BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 152 (Fuentes)
Hearing Date: 08/25/2011 Amended: 08/18/2011
Consultant: Mark McKenzie Policy Vote: H.7-0; H.S.7-0;
G.&F.9-0
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BILL SUMMARY: AB 152 would establish a new tax credit for
farmers who donate fresh fruits and vegetables to food banks,
require the Department of Social Services (DSS) to establish and
administer a State Emergency Food Assistance Program (SEFAP),
and require the Department of Public Health (DPH) to apply for
federal funds available for promoting healthy eating and
preventing obesity.
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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 administration Minor and absorbable
costsGeneral
DPH: seek federal fundsMinor costs to investigate federal
funding General
opportunities and distribute grants
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
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 (Fuentes)
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AB 152 would authorize 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. The 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 AB 152 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 would result
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 the
federal Temporary Emergency Food Assistance Program (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 food in 2001-02, to 54 million pounds in 2007-08, to
just over 95 million pounds (the equivalent of 74 million meals)
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in 2008-09.
In 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.
AB 152 would establish 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. The bill would
also establish the SEFAP Account in the Emergency Food
Assistance Program Fund for deposits of federal funds, voluntary
contributions, and General Fund moneys. 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, the bill would not require any new DSS staff. Staff
notes, however, that the bill establishes a SEFAP Account into
which state funds may be deposited, thereby creating cost
pressures to fund a state program that would purchase and
distribute food grown and produced in California. The magnitude
of these cost pressures is unknown, but potentially significant.
Healthy Eating and Obesity Prevention
AB 152 would also require DPH to investigate and apply for
federal funding intended to promote healthy eating and
preventing obesity. The bill would authorize DPH to use
available federal funds to provide in-kind support and award
grants to support local assistance to local governments,
AB 152 (Fuentes)
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nonprofit organizations, and local education 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 would provide a more flexible grant
mechanism, which is similar to the way DPH administers federal
smoking cessation funding.
PROPOSED COMMITTEE AMENDMENTS would delete "General Fund moneys"
from the funds that may be deposited into the State Emergency
Food Assistance Program Account, thereby eliminating cost
pressures noted above.