Arizona recommends cutting fee drivers pay for emissions test

Arizona cut the cost of vehicle emissions tests last year, but some vehicle owners still pay too much for the mandatory procedure, according to a report by the state Office of the Auditor General.

The Arizona Department of Environmental Quality should restructure testing fees to more closely reflect the true cost of administering the tests, said the report issued Oct. 1.

The auditors did not propose specific price reductions for the tests, however. They instead recommended ADEQ officials study the matter to determine revised fee structures.

The report found that fees are inconsistent across testing locations.

For example, vehicle owners in Phoenix pay $20 for the onboard diagnostic test, while those in Tucson pay $12.25 for the same test. No matter the location, ADEQ pays its contractor $13.85 for each diagnostic test. That means ADEQ runs a $6.15 surplus in Phoenix and a $1.60 deficit in Tucson every time a test is conducted.

In addition:

• ADEQ pays the vendor $23.50 for each heavy-duty diesel test, but charges vehicle owners in Phoenix $28 and vehicle owners in Tucson $12.25. As a result, each test in Phoenix provides ADEQ a $4.50 surplus, while each test in Tucson creates a $11.25 deficit.
• Overall, most smog tests in Phoenix generate a $5.15 to $6.15 surplus. Most tests in Tucson result in deficits or surpluses of $1.40.

The inconsistencies should be addressed, according to the report.

"As much as possible, you want those fees to reflect actual costs," said Jeff Gove, performance audit manager for the Auditor General's office.

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ADEQ officials already are at work on a recommendation for a new fee structure, ADEQ Director Misael Cabrera wrote in response to the 37-page report.

Smog tests are required in the state's two largest metro areas for vehicles from between 1967 and four years prior to the current year. The vehicles, with certain exceptions, must be tested annually or biennially, depending on a vehicle’s age and engine type.

Last year, more than 1.2 million vehicles were tested in metro Phoenix and nearly 320,000 were tested in metro Tucson.

On July 1, 2014, ADEQ reduced fees in the Phoenix area for two tests that represented approximately 86 percent of those conducted in the region, according to the report.

The agency dropped the price of its onboard diagnostic tests, which primarily are used on 1996 and newer light-duty vehicles, and transient load tests, which are used on most 1981 through 1995 vehicles.

The price went from $27.75 per test to $20 per test, benefiting more than 1 million consumers. It resulted in collective savings to motorists of nearly $8.2 million, according to ADEQ spokeswoman Caroline Oppleman.

“To ADEQ’s knowledge, this is the first time in the last 10 years that a state agency has voluntarily reduced its fees and revenue associated with any of its programs," she said in an e-mail to The Arizona Republic.

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ADEQ has contracted with Gordon-Darby Arizona Testing to perform the majority of vehicle emissions tests since 1991. The company operated 15 testing locations in metro Phoenix and three in Tucson when the audit was conducted.

State law allows fleet operators, such as car dealerships and city governments, to conduct their own emissions tests.

ADEQ uses the testing fees to pay Gordon-Darby, cover its own administrative costs and fund the agency's Trip Reduction and Safe Drinking Water programs. In addition, the state has drawn a portion of the excess fees to help balance the state's general fund.

Before cutting fees for two tests in the Phoenix area last year, ADEQ collected 51 percent more than the testing program’s cost, auditors said. Even after the price cut, ADEQ still is collecting 22 percent more than the program’s cost.

"They did lower those fees, but we did find that at that time, they had not made changes to any of their other fees," said Gove. 

ADEQ officials plan to take an incremental approach to revising fees to ensure the agency has sufficient flexibility to meet its obligations, Oppleman said.

"As ADEQ begins to lower fees, fund balances will gradually become smaller and less frequent, allowing for a more orderly transition to a more balanced fee for service model," she said.