BILL ANALYSIS
AB 1694
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1694 (Beall) - As Amended: March 8, 2010
SUBJECT : Alcohol-Related Services Program.
SUMMARY : Establishes the Alcohol-Related Services (ARS)
Program within the Department of Alcohol and Drug Programs
(DADP) to mitigate the harm of alcohol use and imposes a five
cent mitigation fee on beer, wine, and liquor to fund the ARS
Program. Specifically, this bill :
1)Makes a number of legislative findings regarding the cost and
harmful effects of alcohol use, including the following:
a) Alcohol-related problems cost Californians an estimated
$38.4 billion annually, including costs for alcohol-related
illness and injury, criminal justice, lost productivity, as
well as impacts on the welfare system, trauma and emergency
care, and the foster care system, among other costs;
b) Alcohol use drains California's state and local
governments of approximately $8.3 billion annually in
increased health care costs, criminal justice costs, and
lost tax bases, while the income to the state in alcohol
licensing, fees, excise taxes, and sales taxes is less than
$1 billion annually;
c) The use of alcohol is a major cause of hospital
emergency room and trauma care treatment, and greatly
contributes to the need for fire and law enforcement
response and for transportation costs such as emergency
medical air transportation services and ambulance costs;
d) The use of alcohol is closely associated with mental
illness and contributes enormously to the cost of treating
the mentally ill;
e) There are significant benefits of alcohol treatment and
recovery programs and they are effective in enabling
individuals who complete treatment to find employment and
pay taxes, no longer suffer from alcohol problems, and
become productive members of their communities; and,
f) While the staggering cost of alcohol abuse is borne by
all Californians, 67% of the alcohol sold in California is
consumed by only 11% of the population.
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2)Establishes the ARS Program (Program), to be administered by
DADP, under the police powers of the state as a regulatory and
service program to protect the health and safety of California
residents who are harmed by the pervasive influence of alcohol
production, distribution, sales, and consumption.
3)Provides that the services authorized under the Program may
mitigate for the past, present, or future harm caused by
alcohol products in the stream of commerce in California and
specifies that the ARS Program may support new or preexisting
services.
4)Directs DADP, by April 1, 2011, to adopt rules, guidelines,
procedures, and regulations necessary or appropriate to carry
out the purposes of this bill. Permits rules, guidelines,
procedures, and regulations to be adopted on an emergency
basis if necessary, as specified.
5)Requires the rules, guidelines, and procedures pursuant to 4)
above to be adopted according to the Administrative Procedures
Act and to include submissions by state agencies, nonprofit
organizations, cities, and counties of evidence of alcohol
harm to support the need and nexus of the ARS Program. States
that the published rules, guidelines, and procedures must
include supplemental findings to further demonstrate the
reasonable relationship between the ARS Program and the harm
from the use of alcohol.
6)Imposes a mitigation fee of specified rates for specified
alcohol, commencing on January 1, 2011, on all persons engaged
in business in California, as defined in the Revenue and
Taxation Code, who sell alcoholic beverages, where the sale is
for the purpose of resale in the regular course of business
with the purchaser. Requires the mitigation fee to be levied
at the first point of sale within the state.
7)Allows the State Board of Equalization (SBE) to increase the
fee in accordance with the California Consumer Price Index, as
specified, and requires the fee to be sufficient to defray the
costs incurred by SBE and DADP in implementing this bill.
8)Establishes the ARS Program Fund (Fund) in the State Treasury
and requires expenses incurred in the administration and
collection of the fee, and all funds collected pursuant to the
fee, less refunds, to be deposited in the Fund.
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9)Specifies that funds collected pursuant to this bill and
deposited in the Fund must be continuously appropriated to
DADP and used exclusively by DADP for the purposes of funding
the Program established by this bill.
10)Requires any fee imposed pursuant to this bill to be
consistent with all applicable legal requirements for imposing
fees, including the requirements prescribed in Sinclair Paint
Co. v. SBE (1997) 15 Cal.4th 866.
11)Requires DADP, beginning April 10, 2011, to establish,
contract for, or provide grants for the establishment or
continuation of, component services under the ARS Program.
Thereafter, directs DADP to release grants or contracts on
July 1, 2012, and every two years thereafter.
12)Prohibits any service component from being funded at more
than the cost of harm caused by alcohol, which, in turn,
caused the need for services.
13)Describes the following five alcohol-related component
services in the Program and requires DADP to equally
distribute available funding from the Fund to the components:
a) treatment and recovery; b) prevention, education and
research; c) emergency medical and trauma care treatment
services; d) hospitalization and rehabilitation services; and,
e) criminal justice and enforcement programs.
14)Directs DADP to use the criteria of need, effectiveness, and
best practices as guidance in deciding on guidelines for the
components. Authorizes DADP to, in its biennial update of the
guidelines, consider other varieties of services but requires
DADP to show the need, effectiveness, and best practices that
those services would bring to the component service area.
EXISTING LAW :
1)Establishes DADP as the single state agency responsible for
administering and coordinating the State's efforts in alcohol
and drug abuse prevention, treatment, and recovery services.
