. The bureau also expects to include fee recommendations as part of the next sunset review due in 2026.

The budget presentation noted other risks: possible increased enforcement costs not accounted for in the current fund condition, and that any future legislation or unanticipated events could increase resource needs. The budget office said it will continue to work with the bureau on resource planning.

Looking ahead, staff said the bureau will finalize the fee study and use it to inform the sunset report and any legislative or regulatory proposals related to revenue or user fees.