BILL ANALYSIS
AB 1019
Page 1
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 1019 (Beall) - As Amended: April 15, 2009
SUBJECT : Alcohol-Related Services Program.
SUMMARY : Establishes the Alcohol-Related Services (ARS)
Program within the Department of Alcohol and Drug Programs
(DADP) to mitigate the harm of alcohol use and imposes a ten
cent mitigation fee on beer, wine, and liquor to fund the ARS
Program. Specifically, this bill :
1)Makes a number of legislative findings regarding the cost and
harmful effects of alcohol use, including the following:
a) Alcohol-related problems cost Californians an estimated
$38.4 billion annually, including costs for alcohol-related
illness and injury, criminal justice, lost productivity, as
well as impacts on the welfare system, trauma and emergency
care, and the foster care system, among other costs;
b) Alcohol use drains California's state and local
governments of approximately $8.3 billion annually in
increased health care costs, criminal justice costs, and
lost tax bases, while the income to the state in alcohol
licensing, fees, excise taxes, and sales taxes is less than
$1 billion annually;
c) The use of alcohol is a major cause of hospital
emergency room and trauma care treatment, and greatly
contributes to the need for transportation costs such as
emergency medical air transportation services and ambulance
costs;
d) The use of alcohol is closely associated with mental
illness and contributes enormously to the cost of treating
the mentally ill;
e) There are significant benefits of alcohol treatment and
recovery programs and they are effective in enabling
individuals who complete treatment to find employment and
pay taxes, no longer suffer from alcohol problems, and
become productive members of their communities; and,
f) While the staggering cost of alcohol abuse is borne by
all Californians, 67% of the alcohol sold in California is
consumed by only 11% of the population.
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2)Establishes the ARS Program (Program), to be administered by
DADP, under the police powers of the state as a regulatory and
service program to protect the health and safety of California
residents who are harmed by the pervasive influence of alcohol
production, distribution, sales, and consumption.
3)Provides that the services authorized under the Program may
mitigate for the past, present, or future harm caused by
alcohol products in the stream of commerce in California and
specifies that the Program may support new or preexisting
services.
4)Directs DADP, by April 1, 2010, to adopt rules, guidelines,
procedures, and regulations necessary or appropriate to carry
out the purposes of this bill. Permits rules, guidelines,
procedures, and regulations to be adopted on an emergency
basis if necessary to meet the four-month deadline.
5)Requires the rules, guidelines, and procedures pursuant to 4)
above to be adopted according to the Administrative Procedures
Act and to include submissions by state agencies, nonprofit
organizations, cities, and counties of evidence of alcohol
harm to support the need and nexus of the Program. States
that the published rules, guidelines, and procedures must
include supplemental findings to further demonstrate the
reasonable relationship between the Program and the harm from
the use of alcohol.
6)Imposes a mitigation fee of specified rates for specified
alcohol, commencing on January 1, 2010, on all persons engaged
in business in California, as defined in the Revenue and
Taxation Code, who sell alcoholic beverages, where the sale is
for the purpose of resale in the regular course of business
with the purchaser. Requires the mitigation fee to be levied
at the first point of sale within the state.
7)Allows the State Board of Equalization (SBE) to increase the
fee in accordance with the California Consumer Price Index, as
specified, and requires the fee to be sufficient to defray the
costs incurred by SBE and DADP in implementing this bill.
8)Establishes the ARS Program Fund (Fund) in the State Treasury
and requires expenses incurred in the administration and
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collection of the fee, and all funds collected pursuant to the
fee, less refunds, to be deposited in the Fund.
9)Specifies that funds collected pursuant to this bill and
deposited in the Fund must be continuously appropriated to
DADP and used exclusively by DADP for the purposes of funding
the Program established by this bill.
10)Requires any fee imposed pursuant to this bill to be
consistent with all applicable legal requirements for imposing
fees, including the requirements prescribed in Sinclair Paint
Co. v. SBE (1997) 15 Cal.4th 866.
11)Requires DADP, beginning April 10, 2010, to establish,
contract for, or provide grants for the establishment or
continuation of, component services under the Program.
Thereafter, directs DADP to release grants or contracts on
July 1, 2010, and every two years thereafter.
12)Prohibits any service component from being funded at more
than the cost of harm caused by alcohol, which, in turn,
caused the need for services.
13)Describes the following five alcohol-related component
services in the Program and requires DADP to equally
distribute available funding from the Fund to the components:
a) treatment and recovery; b) prevention, education and
research; c) emergency medical and trauma care treatment
services; d) hospitalization and rehabilitation services; and,
e) criminal justice and enforcement programs.
14)Directs DADP to use the criteria of need, effectiveness, and
best practices as guidance in deciding on guidelines for the
components. Authorizes DADP to, in its biennial update of the
guidelines, consider other varieties of services but requires
DADP to show the need, effectiveness, and best practices that
those services would bring to the component service area.
