BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                    AB 2782


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          Date of Hearing:  April 12, 2016


                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          AB 2782  
          (Bloom) - As Amended March 30, 2016


          SUBJECT:  Healthy California Fund.


          SUMMARY:  Imposes a health promotion fee of $0.02 per fluid  
          ounce on bottled sugar sweetened beverages (SSBs) and  
          concentrates.  Establishes the Healthy California Fund (Fund)  
          and allocates moneys from the Fund to various state departments  
          for purposes of reducing the incidence and impact of diabetes,  
          obesity, and dental disease in California.  Authorizes the Board  
          of Equalization (BOE) to administer and collect the fee and  
          deposit all fees, penalties, and interest collected into the  
          Fund.  Specifically, this bill:  


          1)Imposes a health impact fee on bottled SSBs and concentrates  
            in the state using the following formula:



             a)   Two cents ($0.02) per fluid ounce on bottled sweetened  
               beverages; and,



             b)   Two cents ($0.02) per fluid ounce of sweetened beverages  
               produced from concentrate, based on the largest volume  











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               resulting from the concentrate's use according to any  
               manufacturer's instructions. 



          2)Establishes the Fund within the State Treasury.  Requires the  
            Fund to support culturally and linguistically appropriate  
            programs to improve access to healthy and affordable foods and  
            beverages, reduce access to calorie-dense and nutrient-poor  
            foods, encourage physical activity, and raise awareness of the  
            importance of nutrition and physical activity in the  
            prevention of obesity, diabetes, and dental disease.   
            Specifies the allocation of funds, by percentage, to various  
            entities as follows: 



             a)   Fifty-one percent to the Department of Public Health  
               (DPH), to be divided, as specified,  among the following  
               activities: 

               i)     A regular grant program to all county and city  
                 health departments, or their nonprofit designees, seeking  
                 to invest in obesity, diabetes, and dental disease  
                 prevention activities;

               ii)    A competitive grant program to nonprofit  
                 organizations and community based organizations seeking  
                 to invest in obesity, diabetes, and dental disease  
                 prevention activities.  Requires a percentage of these  
                 funds to be used for the following:



                  (1)       To support nonprofit organizations working  
                    statewide, including those that provide capacity  
                    building and technical assistance services; and,

                  (2)       For statewide priority population leadership  











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                    networks, including African American, Hispanic,  
                    American Indian and Alaska Native, Asian American,  
                    Native Hawaiian and Pacific Islander and low  
                    socioeconomic status populations.



               iii)   A competitive grant program for licensed clinics to  
                 invest in obesity, diabetes, and dental disease  
                 prevention and treatment activities, and to support  
                 programs that use education, and other public health  
                 approaches that raise awareness about the importance of  
                 nutrition and physical activity;  

               iv)    Statewide advertising and media campaigns, including  
                 social media initiatives, to change social and cultural  
                 norms around risk factors for chronic diseases, including  
                 diet and physical activity, and dental disease  
                 prevention;





               v)     Dental health programs through the DPH Oral Health  
                 Program; and,

               vi)    Administration, independent evaluation, and disease  
                 surveillance.





             b)   Twenty-five percent to the Department of Education  
               (CDE), to be divided among the following activities: 














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               i)     Competitive grant programs for school districts for  
                 educational, environmental, policy, and other public  
                 health approaches that promote physical activity,  
                 improved nutrition and ensure access to clean drinking  
                 water throughout the school day. Permits these funds to  
                 be used for school recreational facility improvements and  
                 improving quality of school meals; and,

               ii)    The CDE Farm to School Program.





             c)   Twenty percent to the Office of Farm to Fork in the  
               Department of Food and Agriculture (DFA), to  support  
               consumer incentive programs and to administer a competitive  
               grant program to aid community food producers; and,



             d)   Four percent of funds to the Department of Health Care  
               Services (DHCS) for the Expanded Access to Primary Care,  
               Rural Health Services Development, Seasonal Agricultural  
               Migratory Workers, and Indian Health programs.  Requires  
               the funds to be used to support clinic-based obesity and  
               diabetes prevention and related disease management.

