BILL ANALYSIS Ó AB 199 Page 1 Date of Hearing: May 1, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 199 (Holden) - As Introduced: January 29, 2013 Policy Committee: AccountabilityVote:12 - 1 Agriculture 7 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires state agencies to purchase agricultural products that are grown, manufactured, or produced in California as long as the cost is not more than 5% above the lowest costs of out-of-state products. Specifically, this bill: 1)Requires that state-owned and state-run institutions, except for schools, purchase agriculture products that are grown in California instead of those grown elsewhere only if the costs of California products are no more than 5% higher than the costs of the lowest bid or price quoted for out-of-state products. 2)If no California-grown agriculture products meet the above criteria, the bid shall go to the California company that packs or processes its products in the state, as long as the costs do not exceed the cost of the lowest bid or price quoted for out-of-state products by more than 5%. 3)Requires public schools and school districts to purchase agriculture products grown in California instead of out-of-state products if the costs of the California products do not exceed the lowest bid or price quoted for out-of-state products. FISCAL EFFECT 1)Given all of the state agencies, including the California Department of Corrections and Rehabilitation, University of California (UC), California State Universities (CSU) and AB 199 Page 2 various state hospitals, and the over 1,000 school districts that purchase food, workload costs associated with monitoring the purchase of food, finding vendors that provide California food, ensuring that the quality is comparable to imported food and the cost is no more than 5% more than the cost of imported food would likely cost in excess of $5 million per year. 2)Unknown, likely significant costs in excess of $1 million, in on-going costs associated with the potential 5% increase in the cost of food purchased by the state. COMMENTS 1)Purpose . The intent of this bill is to give California businesses that produce agricultural products an advantage over out-of state producers even if the California products are more expensive. According to the author, this pricing advantage would likely mean an increase in the state's purchases of California-grown and California-processed agricultural products. The author hopes that such an increase would positively impact the state's agricultural economy. Supporters state that with the current economic climate, it is important to keep state tax dollars local. Supporters also state that this preference will give local farmers a fair chance to sell their products within the state, and give a boost to the California farming economy. Supporters further note that California farmers are faced with a competitive disadvantage due to subsidized imported produce and regulations that they claim are more restrictive than other states' and countries' regulations. 2)Agricultural Products . Under current law, an agricultural product is defined as any fowl, animal, vegetable, or other stuff, product, or article which is customary food, or which is proper for food for human beings (Food and Agricultural Code, Chapter 5, Section 58501 (a)). As currently written, this bill applies to all agricultural products. 3)CSU Experience . Because of the volume of food purchased by the CSU system, they work with several large food service establishments across the state. A cursory review of the produce purchased by CSU shows that most of the produce purchased by the university is not only from out of state, but also outside of the country. California grown produce tends AB 199 Page 3 to be limited to lettuce, broccoli, and oranges. Given the amount of food purchased, the workload associated with implementing the provisions of this bill within the CSU system alone would be significant. 4)Related Legislation . AB 1960 (Ma), of 2010, encouraged the State of California and its agencies to purchase California produced, or produced and processed, fruit, nuts and vegetables if the price is equal to or less than, imported fruits, nuts and vegetables. This bill was held in the Senate Rules committee. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081