EXISTING LAW :
1)Establishes DADP as the single state agency responsible for
administering and coordinating the State's efforts in alcohol
and drug abuse prevention, treatment, and recovery services.
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DADP is also the primary state agency responsible for
interagency coordination of these services.
2)Establishes the Licensing and Certification Division within
DADP responsible for assuring that quality services are
provided to all program participants in a safe and healthful
environment through the licensure, certification, regulation,
and oversight of a statewide system of alcohol and other drug
recovery and treatment facilities and programs and counselors.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, California
greatly lags in mitigating the costs of alcohol, especially in
comparison to the reforms governing the sales of tobacco.
The author points out that most of the fees in this bill that
will support the ARS Program will be shouldered by the
heaviest users of alcohol, who also have the highest impact on
social services offered by state/county agencies, and by
foreign corporations like Anheuser-Busch InBev, SAB Miller,
and Diageo, who may decide to absorb some of this fee instead
of passing these costs along to their consumers. The author
contends that all taxpayers, including the 33% of Californians
who do not imbibe, are paying billions for alcohol's negative
impacts on society. The author asserts that increases in
alcohol prices inversely affect under-age consumption by
reducing the frequency and quantity of drinking. Furthermore,
the author points to numerous studies that have underscored
the added benefits of reduced drinking. Finally, the author
notes that the last time any fee or tax on alcohol was
adjusted occurred in 1991 and the fee to charge for the
harmful effects of alcohol in this bill is expected to
generate $1.4 billion as mitigation for alcohol-related
services.
2)RECENT STUDY . A July 2008 comprehensive study of the total
annual costs of alcohol problems in the state of California
conducted by researchers from the Marin Institute, the sponsor
of this bill, found that alcohol consumption is associated
with substantial illness, injuries, death, lost productivity,
lower quality of life among victims of alcohol abuse and the
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alcohol users themselves, and high costs to public programs.
The summary findings from the study indicate that one person
dies every hour due to alcohol use in California; there are
100 incidents every hour due to alcohol use in California; the
total economic cost of alcohol to California is $38.4 billion
annually, which translates to approximately $1,000 per
California resident per year; costs from lost productivity in
terms of the reduced earnings of those who are currently, or
have ever been, alcohol dependent total $12.8 billion;
government entities bear $8.3 billion or 22% of the total
cost; and, pain and suffering costs add another $48.8 billion
annually. One of the recommendations that researchers issued
as a result of the study was to raise fees by implementing an
alcohol producer surcharge to cover the costs of government
programs.
3)DADP STRATEGIC PLAN . DADP is charged with developing and
implementing a statewide plan to alleviate problems related to
inappropriate alcohol use. DADP's strategic plan is organized
around core programs that include prevention and treatment,
and information and education. Among its prevention-centered
efforts, DADP funds and directs the Community Prevention
Initiative, a training and technical assistance project
designed to reduce and manage community-level risks and
problems directly attributable to, or collaterally resulting
from, the availability, manufacture, distribution, promotion,
sale or use of alcohol and drugs. DADP also maintains a
Resource Center that provides a comprehensive collection of
alcohol, tobacco, and other drug prevention and treatment
information to all California residents at no cost through a
clearinghouse, Internet communication links, and a telephone
information and referral system. In addition, DADP implements
the Prevention Activities Data System to collect primary
prevention service and activity data funded with DADP dollars.
The treatment component of DADP's strategic plan focuses on
making treatment and recovery services accessible and
available for all Californians in need and seeks to improve
the quality of life of clients with alcohol and other drug
problems. Specifically, DADP's Office of Women's and
Perinatal Services oversees a statewide network of
approximately 300 publicly-funded perinatal alcohol and drug
treatment programs that annually serve over 38,000 pregnant
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and parenting women. It also currently oversees a statewide
network of approximately 390 publicly funded alcohol and drug
treatment programs that annually serve over 12,000 youth and
provides technical assistance to private, for-profit programs
that provide alcohol and other drug treatment services to
youth. DADP's Co-Occurring Disorders Unit is charged with
disseminating data, research citations, and other
evidence-based information and best practices in an effort to
keep providers of alcohol and other drug services aware of
developments related to co-occurring disorders. Finally, DADP
funds efforts to increase knowledge, skills, and abilities in
the alcohol and other drugs prevention and treatment
workforce.