          3)Requires target populations to be the focus of the campaign  
            implemented pursuant to this bill, and all moneys in the fund  
            to be allocated with no less than 60% priority given to  
            communities located in zip codes with the highest 30  
            percentile of type II diabetes, as reported by the California  
            Health Interview Survey (CHIS). Specifies the following target  
            populations:

             a)   African American, Hispanic, American Indian and Alaska  
               Native, Asian American, Native Hawaiian, and Pacific  
               Islander;











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             b)   Low socioeconomic status populations;



             c)   Zip codes with the top 30th percentile of rates of type  
               II diabetes;



             d)   Communities identified as dentally underserved or with  
               high rates of dental disease; and,


             e)   At-risk populations, as determined by CHIS and other  
               data sources.



          4)Requires that DPH funding for local government activities be  
            focused and primarily expended on programs directly serving  
            African American, Hispanic, American Indian and Alaska Native,  
            Asian American, Native Hawaiian, and Pacific Islander  
            communities and where consumption of bottled sugar-sweetened  
            beverages is the highest, in neighborhoods with schools with a  
            high concentration of students who qualify for supplemental  
            and concentration grants, and in neighborhoods with a  
            demonstrated need for services, including a high concentration  
            of Medi-Cal eligible residents.



          5)Requires DPH to develop a funding formula to provide a minimum  
            base level to all county and city health departments with the  
            additional amount weighted to reflect the number of residents  
            in each jurisdiction living below 150% of the federal poverty  
            level.  Makes funding dependent on each local health  
            department submitting an approved implementation plan and  
            maintaining a community coalition to support the objectives of  











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            the funding.  Requires at least one third of each  
            jurisdiction's funds be subgranted to community partners  
            selected through a competitive process with a priority and  
            focus on directly serving African American, Hispanic, American  
            Indian and Alaska Native, Asian American, Native Hawaiian, and  
            Pacific Islander communities.

          6)Limits administrative expenses to 3% of funds allocated to  
            DPH, DHCS, CDE, and DFA.


          7)Requires that moneys in the Fund be expended only for purposes  
            specified and to supplement existing levels of service.   
            Prohibits moneys in the Fund from supplanting current federal,  
            state, or local funding for existing levels of service.





          8)Authorizes the State Public Health Officer, the Secretary of  
            DFA, the Director of DHCS, and the Superintendent of Public  
            Instruction to coordinate to make rules and regulations to  
            implement the Fund allocation. 



          9)Requires the State Auditor to conduct periodic audits,  
            starting no later than 24 months after the bill's effective  
            date, to ensure annual allocation to individual programs is  
            awarded in a timely fashion consistent with the requirements  
            of this bill.



          10) Creates the 13-member Healthy California Fund Oversight  
            Committee (Committee) to advise DPH, CDE, DFA, and DHCS with  
            respect to policy development, integration, and evaluation of  
            the state and local programs funded under this bill, and  











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            requires the Committee to develop a master plan for the future  
            implementation of diabetes, obesity, and dental disease  
            prevention programs.  Requires the Committee to submit to the  
            Legislature an annual report detailing the number and scope of  
            programs enabled by the Fund, the amount of Fund moneys spent  
            and unspent and recommendations, if any for policy changes.  

          11)Requires, by July 1, 2017, and annually thereafter, DPH,  
            DHCS, CDE, and DFA to prepare a program budget for the  
            following year including anticipated revenues and costs of  
            implementing the program, a recommended funding level to  
            operate the program, and the amount of fees collected by the  
            state.  



          12)Creates the Healthy California Fund Administration Account  
            for the purpose of reimbursing DPH, DHCS, CDE, and DFA for  
            administrative and implementation costs of the program.  


          13)Requires the BOE to administer and collect the fees under the  
            Fee Collection Procedures Law.  Allows the BOE to adopt  
            regulations and prescribe reporting requirements necessary to  
            implement the fee, including information regarding the total  
            amount of bottled SSB and concentrate sold, and the amount of  
            fee due.  Limits BOE's administrative expenses to 3%.



          14)Requires distributors subject to the fee to register with  
            BOE.  





          15)Requires fee payers to file with BOE a return on or before  
            the last day of the calendar month following the calendar  











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            quarter, together with a remittance for the amount of fee due  
            for that period.