DADP is also the primary state agency responsible for
interagency coordination of these services.
2)Establishes the Licensing and Certification Division within
DADP responsible for assuring that quality services are
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provided to all program participants in a safe and healthful
environment through the licensure, certification, regulation,
and oversight of a statewide system of alcohol and other drug
recovery and treatment facilities and programs and counselors.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, state budget
cuts the past few years have decimated treatment for
Californians suffering from alcohol abuse. The author states
that the latest budget cuts being contemplated will eliminate
all Proposition 36 treatment funds and nearly all other
treatment, meaning Californians released from prison will
receive no treatment either during incarceration or upon
release into the community. The author notes that 30% of all
crimes are committed while under the influence of alcohol and
the state's 70% recidivism rate is due primarily to drug and
alcohol parole violations. The author contends that a major
component of the state's plan to address recidivism and
overcrowding was to focus on rehabilitation, but without the
funding provided by this bill, the state will not be able to
provide any treatment services and all Californians will
suffer the consequences. The author asserts that most of the
fees in this bill to support the ARS Program will be borne by
the heaviest users of alcohol, who also have the highest
impact on social services offered by state/county agencies,
and by foreign corporations like Anheuser-Busch InBev, SAB
Miller, and Diageo, who may decide to absorb some of this fee
rather than pass it on to their consumers. Lastly, the author
points out that the last time any fee or tax on alcohol was
adjusted occurred in 1991 and the fee to charge for the
harmful effects of alcohol in this bill is expected to
generate $1.4 billion as mitigation for alcohol-related
services.
2)RECENT STUDY . A July 2008 comprehensive study of the total
annual costs of alcohol problems in the state of California
conducted by researchers from the Marin Institute, the sponsor
of this bill, found that alcohol consumption is associated
with substantial illness, injuries, death, lost productivity,
lower quality of life among victims of alcohol abuse and the
alcohol users themselves, and high costs to public programs.
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The summary findings from the study indicate that one person
dies every hour due to alcohol use in California; there are
100 incidents every hour due to alcohol use in California; the
total economic cost of alcohol to California is $38.4 billion
annually, which translates to approximately $1,000 per
California resident per year; costs from lost productivity in
terms of the reduced earnings of those who are currently, or
have ever been, alcohol dependent total $12.8 billion;
government entities bear $8.3 billion or 22% of the total
cost; and, pain and suffering costs add another $48.8 billion
annually. One of the recommendations that researchers issued
as a result of the study was to raise fees by implementing an
alcohol producer surcharge to cover the costs of government
programs.
3)DADP STRATEGIC PLAN . DADP is charged with developing and
implementing a statewide plan to alleviate problems related to
inappropriate alcohol use. DADP's strategic plan is organized
around core programs that include prevention and treatment,
and information and education. Among its prevention-centered
efforts, DADP funds and directs the Community Prevention
Initiative, a training and technical assistance project
designed to reduce and manage community-level risks and
problems directly attributable to, or collaterally resulting
from, the availability, manufacture, distribution, promotion,
sale or use of alcohol and drugs. DADP also maintains a
Resource Center that provides a comprehensive collection of
alcohol, tobacco, and other drug prevention and treatment
information to all California residents at no cost through a
clearinghouse, Internet communication links, and a telephone
information and referral system. In addition, DADP implements
the Prevention Activities Data System to collect primary
prevention service and activity data funded with DADP dollars.
The treatment component of DADP's strategic plan focuses on
making treatment and recovery services accessible and
available for all Californians in need and seeks to improve
the quality of life of clients with alcohol and other drug
problems. Specifically, DADP's Office of Women's and
Perinatal Services oversees a statewide network of
approximately 300 publicly-funded perinatal alcohol and drug
treatment programs that annually serve over 38,000 pregnant
and parenting women. It also currently oversees a statewide
network of approximately 390 publicly funded alcohol and drug
treatment programs that annually serve over 12,000 youth and
provides technical assistance to private, for-profit programs
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that provide alcohol and other drug treatment services to
youth. DADP's Co-Occurring Disorders Unit is charged with
disseminating data, research citations, and other
evidence-based information and best practices in an effort to
keep providers of alcohol and other drug services aware of
developments related to co-occurring disorders. Finally, DADP
funds efforts to increase knowledge, skills, and abilities in
the alcohol and other drugs prevention and treatment
workforce.
4)SUPPORT . The sponsor of this bill, Marin Institute, writes
that the nexus between the ARS Program created by this bill
and a reasonable mitigation fee will lawfully support programs
paramount to effectively addressing alcohol-related harm for
California residents. The sponsor states that the $700
million that would be generated annually by this bill is a
pragmatic solution to reducing alcohol-related costs, citing a
January 2009 poll by the Public Policy Institute of California
which found that 85% of California residents favor raising
alcohol taxes. Other supporters, including the Drug Policy
Alliance and the County Alcohol and Drug Program
Administrators Association of California, note that alcohol
fees serve the important dual function of raising much-needed
revenue while reducing alcohol-related societal costs. They
state that, under current rates, in 2005, California collected
just $318 million in state excise taxes and $50 million in
alcohol licensing fees and fines, but these payments covered
only 5% of alcohol's cost to state and county governments.
Furthermore, they assert that even if $1.5 billion in sales
tax paid on alcoholic beverages in California is included,
these revenues would still only cover 22% of government costs.
5)OPPOSITION . Opponents, representing makers, carriers, and
sellers of alcohol products, assert that there are no negative
social costs associated with normal moderate consumption of
alcoholic beverages and this bill unfairly penalizes 90-95% of
responsible drinkers. They argue that this bill could make it
even more difficult for businesses that are struggling to keep
their doors open and retain employees during these difficult
economic times by disproportionately targeting a specific
category of products for fee increases. Opponents from the
wine industry refute that a nexus exists between winemakers
and the abuse of wine by a few consumers and they cite studies
that have substantiated the health benefits of wine. Lastly,
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opponents maintain that the alcohol industry already pays more
than its fair share of revenue to the state and this bill will
have immediate adverse effects on brewing industry jobs and
result in declining economic activity in communities where
beer is produced, including reduced sales and income taxes
generated by brewer purchasing from local vendors and service
providers.
6)PRIOR LEGISLATION .
a) AB 1019 (Beall) of 2009, substantially similar to this
bill, was heard by the Assembly Health Committee on January
5, 2010, and failed passage by a 5-8 vote.
b) SB 558 (DeSaulnier) of 2009 would have established the
Alcohol Abuse Treatment Fund and authorized the Department
of Alcoholic Beverage Control to assess and collect a fee
in the maximum amount of $0.05 per drink from every person
who is engaged in business in this state and sells
alcoholic beverages for resale. This bill was referred to
the Senate Governmental Organization Committee but was
never set for a hearing.
c) SB 297 (Romero) of 2007 would have authorized counties,
with voter approval, to levy a local tax on the consumption
of beer, wine, and distilled spirits consumed on the
premises of the seller of one of these products. This bill
was referred to the Senate Governmental Organization
Committee but was never set for a hearing.
7)DOUBLE-REFERRAL . This bill has been double-referred. Should
this bill pass out of this committee, it will be referred to
the Assembly Governmental Organization Committee.
8)POLICY COMMENT . This bill prohibits any component in the ARS
Program from being funded more than the cost of the harm
caused by the alcohol that caused the need for services. The
author may wish to clarify how the amount of the cost of such
alcohol-related harm would be quantified for purposes of this
provision.
9)AUTHOR'S AMENDMENTS . To address some of the concerns raised
by the opposition, the author plans to offer the following
amendments to provide exemptions from the bill based on
volume:
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a) On page 5, between lines 38 and 39, insert "(3) A person
subject to the mitigation fee described in paragraph (1),
at the rates established in paragraph (2), shall be liable
for the amount of the mitigation fee that, in the
aggregate, exceeds fifteen thousand two hundred sixteen
dollars ($15, 216) each calendar year.
b) On page 5, line 39, strike out "(3)" and insert "(4)".
c) On page 6, line 2, after the period insert "If the State
Board of Equalization increases the fees, it shall increase
the amount described in paragraph (3) over which a person
may be liable for the mitigation fee by the same rate of
increase.
d) On page 6, line 3, strike out "(4)" and insert "(5)".
REGISTERED SUPPORT / OPPOSITION :
Support
Marin Institute (sponsor)
Alameda County Board of Supervisors
American College of Emergency Physicians
American Federation of State, County and Municipal Employees,
AFL-CIO
Asian American Drug Abuse Program
Associated Rehabilitation Program for Women, Inc.
California Academy of Family Physicians
California Association of Alcohol and Drug Program Executives,
Inc.
California Council on Alcohol Problems
California Mental Health Directors Association
California Peace Officers' Association
California Police Chiefs Association
Canal Alliance
Casa de las Amigas
Central Valley Recovery Services, Inc.
City and County of San Francisco
CLARE Foundation
Coalition for Alcohol & Drug Free Pregnancies
Community Social Model Advocates, Inc.
County Alcohol and Drug Program Administrators Association of
California
Day One, Inc.
Drug Policy Alliance
Fred Brown Recovery Services
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Injury Prevention Coalition of Shasta County
Los Angeles Centers for Alcohol and Drug Use
Los Angeles County Probation Officers' Union
Lutheran Office of Public Policy- California
National Association of Social Workers, California Chapter
Prototypes Youth Prevention Program
Pueblo Y Salud, Inc.
Santa Barbara's Fighting Back Coalition
Santa Clara County Board of Supervisors
Several individuals
Sonoma County Prevention Partnership
The Arc of California
Together for Youth
Youth Leadership Institute
Opposition
Anheuser-Busch In Bev
California Beer & Beverage Distributors
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Independent Grocers Association
California Manufacturers and Technology Association
California Restaurant Association
California Retailers Association
California Small Brewers Association
California Taxpayers' Association
California Teamsters Public Affairs Council
California Travel Industry Association
Diageo North America
Distilled Spirits Council of the United States
Family Winemakers of California
Heineken USA
MillerCoors
Napa Valley Winegrowers Alliance
Wine Institute
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097