BILL ANALYSIS Ó
AB 1396
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1396 (Bonta) - As Amended April 16, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill allocates revenues generated by SB 591 (Pan), the
California Tobacco Tax Act of 2015 (Tobacco Tax Act), to various
state funds. This bill is contingent on the passage of SB 591.
Specifically, this bill:
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1)Defines the California Tobacco Tax Act of 2015 as a trust
fund, and continuously appropriates funds in several accounts
for tobacco prevention and education, tobacco-related
diseases, and tobacco-related law enforcement.
2)Requires the Board of Equalization to calculate losses to
existing tobacco tax revenue and reimburse those funds
(Proposition 99 accounts, Breast Cancer Fund, the Children's
and Families Trust Fund which funds First 5, and the GF) for
losses due to the new tax.
3)Restricts the use of funds by state recipients for
administrative costs to 2%.
4)Requires departments receiving funds to publish on their
websites an accounting of how funds were spent.
FISCAL EFFECT:
As coupled with SB 591, which raises tobacco tax revenues by
imposing the new tax, this bill continuously appropriates over a
billion dollars to various funds defined in the bill.
COMMENTS:
1)Purpose. This bill simply allocates funds. The author states
the revenue allocations in this bill would provide critical
stability to health care provider networks and ensure access
to healthcare services for people receiving services in the
Medi-Cal program, as well as fund other tobacco-related
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programs.
2)Societal costs of tobacco use. A recent University of
California, San Francisco (UCSF) study reports the cost of
smoking in California amounted to $18.1 billion: $487 per
resident and $4,603 per smoker, including direct healthcare
costs and indirect costs from lost productivity due to illness
and premature death. Although California's decades-old,
tobacco tax-funded antismoking programs are credited with
reducing smoking rates, four million people still smoked in
the state, including an estimated 146,000 adolescents.
3)Current tax. California currently imposes taxes of $0.87,
split among uses described in (2) in the summary above.
California's tobacco tax rate ranks 33rd when compared to the
rates of other states. The national mean is $1.48 per pack,
and the range is $0.30 to $4.35. Some local governments also
impose additional taxes. California has not raised its
cigarette excise tax since 1998. According to the Campaign
for Tobacco-Free Kids, the average price for a pack of
cigarettes in California is $5.44, with all taxes included.
4)Staff Comments.
a) Continuous appropriation. This bill continuously
appropriates funds to departments for specified activities.
Staff recommends the funds be subject to review and
appropriation by the Legislature. This model has worked
well for current Proposition 99 funds, which the account
structure in this bill appears to be modeled upon.
b) Blanks. The bill contains blanks instead of the
percentage allocation to the Department of Public Health,
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the Department of Education, and the University of
California in the Tobacco Prevention and Education Account.
Staff recommends the blanks be filled in with numbers.
c) Limit on state administrative costs. A 2% limit on state
administrative costs appears very low. Administrative
costs vary across activities, but 2% seems to be on the low
end of any range.
State administrative activities are critical for ensuring
adequate control and oversight of any program. In
addition, the smaller the funding allocation, the less
likely it is that administrative costs could be that low;
smaller allocations will naturally have higher
administrative costs as a percentage of total funds.
Further, if imposing a strict limit on administrative costs
is important, the author may wish to clarify what counts as
an administrative cost. Is this simply all state-level
activity that is not "in the field," or does it mean
"bureaucratic" activities such as control agency
activities, rather than program-related activities? Some
activities are better done at the state level. For example,
creating tobacco-related educational materials at the state
level, or coordinating statewide technical assistance and
training, may be more efficient than allocating funds out
to local entities. The author may wish to further clarify
what types of administrative costs are subject to a cap,
ensure beneficial state-level activity is not hampered by
administrative funding constraints, and correspondingly
reassess the limit.
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Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081