          16)Provides several definitions including , but not limited to,  
            the following: 



             a)   A "sugar-sweetened beverage" means a nonalcoholic  
               beverage, carbonated or not, that contains added caloric  
               sweetener; and,

             b)   Specifies that SSBs do not include: 



                i)      Beverages sold to the U.S. government and American  
                  Indian tribal governments;

                ii)     Certain transactions where beverages are sold by  
                  one distributor to another;



                iii)    Beverages sweetened with noncaloric sweeteners;



                iv)     Beverages sweetened with 100% natural fruit or  
                  vegetable juice;



                v)      Beverages in which milk (including plant based  
                  milk-substitutes) is the primary or first-listed  
                  ingredient;














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                vi)     Beverages with fewer than five grams of added  
                  sugar or other caloric sweeteners per 12 ounces;



                vii)    Coffee or tea without added caloric sweetener;



                viii)   Infant formula;



                ix)     Beverages for medical use; and,



                x)      Water without any caloric sweetener.


          17)Makes various findings and declarations regarding the  
            negative impact of sugar on human health.


          EXISTING LAW:  


          1)Establishes DPH to protect and improve the health of  
            communities through education, promotion of healthy  
            lifestyles, and research for disease and injury prevention.


          2)Establishes restrictions on the sale of certain beverages in  
            schools by placing restrictions on the types of beverages  
            allowed to be sold in elementary, middle, and junior high  
            schools and high schools.


          3)Establishes the BOE to collect California state sales and use  











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            tax, as well as fuel, alcohol, and tobacco taxes and fees that  
            provide revenue for state government and essential funding for  
            counties, cities, and special districts.


          4)Imposes sales tax on the retail sale of tangible personal  
            property.  Imposes use tax on the storage, use, or other  
            consumption of tangible personal property from any retailer.   
            Requires the sale or use tax to be computed on the retailer's  
            gross receipts or sales price, respectively, unless the law  
            provides a specific exemption or exclusion.  Provides an  
            exemption for the sale of, and the storage, use, or other  
            consumption of, food products for human consumption including,  
            in part, all fruit juices, vegetable juices, and other  
            beverages, including bottled water, but not to include  
            carbonated beverages. 


          FISCAL EFFECT:  This bill has not been analyzed by a fiscal  
          committee. 


          COMMENTS: 


          1)PURPOSE OF THIS BILL.  According to the author, California is  
            facing a diabetes and obesity epidemic, yet spends less than  
            any other state on prevention.  There are approximately 2.5  
            million Californians, about 9% of the state's population,  
            living with diabetes today.  An estimated 13 million  
            Californians, about 46% of the state's population, have  
            pre-diabetes and up to 70% of these individuals will go on to  
            develop type 2 diabetes in their lifetime.  From 1980 to 2010,  
            the national obesity rate more than doubled among adults and  
            tripled among children. These rates are even higher in  
            low-income communities and communities of color and unless  
            current trends are reversed, one out of every three Americans  
            will have diabetes. 












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            The author states that soda and other sugary drinks are the  
            number one source of added sugar in the American diet, and are  
            linked to increased risk of diabetes, heart and liver disease,  
            stroke, obesity, and tooth decay.  This bill will create a  
            dedicated revenue source to address the harmful effects of  
            overconsumption of SSBs.  The revenues from the fee will go to  
            diabetes prevention programs, as well as oral health programs,  
            programs to increase access to clean drinking water in  
            schools, and physical education programs.  This bill will not  
            only help improve public health outcomes, but will also save  
            taxpayers billions of dollars every year on healthcare costs  
            in the long run. 


             
          2)Obesity, DIABETES, and other chronic diseases.  According to  
            the Centers for Disease Control and Prevention, more than  
            one-third of U.S. adults are obese, and approximately 12.5  
            million children and adolescents ages two to 19 years are  
            obese.  Research indicates a tripling in the youth obesity  
            rate over the past three decades.  While this increase has  
            stabilized between the years 2005 and 2010, in 2010, 38% of  
            public school children were overweight and obese.  Overweight  
            youth face increased risks for many serious detrimental health  
            conditions that do not commonly occur during childhood,  
            including high cholesterol and type 2 diabetes.  Additionally,  
            more than 80% of obese adolescents remain obese as adults.   
            Obese children and teenagers also remain at greater risk for  
            developing serious chronic diseases including type 2 diabetes,  
            heart disease, high blood pressure, cancer and other health  
            conditions including asthma, sleep apnea, and psychosocial  
            effects such as decreased self-esteem.  In one large study,  
            61% of overweight five to 10 year-olds already had at least  
            one risk factor for heart disease, and 26% had two or more  
            risk factors.  An overweight adolescent has a 70% chance of  
            being overweight or obese as an adult.












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            According to the September 2014 "Burden of Diabetes in  
            California" report by DPH, over 2.3 million California adults  
            report having been diagnosed with diabetes, representing one  
            out of every 12 adult Californians.  The vast majority of  
            diabetes cases in California are type 2, representing 1.9  
            million adults.  The prevalence increases with age-one out of  
            every six adult Californians aged 65 and above have type 2  
            diabetes-and is higher among ethnic/racial minorities and  
            Californians with low education attainment and/or family  
            income.  Compared with non-Hispanic whites, Hispanics and  
            African Americans have twice the prevalence of type 2 diabetes  
            and are twice as likely to die from their disease.  Diabetes  
            is the seventh leading cause of death in California, and  
            determined to be the underlying cause of death in almost 8,000  
            people each year.  As diabetes is a contributing factor to  
            many deaths from heart disease and stroke, diabetes may be  
            under-represented as a contributing cause of death.  



          3)THE ECONOMIC BURDEN.  The last decade has witnessed a 32% rise  
            in diabetes prevalence, affecting some 3.9 million people and  
            costing upwards of $24 billion per year. 
          Overall health care spending on obesity continues to  
            significantly burden the nation, however, and the most recent  
            research data available estimate obesity-related health care  
            costs at nearly $150 billion annually.  According to the  
            National Conference on State Legislatures, taxpayers fund  
            about half of these costs, at approximately $60 billion,  
            through Medicare and Medicaid.  Recent research indicates that  
            if obesity rates are reduced by as little as 5%, health care  
            savings could exceed $29 billion.  Childhood obesity also  
            poses a national security challenge, as obesity has become one  
            of the most common disqualifiers for military service;  
            affecting 25% of those who apply to serve.

          The medical costs and associated costs of diabetes jumped to  
            $245 billion in 2012, meaning that the diabetes toll on the  
            economy has increased by more than 40% since 2007, according  











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            to a recent report from the American Diabetes Association.   
            The 2007 figures were $116 billion for diabetes and the  
            indirect costs (disability, work loss, premature mortality)  
            were $58 billion.  According to the California Diabetes  
            Program, total health care and related costs for the treatment  
            of diabetes in California are about $24.5 billion each year.   
            Direct medical costs (e.g., hospitalizations, medical care,  
            treatment, supplies) account for about $18.7 billion, with the  
            other $5.8 billion including indirect costs such as disability  
            payments, time lost from work, and premature death.  The  
            average annual treatment cost per case for diagnosed diabetes  
            in the U.S. was nearly $10,000 in 2007.  The economic burden  
            of diabetes and prediabetes on the average person is estimated  
            to be over $700 for every man, woman, and child - representing  
            a hidden 'tax' paid by all through higher insurance  
            premiums<1>. 
          
          4)CAUSE, CORRELATION, AND RISK.  It is very difficult to  
            scientifically prove a direct causal relationship between diet  
            and disease in humans.  In laboratory animal studies, a single  
            variable can be changed while all others are held constant to  
            determine a direct cause-and-effect relationship.  It is  
            nearly impossible to exert the same level of control in human  
            dietary studies.  However, while it may be impossible to  
            completely eliminate alternate hypotheses, a causal  
            relationship between the intake of added sugar and obesity is  
            supported by strong epidemiological evidence.  A meta-analysis  
            published in the American Journal of Clinical Nutrition looked  
            at 30 studies of sugary drink consumption published from 1966  
            to 2005 and found that sugary drink consumption was associated  
            with weight gain and obesity.  Another study concluded that  
            sugary drinks are likely to account for at least 20% of the  
            weight gained by Americans between 1977 and 2007.  Numerous  
            studies indicate that higher consumption of sugary drinks is  
            associated with higher risk of weight gain and also with  
            higher risk of developing type 2 diabetes.



