BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 152| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 152 Author: Fuentes (D), et al. Amended: 8/30/11 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 7-1, 6/22/11 AYES: Hernandez, Strickland, Alquist, Blakeslee, De León, DeSaulnier, Wolk NOES: Anderson NO VOTE RECORDED: Rubio SENATE HUMAN SERVICES COMMITTEE : 7-0, 6/28/11 AYES: Liu, Emmerson, Berryhill, Hancock, Strickland, Wright, Yee SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 7/6/11 AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez, Kehoe, La Malfa, Liu SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/25/11 AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley, Price, Runner, Steinberg ASSEMBLY FLOOR : 76-0, 6/1/11 - See last page for vote SUBJECT : Food banks: grants: voluntary contributions: income tax credits SOURCE : Author CONTINUED AB 152 Page 2 DIGEST : This bill establishes a new tax credit for farmers who donate fresh fruits and vegetables to food banks, require the Department of Social Services to establish and administer a State Emergency Food Assistance Program, and require the Department of Public Health to apply for federal funds available for promoting healthy eating and preventing obesity. ANALYSIS : Existing law: 1. Establishes the scope of functions and responsibilities of the State Department of Public Health (DPH). 2. Establishes the Emergency Federal Assistance Program (TEFAP), a federal program that supplements the diets of low-income needy persons, including elderly people, by providing them with emergency food and nutrition assistance. 3. Authorizes, via the Personal Income Tax Law and the Corporation Tax Law, various tax credits against the taxes imposed by the bill. 4. Establishes the Personal Income Tax Law which allows taxpayers, until January 1, 2014, to designate on their tax returns that a specified amount in excess of their tax liability be contributed to the Fund, to be allocated by Department of Social Services (DSS) for TEFAP. Specifics of this bill Food Bank Tax Credit Under current law, charitable donations to nonprofit organizations may be deducted against income for state and federal tax purposes. There are special rules for contributions of food inventory and the charitable contribution deduction for donations of food inventory is limited to 10 percent of a taxpayer's net income. From 1989 through 1991, state law authorized a tax credit equal to 10 percent of the inventory cost of agricultural products, both animal and vegetable, donated to a California food bank. CONTINUED AB 152 Page 3 This bill authorizes crop farmers to claim a tax credit equal to 10 percent of the inventory cost of fresh fruits and vegetables donated to a California food bank through the 2016 tax year. This bill requires that in cases where both a deduction and a credit would be allowed for the same contribution, the deduction is reduced by the amount of the credit claimed. The nonprofit food bank would provide certification to the taxpayer indicating the type, quantity, and value of donated produce, the name of the donor, and the name and address of the food bank. The Franchise Tax Board (FTB) would report information on the utilization of the credit to the Legislature, as specified. The credit authorized by this bill is similar to the program that was operative from 1989 until 1992, except the credit in this bill is only available for donations of fresh fruits and vegetables while the previous credit included donations of agricultural products, including fowl, animal, vegetable, or other products. In addition, the definition of eligible taxpayer is much narrower in this bill. For the 1991 tax year, FTB reported food donation credit claims of $1.5 million. FTB estimates that the credit authorized by this bill results in tax revenue losses of approximately $200,000 in 2011-12 and 2012-13, and $400,000 annually thereafter. The State Emergency Food Assistance Program Currently DSS serves as the state distributing agency for TEFAP, which was established in 1981 as a mechanism for reducing food inventories and storage costs while assisting the needy. Through TEFAP, the United States Department of Agriculture's (USDA) Food and Nutrition Service makes food products available to states for distribution to qualifying emergency food organizations, including food banks, church pantries, soup kitchens, emergency shelters, and community action agencies. These organizations in turn distribute the food directly to those in need or use it to prepare meals. The amount of food that each state receives under TEFAP is based on the number of unemployed persons and the number of people with incomes below the poverty level in the state. The amount of food distributed to California has fluctuated in recent years, from 97 million pounds of CONTINUED AB 152 Page 4 food in 2001-02, to 54 million pounds in 2007-08, to just over 95 million pounds (the equivalent of 74 million meals) in 2008-09. In Fiscal Year (FY) 2010, Congress appropriated $297.5 million for TEFAP - $248 million for food purchases and $49.5 million for administrative support for state and local agencies. Congress also provided $6 million in FY 2010 through the TEFAP infrastructure grants for emergency feeding organizations participating in TEFAP to improve and expand their capacity and infrastructure. The program is also supplemented by funds donated through the Emergency Food for Families Fund, a tax checkoff fund that appears on California income tax returns until 2014. In 2010, California taxpayers donated $487,333 for the program. This bill establishes the State Emergency Food Assistance Program (SEFAP), administered by DSS to provide food and funding for the provision of emergency food to food banks established under TEFAP whose primary function is to facilitate the distribution of food to low-income households. This bill also establishes the SEFAP Account in the Emergency Food Assistance Program Fund for deposits of federal funds, and voluntary contributions. SEFAP Account funds would be allocated to DSS, upon appropriation by the Legislature, and any state funds would be used for the purchase, storage, and transportation of food grown or produced in California. Funds appropriated to DSS may also be used to pay for DSS costs to administer SEFAP. DSS indicates