BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                   AB 152|
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                                 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



                                                                AB 152

           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 

          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 

           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.



                                                                AB 152

           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 



                                                                AB 152

          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 



                                                                AB 152

          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.

           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



                                                                AB 152

          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       

          SEFAP admininstration                             Minor and 
          absorbable costs                                       

          DPH: seek federal funds                           Minor 
          costs to investigate federal                           
                              funding opportunities and distribute 

           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 
          Feeding America San Diego
          First 5 Association of California
          Food Bank for Monterey County
          Food Bank of Contra Costa and Solano



                                                                AB 152

          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 
          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 



                                                                AB 152

          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 



                                                                AB 152

          CTW:kc  8/30/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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