          ---------------------------
          <1> March 2012 fact sheet.  California Diabetes Program,  
          Diabetes Information Resource Center. www.caldiabetes.org










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          5)EFFORTS TO REDUCE CALORIE CONSUMPTION.  Along with increasing  
            physical activity and providing nutritious food, reducing  
            calories from all sources is a necessary component to reduce  
            obesity and associated chronic health conditions.  Research  
            shows that people generally underestimate the number of  
            calories in the foods they consume.  A recent study asking  
            participants to estimate the caloric content of nine  
            restaurant entrées found that 90% underestimated the caloric  
            content of less healthy items by an average of more than 600  
            calories.  Controlling the intake of added sugars represents  
            an important component of lifestyle management for weight  
            control and maintenance.  A recent report by the Institute of  
            Medicine identified sugary drinks as the single largest  
            contributor of calories and added sugars to the U.S. diet.   
            The "2010 Dietary Guidelines for Americans," published every  
            five years jointly by the U.S. Department of Health and Human  
            Services and the U.S. Department of Agriculture, admonished  
                                                                       individuals to reduce consumption of SSBs, recommended that  
            adult Americans should eat a maximum of 10% of their daily  
            calories from added sugars.  In March 2015, the World Health  
            Organization's (WHO) new "Guideline: Sugars Intake for Adults  
            and Children" recommends reduced intake of sugar throughout  
            the life course.  In both adults and children, the intake of  
            sugar should be reduced to less than 10% of total energy  
            intake.  For a person who consumes 2,000 calories per day that  
            means intake of added sugars should be limited to less than 30  
            grams (or two tablespoons).  WHO found that a further  
            reduction to below 5% of total energy intake would provide  
            additional health benefits.  


          6)POLICY INTERVENTIONS AND UNHEALTHY PRODUCTS.  Mounting  
            evidence suggests that effectively curbing the obesity  
            epidemic and reversing the upward trend will require  
            comprehensive approaches across sectors involving public and  
            private stakeholders at the local, state, and federal level.   
            Many believe that the comprehensive approach must be similar  
            to policy efforts previously employed to improve motor vehicle  











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            safety or curb usage of alcohol or tobacco.  After passage of  
            the California Tobacco Tax and Health Promotion Act of 1988  
            (Proposition 99), the state created the California Tobacco  
            Control Program (CTCP), implemented a variety of grassroots  
            efforts to educate consumers about the harmful effects of  
            tobacco use, and passed several anti-tobacco laws, such as  
            local and statewide policies to limit smoking in public  
            places, prohibit the incidence of tobacco sales to minors, and  
            restrictions on tobacco advertising; all designed to address  
            smoking prevalence.  California's early efforts have shaped  
            best practices for comprehensive tobacco control efforts  
            throughout the nation and the world.  According to CTCP, these  
            efforts have so far saved more than one million lives and over  
            $86 billion in health care costs.  While tobacco use continues  
            to be pervasive and costly, California has been successful at  
            significantly curbing the burden of tobacco use on California  
            families, our health care system and our economy. 





            Since the early 1980s, a growing number of economists have  
            examined the impact of the price of alcoholic beverages on  
            alcohol consumption.  Studies investigating such a  
            relationship found that alcohol prices were one factor  
            influencing alcohol consumption among youth and young adults.   
            Other studies determined that increases in the total price of  
            alcohol can reduce drinking and driving and its consequences  
            among all age groups; lower the frequency of diseases,  
            injuries, and deaths related to alcohol use and abuse; and,  
            reduce alcohol-related violence and other crime.  A large body  
            of research supports the view that increases in the monetary  
            prices of alcoholic beverages, which can be achieved by  
            raising federal, state, and local alcohol taxes, significantly  















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            reduce alcohol consumption<2>.


          7)POTENTIAL EFFECT OF SSB FEE.  Over the past decade, states and  
            localities have begun to consider taxing SSBs in order to  
            generate revenue, reduce consumption of unhealthy beverages,  
            and promote public health.  According to a 2009 issue brief by  
            the Robert Wood Johnson Foundation, emerging studies suggest  
            that small taxes on SSBs are unlikely to affect obesity rates,  
            but they can generate revenue that states can invest in  
            improving public health.  In addition, while there is only  
            limited research on the impact of taxes on SSB consumption  
            rates and related weight outcomes, existing research on the  
            impact of prices on food-purchasing behaviors in general  
            suggest that substantive taxes on SSBs could significantly  
            affect consumption patterns and thereby have an impact on  
            overweight and obesity rates.  
            