that since they already administer the federal TEFAP, and that SEFAP would build upon that existing program that distributes food and resources through established networks, this bill does not require any new DSS staff. Healthy Eating and Obesity Prevention This bill also requires DPH to investigate and apply for federal funding intended to promote healthy eating and preventing obesity. This bill authorizes DPH to use available federal funds to provide in-kind support and award grants to support local assistance to local governments, nonprofit organizations, and local education CONTINUED AB 152 Page 5 agencies deemed eligible to implement programs and initiatives for these services in underserved and urban and rural communities. DPH indicates that any costs to seek and administer federal funds in this way would be minor and absorbable. Federal funds received by DPH are currently distributed through a contract process. This bill provides a more flexible grant mechanism, which is similar to the way DPH administers federal smoking cessation funding. Background TEFAP . TEFAP was first authorized as the Temporary Emergency Food Assistance Program in 1981 to distribute surplus foods to households. The name was changed to The Emergency Food Assistance Program under the 1990 farm bill. The program was designed to help reduce Federal food inventories and storage costs while assisting the needy. Under TEFAP, USDA makes USDA foods available to state distributing agencies. The amount of food that each state receives out of the total amount of food provided is based on the number of unemployed persons and the number of people with incomes below the poverty level in the state. States provide the food to local agencies that they have selected, usually food banks, which in turn distribute the food to local organizations, such as soup kitchens and food pantries that directly serve the public. States also provide the food to other types of local organizations, such as community action agencies, which distribute the foods directly to needy households. In FY 2010, Congress appropriated $297.5 million for TEFAP through the normal appropriations process - $248 million to purchase food, and $49.5 million for administrative support for state and local agencies. Congress also provided $6 million in FY 2010 through the TEFAP infrastructure grants for emergency feeding organizations participating in TEFAP to improve and expand their capacity and infrastructure. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No CONTINUED AB 152 Page 6 According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund New tax credit $200 $200 $400 General FTB administration $66 General DSS: SEFAP admininstration Minor and absorbable costs General DPH: seek federal funds Minor costs to investigate federal General funding opportunities and distribute grants SUPPORT : (Verified 8/24/11) Alameda County Community Food Bank American Federation of State, County and Municipal Employees, AFL-CIO California Association of Food Banks California Catholic Conference California Communities United Institute California Food Policy Advocates California Hunger Action Coalition California State PTA Community Action Agency of Butte County, Inc. Community Food Bank Community Food Bank of San Benito County County Welfare Directors Association Emergency Food Bank and Family Services Stockton/San Joaquin Feeding America San Diego First 5 Association of California Food Bank for Monterey County Food Bank of Contra Costa and Solano CONTINUED AB 152 Page 7 Food for People FOOD Share Foodbank of Santa Barbara County Fremont Family Resource Center HMC Farms Hunger Action Los Angeles Imperial County Food Bank Interfaith Community Services Interfaith Council of Amador Los Angeles Regional Foodbank Mariposa Wellness Center Mendocino Food and Nutrition Program Meyers Farms Family Trust Ocean Mist Farms Ola mo Keriso Church Orange County Food Bank Pacific International Marketing Podesta Packing Prima Frutta Packing, Inc. Prime Time International Quality Packing Redwood Empire Food Bank San Francisco Food Bank San Joaquin Tomato Growers Second Harvest Food Bank of Orange County Second Harvest Food Bank of Santa Clara and San Mateo Counties Second Harvest Food Bank of Santa Cruz County Shasta Senior Nutrition Programs/Food Bank Simonian Fruit Company St. Anthony's of San Francisco T.D. Produce Sales The Resource Connection Tradition One-Alcohol/Drug Rehabilitation Program Tri-City Volunteers Van Groningen and Sons, Inc. Vessey and Company, Inc. Western Growers ARGUMENTS IN SUPPORT : The author's office states that California has some of the most productive farmlands in the world, producing more than 350 commodities, specialty crops, and other food items. These farmlands are essential for providing a healthy food supply and guarantee a natural CONTINUED AB 152 Page 8 resource for California's future generations. However, according to a University of California at Los Angeles survey of Californian's health status, more than 8 million people live in a household where an adult cannot always afford enough food. Californians who experience hunger and food insecurity suffer from poor physical and emotional health, as well as a diminished capacity to learn and succeed in the workplace. This can also lead to higher levels of obesity and other diet-related diseases. The author's office contends that access to healthy food is a basic human right. Yet, there is an epidemic of overweight individuals due to poor diet and lack of physical activity. Increased risk of chronic disease has been attributed to low fruit and vegetable intake in the U.S., accounting for $30 billion in associated health care costs in 2008 and 2009. The author's office believes that programs such as TEFAP and the SEFAP can promote increased access to healthy food and increased consumption of Californian-grown fresh fruits and vegetables, whole grains, and low-fat dairy in order to improve nutrition. Not only do they benefit the community, especially low-income ones, they also can decrease the costs found in health care due to the problems caused by bad diet and health. ASSEMBLY FLOOR : 76-0, 6/1/11 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Garrick, Gorell, Jeffries, V. Manuel Pérez CONTINUED AB 152 Page 9 CTW:kc 8/30/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED