BILL ANALYSIS �
SENATE HUMAN
SERVICES COMMITTEE
Senator Carol Liu, Chair
BILL NO: AB 152
A
AUTHOR: Fuentes
B
VERSION: May 27, 2011
HEARING DATE: June 28, 2011
1
FISCAL: Governance and Finance,
Appropriations
5
Consultant:
2 Wu
SUBJECT
Food banks: grants: voluntary contributions: income tax credits
SUMMARY
Establishes the State Emergency Food Assistance Program (SEFAP)
within the Department of Social Services (DSS) and allows for
contributions to SEFAP for the purchase of California grown
fresh fruits or vegetables. Provides a tax credit to California
growers for the costs of fresh fruits or vegetables donated to
California food banks.
ABSTRACT
Existing law:
1. Establishes the scope of functions and responsibilities
of the State Department of Public Health.
2. Establishes the Emergency Federal Assistance Program
(TEFAP), a federal program that supplements the diets of
low-income needy persons, including elderly people, by
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providing them with emergency food and nutrition
assistance.
3. Authorizes, via the Personal Income Tax Law and the
Corporation Tax Law, various tax credits against the taxes
imposed by the bill.
4. Establishes the Personal Income Tax Law which allows
taxpayers, until January 1, 2014, to designate on their tax
returns that a specified amount in excess of their tax
liability be contributed to the Fund, to be allocated by
DSS for TEFAP.
This bill:
1. Requires the State Department of Public Health (DPH) to
find and apply for federal funding opportunities that would
help promote healthy eating and prevention of obesity.
2. Allows, upon receiving federal funds, the Department of
Public Health to provide in-kind support and grants to
assist local governments and nonprofit organizations.
These are governments and organizations that the department
deems eligible to encourage the sale and consumption of
fresh fruits and vegetables, implement programs and
initiatives that prevent obesity and hunger, and promote
healthy eating and access to nutritious food in underserved
and urban and rural communities
3. Establishes, through the State Department of Social
Services (DSS) on and after January 1, 2012, the State
Emergency Food Assistance Program (SEFAP) to provide
emergency food and funding to food bank networks and other
organizations whose ongoing primary function is to
facilitate the distribution of food to low-income
households.
4. Creates the State Emergency Food Assistance Program
account and requires that the money allocated into the
account by the Legislature be used for the purchase,
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storage, and transportation of food grown or produced in
California.
5. Allows qualified taxpayers a 10 percent tax credit for a
donation of fresh fruits or fresh vegetables to food banks
located in California beginning on or after January 1, 2012
and before January 1, 2017.
6. Defines "qualified taxpayer" as the person responsible
for planting a crop, managing the crop, and harvesting the
crop from land.
FISCAL IMPACT
According to the Assembly Appropriations Committee, there is
estimated lost tax revenue of $200,000 for the first two years
with an on-going revenue loss of $400,000 annually due to
farmers taking advantage of the 10 percent tax credit. There
are minor, but absorbable costs to the Department of Public
Health investigating potential funding opportunities.
According to the California Association of Food Banks, a state
investment of $1,000 in tax credit would leverage a $10,000
donation in wholesale-valued crops. For example, this could
leverage over 17,000 pounds in fresh fruits and vegetables.
BACKGROUND AND DISCUSSION
Author's statement:
The author states that California has some of the most
productive farmlands in the world, producing more than 350
commodities, specialty crops, and other food items. These
farmlands are essential for providing a healthy food supply and
guarantee a natural resource for California's future
generations. However, according to a University of California
at Los Angeles survey of Californian's health status, more than
8 million people live in a household where an adult cannot
always afford enough food. Californians who experience hunger
and food insecurity suffer from poor physical and emotional
health, as well as a diminished capacity to learn and succeed in
the workplace. This can also lead to higher levels of obesity
and other diet-related diseases.
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The author contends that access to healthy food is a basic human
right. Yet, there is an epidemic of overweight individuals due
to poor diet and lack of physical activity. Increased risk of
chronic disease has been attributed to low fruit and vegetable
intake in the United States, accounting for $30 billion in
associated health care costs in 2008 and 2009.
The author believes that programs such as Emergency Federal
Assistance Program and the State Emergency Food Assistance
Program can promote increased access to healthy food and
increased consumption of Californian-grown fresh fruits and
vegetables, whole grains, and low-fat dairy in order to improve
nutrition. Not only do they benefit the community, especially
low-income ones, they also can decrease the costs found in
health care due to the problems caused by bad diet and health.
Similar Tax Credit
In Oregon, a similar tax credit has helped food pantries procure
more diverse produce donations, from small growers in
particular. The Oregon Department of Agriculture concluded that
the tax credit achieved its purpose of providing "an incentive
for farmers to donate crops?�W]ithout the incentive a few
donations would still occur, but not at the same level as with
the incentive."
The Emergency Food Assistance Program (TEFAP)
TEFAP was first authorized as the Temporary Emergency Food
Assistance Program in 1981 to distribute surplus foods to
households. The name was changed to The Emergency Food
Assistance Program under the 1990 farm bill. The program was
designed to help reduce Federal food inventories and storage
costs while assisting the needy.
Under TEFAP, the U.S. Department of Agriculture makes USDA foods
available to state distributing agencies. The amount of food
that each state receives out of the total amount of food
provided is based on the number of unemployed persons and the
number of people with incomes below the poverty level in the
state. States provide the food to local agencies that they have
selected, usually food banks, which in turn distribute the food
to local organizations, such as soup kitchens and food pantries
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that directly serve the public. States also provide the food to
other types of local organizations, such as community action
agencies, which distribute the foods directly to needy
households.
In FY 2010, Congress appropriated $297.5 million for TEFAP
through the normal appropriations process - $248 million to
purchase food, 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.
Related Legislation
AB 727 (Correa) of 2001 included a broader agricultural tax
credit than the one contained in this bill. That bill died in
the Senate Revenue and Taxation Committee.
AB 727 (Mitchell), also introduced this year, requires the
Department of General Services to develop nutritional standards
to govern the foods purchased for all state departments,
agencies, and state-run institutions in accordance with the
federal dietary guidelines and to develop prescribed guidelines
for sustainable purchasing practices and procedures that
encourage purchasing from local vendors, farms, and
manufacturers when feasible. This bill awaits hearing in the
Senate Business, Professions and Consumer Protection Committee.
Previous votes
Senate Health Committee: 7-1
Assembly Floor: 76-0
Assembly Appropriations: 17-0
Assembly Rev and Tax: 9-0
Assembly Health: 19-0
COMMENTS
Currently a program exists within the DSS which is, in essence,
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the State Emergency Food Assistance Program. However, the
program is not created in statute, nor is there a SEFAP account.
This bill puts the program and allows the creation of a SEFAP
account into which excess Special Funds money and appropriations
from the General Funds may be deposited.
This principal difference between the federal TEFAP and the
state SEFAP is that the latter promotes the distribution of
fresh fruit and vegetables grown in California.
This bill's provision for a 10 percent tax credit is meant to
encourage the donation of culled fruits and vegetables: produce
otherwise left in the field because it may be cosmetically unfit
for selling in a commercial supermarket. The California
Association of Food Banks hopes that the tax credit will provide
an incentive for farmers to donate this cosmetically-challenged
produce to SEFAP.
The word "fresh" in regards to donated produce is defined so
that the phrase "fresh fruits and vegetables" can still include
items that may have gone through a minor manufacturing process,
such as washing, but still remain perishable. "Fresh" is meant
to be associated with "perishable" rather than apply to any
canned food. As noted by the California Association of Food
Banks, grains and beans are perishable in the long run, but they
can be placed on a shelf for a specified amount of time. "Fresh"
fruits and vegetables are defined as easily perishable and must
be eaten or thrown away within a short time.
POSITIONS
Support: Alameda County Community Food Bank
American Federation of State, County and Municipal
Employees, AFL-CIO
California Association of Food Banks
California Communities United Institute
California Food Policy Advocates
California Hunger Action Coalition
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Community Action Agency of Butte County, Inc.
Community Food Bank
Community Food Bank of San Benito County
Food Bank of Contra Costa and Solano
Food Bank for Monterey County
Foodbank of Santa Barbara County
HMC Farms
Hunger Action Los Angeles
Imperial County Food Bank
Interfaith Council of Amador
Los Angeles Regional Foodbank
Mendocino Food and Nutrition Program
Meyers Farms Family Trust
Ocean Mist Farms
Orange County Food Bank
Prima Frutta Packing, Inc.
Prime Time International
Quality Packing
Redwood Empire Food Bank
San Francisco Food Bank
Second Harvest Food Bank of Orange County
Second Harvest Food Bank of Santa Clara and San
Mateo Counties
Simonian Fruit Company
T.D. Produce Sales
Van Groningen and Sons, Inc.
Vessey and Company, Inc.
Oppose: None received
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