            In October 2013, Mexican President Enrique Peña Nieto approved  
            a one peso (about $0.07) tax per liter of SSB, which national  
            health experts saw as one antidote to Mexico's alarming  
            diabetes rates.  The measure took effect January 1, 2014.  A  
            year later, preliminary data suggest consumption rates are  
            falling, though it's too early to say precisely how much.   
            Mexico's National Institute of Public Health earliest results  
            suggest that in the first three months of 2014, purchases of  
            sugary drinks dropped by 10% from the same period in 2013.   
            Meanwhile purchases of untaxed drinks, like 100% fruit juice  
            and milk, went up 7%, and purchases of bottled water went up  
            13%. 


            


            --------------------------
          <2> Chaloupka FJ, Grossman M, and Saffer H. 2002. The Effects of  
          Price on Alcohol Consumption and Alcohol-Related Problems   
          Alcohol Res Health. 2002;26(1):22-34. 










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          8)RECENT LOCAL EFFORTS.  In November 2014, Berkeley, California  
            became the first city in the nation to adopt a soda tax after  
            30 other cities and states around the country failed.  Its  
            Measure D levied a penny-per-ounce tax on sugar-sweetened  
            drinks.  Its revenues were not dedicated to any particular  
            purpose, therefore needing only a simple majority vote to  
            pass.  It won the support of 75% of voters.  In the first 11  
            months of implementation Berkeley's soda tax has generated  
            $1.5 million.  In the same election, a similar measure in San  
            Francisco failed.  San Francisco's Proposition E would have  
            levied $0.02 per-ounce tax, and it needed two-thirds of the  
            votes to pass because it would have directed revenue to  
            physical education and nutrition programs for children.   
            Proposition E failed to secure two-thirds support, and only  
            received a simple majority, 55%, of votes.  In November 2016 a  
            new San Francisco penny-per-once soda tax initiative will be  
            on the ballot.  It will require a simple majority for passage.


          9)SUPPORT.  The American Heart Association, cosponsor of this  
            bill, states that SSBs  have a direct link to obesity and  
            diabetes, as well as many other diseases and are the largest  
            source of daily calories for adolescents in the U.S. Moreover,  
            SSB consumption is highest among groups that have the highest  
            risk of type 2 diabetes.   If nothing is done, it is predicted  
            that 50% of Latino and African American children born since  
            the year 2000 will develop type 2 diabetes during their  
            lifetime.  This bill will enable the state to invest in  
            communities disproportionately burdened by diseases related to  
            the consumption of SSBs.  The American Diabetes Association  
            (ADA), a cosponsor of this bill, argues that this bill can  
            play an important role in preventing diabetes by deterring  
            consumption of SSBs and appropriating monies from the health  
            impact fee for educational and health purposes in communities  
            hardest hit by the disease.  The ADA states that diabetes  
            costs $37.1 billion annually in California alone and argues  
            that California cannot afford to wait to address this growing  
            epidemic.  The Latino Coalition for a Healthy California  











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            argues that the investment in communities of color made  
            possible by the fee on SSBs, which will raise over $2 billion,  
            will comprehensively address the root causes of poor health  
            outcomes in these communities.  The American Academy of  
            Pediatrics, California supports this bill because it will  
            bring awareness of the hazardous effects of SSBs, provide  
            dedicated resources to impacted communities, and reduce SSB  
            consumption.


