BILL ANALYSIS AB 2240 Page 1 Date of Hearing: April 28, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 2240 (Ma) - As Amended: April 8, 2010 Policy Committee: AgricultureVote:8 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill authorizes the California Department of Food and Agriculture (CDFA) to reevaluate the fee structure of the Marketing Enforcement Branch (MEB) based on actual operating costs. In addition, this bill raises certain fees and deletes the outdated fee structure and reporting provisions. FISCAL EFFECT This legislation could generate between $250,000 and $300,000 in additional revenue for the declining MEB fund. COMMENTS 1)Rationale . The operating revenue of MEB has been declining as expenditures have increased over the past several years. Their current year proposed budget estimates a year-end deficit causing their advisory board to recommend a draw of roughly 26%, or $200,000, from their reserves (known as the trust fund) in order to balance their budget. Without an increase in license fee revenues, this pattern will continue. The advisory board recommended these fee increases during their December 3, 2009, meeting. This legislation reflects those recommendations. 2)The Marketing Enforcement Branch . The mission of the MEB is to enforce laws enacted to ensure confidence and stability in the agricultural marketplace and to protect against unfair business practices between producers, handlers, and processors of California farm products. AB 2240 Page 2 MEB duties include: a) Licensing dealers, brokers, commission merchants, cash buyers, and processors that handle California farm products for the purpose of resale or processing. b) Processing complaints filed by producers or licensees. The most common complaints filed are for failure to pay in full, failure to render a true and complete account of sales, and failure to comply with the provisions of a written agreement. c) Investigating alleged violations by licensed or unlicensed entities to ensure that each is in compliance with the Food and Agricultural Code. d) Taking disciplinary action when appropriate against licensees, principals, or agents. Actions may range from notices of violation, probation, suspension, or revocation of a license, to the denial of an application for license. e) Referring certain violators to local law enforcement agencies for civil and/or criminal prosecutions. 3)Opposition . In opposition to the bill, the Family Winemakers of California (FWC) note that in their opinion the fee increases are inequitable because processors that only buy up to $20,000 worth of produce will face a $50 increase in fees and a $20 increase in agent fees. According to the FWC, the proposal is inequitable since over 3,000 other processors will not incur an increase even though the branch's enforcement activity is driven more by complaints against licensees in other fee tiers. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081