I agree with these points that have been noted so far:
1. The law will force some people "underground" that can't afford the spaying / neutering (it cost me $145 each to neuter my two kittens, for some, including me, that is a LOT of money).... If they can't afford it, they'll just leave their animal home and not go to the vet, etc. at all.
2. Most unwanted animals (that end up in shelters) ARE from owners whose unaltered animals got pregnant "by accident" or because they wanted their kids to "experience the miracle of life", etc. Very few (at least cats) that go to shelters are "purebred".
3. Offering low cost or no-cost spay/neuter programs WOULD do more to solve the problem IMO than a law.
That said, many people I know, with unaltered animals, often complain of the cost and expenses related with a litter and with the hassel of finding homes for the kittens, etc... Most of these people would get their animal spayed/neutered given 2 things:
1. education on neutering/spaying and how it would benefit them and their animals
2. Availability of low cost or no-cost altering... Also, if the place where it was done was NEAR them, would be a plus for them... As some that make very little money have no transportation, therefore no way to go to where they could get their animal altered.
I could see this law having a positive effect in a couple of cases:
1. Law-abiding, middle class (or upper middle class) people that own unaltered pets just because they didn't want to, or feel like, getting them fixed. They could afford to have their animals altered and would (because they are law-abiding) have them fixed to avoid fines, etc.
2. BYBs and puppy mills, are generally the ones with many, many breeding animals (most hobby breeders do not have large numbers around). I assume that they could not afford the licensing, so would leave or dump their animals at the pound...
However, I can also see that there will be negative effects in primarily three situations:
1. low-income owner can't afford to have animal altered, can barely afford regular vet visits... with law passed, will just not take their pet to the vet to avoid the fines, etc. Animal will miss out on routine and possibly emergency vet care.
2. low-income owner (same situation as above) would dump their animal on the street or at the shelter to avoid paying to have them altered... So, more animals at the shelter to be put down, or more "ferals" and "strays" on the streets... This would probably be the option that about 50% of owners would take that couldn't afford to pay for altering.
3. Responsible breeders will be put under such fines and costs that they either move off or go out of breeding... Probably not a "downside" to some of you, but it wouldn't do much to help the overpopulation issue... And, I, for one, would hate to see the breeds of cats and dogs disappear...
Although I agree with the (at least on the surface) original intent of this law (to reduce overpopulation). I think that there is a better way to go about it... That of offering options and education to the general pet owner so that they will be able to afford to alter their pet and know (through education) why they should and how it will benefit them and their animal.
EDIT- I just noticed that I put about 5 sets of numbered comments in this post...sorry, but sometimes my organizational tendencies get the better of me.