          10)OPPOSITION.  Californians for Food and Beverage Choice (CFB)  
            argues that this tax does not just impact soda, it also would  
            place a misguided tax on juice drinks, sports drinks, iced  
            teas, and enhanced waters and result in higher prices on  
            hundreds of products sold at convenience and grocery stores  
            and restaurants.  These increased prices will especially  
            impact middle- and lower-income Californians.  CFB argues that  
            obesity and diabetes are complex health issues so it is unfair  
            and inaccurate to portray SSBs as the main culprit.  While  
            obesity and diabetes are serious concerns, consumption of SSBs  
            has steadily declined over the past decade while the rates of  
            obesity and diabetes have increased.  The California  
            Restaurant Association argues that this bill is an overreach  
            of government.  Singling out and increasing costs on one  
            specific product is a misguided tactic and will likely force  
            higher costs on all drinks.  Placing higher taxes on beverages  
            or food will not singularly make people healthier.  PepsiCo  
            states that data from the U.S. Department of Agriculture show  
            that over the last 40 years calorie intake from "added fat"  
            and "refined grains" have risen while calories from products  
            with "added sugar" have been flat, with total calories from  
            the former two sources each being larger than calories from  
            added sugar. Pepsi also argues that this bill endangers good  
            jobs in California.

          11)RELATED LEGISLATION.  AB 2696 (Beth Gaines) requires DPH to  
            submit a report to the Legislature on or before January 1,  
            2018, that includes a summary and compilation of  
            recommendations on diabetes prevention and management.  











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          12)PREVIOUS LEGISLATION.  


             a)   AB 1357 (Bloom) of 2015 was largely similar to this  
               bill.  AB 1357 failed passage in the Assembly Health  
               Committee. 


             b)   AB 572 (Beth Gaines) would have required DPH to create a  
               detailed diabetes action plan for the state, and to report  
               the results of the plan to the Legislature biennially.   
               Requirements include the development of a detailed budget  
               blueprint identifying needs, costs, and resources required  
               to implement the plan and a proposed budget for each action  
               step, as well as policy recommendations for the prevention  
               and treatment of diabetes.  AB 572 was held on the Suspense  
               File in the Senate Appropriations Committee. 


             c)   SB 203 (Monning) of 2015 would have established the  
               Sugar-Sweetened Beverages Safety Warning Act, to be  
               administered by DPH, and required a safety warning on all  
               sealed SSB containers.  Would have required the warning  
               label to be posted in a place that is easily visible at the  
               point-of-purchase of an establishment where a beverage  
               container is not filled by the consumer.  SB 203 failed  
               passage in the Senate Health Committee. 


             d)   SCR 34 (Monning) of 2015 proclaimed the month of  
               September 2015, and each year thereafter, as Childhood  
               Obesity Awareness Month, and expressed the Legislature's  
               support of various programs that work to reduce obesity  
               among children.














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             e)   SR 47 (Hall) of 2015 proclaimed November 2016 as  
               Diabetes Awareness Month, and expressed the Senate's  
               support of aggressive early detection and treatment of  
               diabetes.


             f)   SB 1000 (Monning) of 2014 was largely similar to SB 203.  
                SB 1000 failed passage in the Assembly Health Committee. 


             g)   SB 622 (Monning) of 2013 would have imposed $0.01 per  
               fluid ounce tax on bottled SSBs and concentrates.   SB 622  
               was held on the Suspense File in the Senate Appropriations  
               Committee. 


             h)   AB 669 (Monning) of 2011 was similar to SB 622.  AB 669  
               was held in the Assembly Revenue and Taxation Committee.



             i)   AB 2100 (Coto) of 2010 would have imposed a $0.01 per  
               teaspoon of added sweetener tax on SSBs and concentrates.   
               AB 2100 was held in the Assembly Revenue and Taxation  
               Committee. 



             j)   SB 1210 (Florez) of 2010, a similar measure to AB 2100,  
               was placed on the former Senate Revenue and Taxation  
               Committee's Suspense File. 



             aa)  SB 1520 (Ortiz) of 2002 would have imposed an excise tax  
               upon every distributor, manufacturer, or wholesale dealer  
               at a rate of $2 per gallon of soft drink syrup or simple  
               syrup, $0.21 per gallon of bottled soft drinks, and $0.21  
               per gallon of soft drink produced from powder.  The soda  











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               tax provisions were removed from the April 29, 2002,  
               version of the bill. 



             bb)  AB 105 (Moore) of 1983 would have imposed an excise tax  
               on the distribution of nonalcoholic carbonated beverages,  
               except carbonated water and carbonated fruit juice, at the  
               rate of $0.07 per gallon.  The provisions of that bill also  
               included an excise tax on the distribution of nonalcoholic  
               carbonated beverage syrup at the rate of $0.50 per gallon  
               of liquid syrup.  AB 105 also died in the Assembly Revenue  
               and Taxation Committee. 