4)SUPPORT . The sponsor of this bill, Marin Institute, states
that raising the cost of tobacco products has been accepted as
an effective and appropriate policy measure in helping to pay
for Medicare and Medicaid bills for tobacco-related illnesses
and curb tobacco use. The sponsor believes this assumption is
equally, if not more so, relevant to alcohol products and
argues that, although tobacco on its face kills more people
annually, alcohol harms cost twice that of tobacco, according
to the sponsor's own cost study, and this bill appropriately
addresses the billions of dollars in alcohol-related harm in
California. Other supporters, including the Drug Policy
Alliance, the City and County of San Francisco, Youth
Leadership Institute, and the County Alcohol and Drug Program
Administrators Association of California, contend that alcohol
consumption is a major cause of injuries and death in
California and therefore should bear some of the costs. They
state that, under current rates, in 2005, California collected
just $318 million in state excise taxes and $50 million in
alcohol licensing fees and fines, but these payments covered
only 5% of alcohol's cost to state and county governments.
Furthermore, they assert that even if $1.5 billion in sales
tax paid on alcoholic beverages in California is included,
these revenues would still only cover 22% of government costs.
5)OPPOSITION . Opponents, representing makers, carriers, and
sellers of alcohol products, assert that there are no negative
social costs associated with normal moderate consumption of
alcoholic beverages and this bill unfairly penalizes 90-95% of
responsible drinkers. They argue that this bill could make it
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even more difficult for businesses that are struggling to keep
their doors open and retain employees during these difficult
economic times by disproportionately targeting a specific
category of products for fee increases. Opponents from the
wine industry refute that a nexus exists between winemakers
and the abuse of wine by a few consumers and they cite studies
that have substantiated the health benefits in wine. Lastly,
they maintain that the alcohol industry already pays more than
its fair share of revenue to the state and this bill will
worsen the business climate by making California a
more-expensive, less-desirable place to live and drive more
jobs out of state.
6)RELATED LEGISLATION . SB 558 (DeSaulnier) establishes the
Alcohol Abuse Treatment Fund and authorizes the Department of
Alcoholic Beverage Control to assess and collect a fee in the
maximum amount of five cents per drink from every person who
is engaged in business in this state and sells alcoholic
beverages for resale. This bill is pending in the Senate
Governmental Organization Committee.
7)PRIOR LEGISLATION . SB 297 (Romero) of 2007 would have
authorized counties, with voter approval, to levy a local tax
on the consumption of beer, wine, and distilled spirits
consumed on the premises of the seller of one of these
products. This bill was held in the Senate Revenue and
Taxation Committee.
8)DOUBLE-REFERRAL . This bill has been double-referred. Should
this bill pass out of this committee, it will be referred to
the Assembly Governmental Organization Committee.
9)POLICY COMMENT . This bill prohibits any component in the ARS
Program from being funded more than the cost of the harm
caused by the alcohol that caused the need for services. The
author may wish to clarify how the amount of the cost of such
alcohol-related harm would be quantified for purposes of this
provision.
REGISTERED SUPPORT / OPPOSITION :
Support
Marin Institute (sponsor)
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Alcohol Policy Network
Bay Area Community Resources
California Association of Alcoholism & Drug Abuse Counselors
California Council on Alcohol Policy
California Council on Alcohol Problems
City and County of San Francisco
County Alcohol and Drug Program Administrators Association of
California
Drug Policy Alliance
National Association on Alcohol, Drugs and Disability
National Council on Alcoholism and Drug Dependence
Pueblo y Salud, Inc.
San Diego County Alcohol Policy Panel
South Bay Children's Health Center
Stepping Stone
Youth Leadership Institute
Numerous individuals
Opposition
Ace Beverage Company
Advance Beverage Company
Anheuser-Busch Companies, Inc.
ASV Wines, Inc.
Bay Area Beverage Company
Bear Creek Winery
Beauchamp Distributing Company
Brutocao Cellars
California Association of Winegrape Growers
California Beer and Beverage Distributors
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Independent Grocers Association
California Licensed Beverage Association
California Manufacturers & Technology Association
California Retailers Association
California Small Brewers' Association
California Taxpayers' Association
California Teamsters Public Affairs Council
Cole Bailey Vineyards
Crest Beverage Company
DBI Beverage Sacramento
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Diageo North America
Distilled Spirits Council of the United States
Family Winemakers of California
Glass Packaging Institute
Golden Gate Restaurant Association
Greenwood Ridge Vineyards
Heineken USA
Husch Vineyards
Ironstone Vineyards
Kautz Farms
Lodi District Grape Growers Association, Inc.
Markstein Beverage Co.
Matagrano Inc.
Mendocino Winegrape & Wine Commission
MillerCoors
Mission Beverage Co.
Napa Valley Grapegrowers
Neighborhood Market Association
Nor-Cal Beverage Co. Inc.
North Coast Mercantile Co., Inc.
Paso Robles Wine Country Alliance
Philo Ridge
Redding Distributing Company
Regional Black Chamber of Commerce San Fernando Valley
Roederer Estate
Rubicon Brewing Company
Scheid Vineyards
Thomas Group LLC
Valley Farm Management
Wine Institute
Numerous individuals
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097