          13)TECHNICAL AMENDMENTS.
          
             a)   On page 12, line 36, insert the word "media" before  
               "campaign" to clarify what campaign this refers to.

             b)   On page 13, it appears that lines 8 and 9 should be  
               deleted as they are duplicative of language already  
               included in this paragraph on page 12, line 39.



             c)   Three technical amendments are recommended related to  
               section 104895.57 of this bill, as follows:



               i)     In order to clarify the definition of "program" as  
                 used in section 104895.57 beginning on page 19, line 11  
                 of the bill, the following should be inserted on page 20  
                 after line 10: "(d) For purposes of this section,  
                 "program" shall mean all of the activities paid for by  
                 the Fund."












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               ii)    In section 104895.57 beginning on page 19, line 11,  
                 as drafted, this bill requires DPH, DHCS, CDE and DFA to  
                 prepare an annual program budget, including the amount of  
                 fees that have been paid to BOE.  The bill should add BOE  
                 to that list of departments which will coordinate to  
                 provide the necessary information for preparing the  
                 annual budget. 



               iii)   Paragraph (c) of section 104895.57 beginning on page  
                 20, line 1, states that DPH, DHCS, DFA, and CDE "shall  
                 deposit all moneys submitted for reimbursement by the  
                 program into the Healthy California Fund Administration  
                 Account . . ."  The bill should clarify the meaning of  
                 this provision or delete it.



          14)DOUBLE REFERRAL.  This bill has been double-referred. Should  
            this bill pass out of this committee, it will be referred to  
            the Assembly Revenue and Tax Committee.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          American Diabetes Association (cosponsor)


          American Heart Association (cosponsor)


          California Black Health Network (cosponsor)











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          California Dental Association (cosponsor)


          California Primary Care Association (cosponsor)


          Latino Coalition for a Healthy California (cosponsor)


          Public Health Institute (cosponsor)


          Roots of Change (cosponsor)


          100 Black Men of Sacramento


          ACT for Women and Girls


          AFSMC District Council 36


          Agriculture and Land-Based Training Association


          Alchemist CDC


          Alliance for Rural Community Health


          AltaMed Health Services Corporation


          American Academy of Pediatrics











                                                                    AB 2782


                                                                     Page X




          American Federation of State, County and Municipal Employees,  
          (AFL-CIO)


          Asian Pacific Islander Obesity Prevention Alliance


          California Academy of Physician Assistants


          California Chronic Care Coalition


          California Food Policy Advocates


          California Immigrant Policy Center


          California Latinas for Reproductive Justice


          California Pan-Ethnic Health Network


          California Rural Legal Assistance Foundation


          California School-Based Health Alliance


          California School Nurses Association


          Cambodian Family Community Center













                                                                    AB 2782


                                                                     Page Y


          Children Now


          Community Clinic Association of Los Angeles County


          Community Clinic Consortium


          Community Health Partnership


          Community Water Center


          County Health Executives Association of California


          Cultiva La Salud


          Dignity Health


          Ecology Center


          Families in Good Health


          Farmers Guild


          Having our Say!


          Health and Life Organization, Inc.













                                                                    AB 2782


                                                                     Page Z


          Health Trust


          Kheir Center


          Long Beach Fresh


          Los Angeles Trust for Children's Health


          Mathiesen Memorial Health Clinic


          Mountain Valleys Health Centers


          National Hmong American Farmers


          North Coast Clinics Network


          North East Medical Services


          Orange County Food Access


          PDI Surgery Center


          Pico Union Project


          Sacramento Native American Health Center, Inc.













                                                                    AB 2782


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          San Ysidro Health Center


          SEIU California


          Sonoma County Board of Supervisors


          Sonoma County Indian Health Project


          South Asian Network


          Southeast Asia Resource Action Center


          Street Level Health Project


          Tiburcio Vasquez Health Center


          UFCW Western States Council


          United Nurses Association of California


          Vision y Compromiso




          Opposition


          California Restaurant Association











                                                                    AB 2782


                                                                     Page B




          California Teamsters Public Affairs Council


          Californians for Food and Beverage Choice


          PepsiCo




          Analysis Prepared by:John Gilman / HEALTH / (916) 319-2097