in the KNOWN

In the Know Newsletter

June 16, 2017

State Capitol

State Capitol

Legislature Passes the Biggest State Budget in History

On June 15, the California State Legislature approved a $125 billion general fund 2017-2018 state budget, which is the largest budget spending plan in the history of the state. When special funds, bond funds and other funds are included, the budget soars to over $180 billion. The budget increases spending on social services and education and expands the earned income tax credit for low-wage workers, among other efforts. The budget, and its accompanying “trailer bills” that implement specific changes to state law, are now pending on Governor Jerry Brown’s desk. Upon the governor’s signature, the budget takes effect on July 1.

Budget Takes Away Much of the Board of Equalization’s Authority
Major changes are on the way for the Board of Equalization (BOE). The changes, added to the budget this week, will be a major overhaul of the BOE coming on the heels of an audit revealing problems with various practices at the BOE.

The budget moves much of the BOE’s responsibilities into two new state bureaucracies that must be created, the Department of Tax and Fee Administration and the Office of Tax Appeal. Significantly, the overhaul removes the BOE’s authority over tax appeals relating to income, sales and other taxes and fees. A panel of judges will hear tax appeals, rather than the BOE. In addition, responsibility over the application of tax laws will be moved to a new bureaucracy operated by governmental appointees, rather than elected officials. Ag Council joined with many others to oppose this major change over concerns that the new provisions undermine existing taxpayer protections.

As background, the BOE administers tax and fee programs in the areas of sales and use taxes, property taxes, and special taxes, as well as the tax appellate program. The BOE collects one-third of the state’s revenue.

The governor is expected to sign the budget and its accompanying trailer measures soon.

Democrats Change Election Rules to Impact the Outcome of a Recall Effort
The budget contains a controversial provision written by Democrat legislators to change election rules to make it more difficult to recall elected officials. The provision passed the Senate and Assembly as part of the state budget package on June 15. It was written in an effort to affect the outcome of a recall effort against Senator Josh Newman (D-Fullerton). If Senator Newman loses the race, Democrats would no longer have a two-thirds supermajority in the State Senate.

In April, Senator Newman voted for SB 1, the transportation infrastructure measure that will result in an increase in the gas tax for Californians. After the SB 1 vote, a recall effort against him was launched. If recalled, it was widely anticipated that Senator Newman would face a difficult challenge since he won the 2016 election by a mere 2,498 votes.

The change to voting rules will likely add months to the timeline to certify a recall election. In the case of the recall against Senator Newman, the legislation could move his recall to June 2018 when competitive primaries for governor and other seats will boost Democratic turnout.

Specifically, the change to recall elections allows a person who signed a recall petition to have the opportunity to ask that their name be rescinded from the recall petition. If requested, the names would have to be removed and the signature tallies would be recounted to ensure a sufficient number of verified signatures were obtained to initiate a recall election. If enough verified signatures are obtained, the change requires the Department of Finance to estimate the costs of the recall election if held as a special election or as part of the next regularly scheduled election. The signatures may not be certified until the Joint Legislative Budget Committee has 30 days to review and comment on the Department of Finance’s cost estimate.

The BOE changes and the recall election provisions were added to the budget package three days prior to passage of the budget. The budget package is now pending on the governor’s desk where he is expected to sign it.

Discussions Continue on Cap and Trade Program Extension

Governor Brown supports extending the cap and trade program by a two-thirds vote in the Legislature. At this time, the governor and his staff are actively working to negotiate a cap and trade package with various stakeholders, including Ag Council, in order to attain a two-thirds vote. Ag Council has members participating in the cap and trade program, and we are engaged in the legislative discussions to help seek the best possible outcome for our members.

Since the cap and trade extension is very important to the governor, it is widely anticipated that legislative leaders will move forward with legislation once a deal is struck to reauthorize cap and trade.

Under current law, the Air Resources Board (ARB) must reduce statewide emissions of greenhouse gases to 40 percent below 1990 levels by 2030. Existing law does not extend the cap and trade program beyond 2020, so without cap and trade as the market-based compliance mechanism, ARB has unconstrained authority to reduce emissions. This is why Ag Council is at the table in the cap and trade negotiations on behalf of our members, and we will continue to keep members updated regarding the discussions.

Ag Council Testifies on New Bovine General Order

On June 8, Ag Council testified before the Central Valley Regional Water Quality Control Board (the Board) on the proposed Waste Discharge Requirements General Order for Confined Bovine Feeding Operations (Bovine Order).

The Bovine Order would impose conditions to protect water quality and applies to commercial operations having six or more animals on site. The Board has made it clear they do not intend to regulate educational projects related to secondary schools, FFA, 4H programs, and similar endeavors where education, not commercial profit, is the primary goal–even if the animals are later auctioned at a fair.

The Bovine Order was adopted and includes the latest revisions requested by industry stakeholders. While agriculture did not get everything we asked for, the final Bovine Order as adopted is improved in many areas. The Board agreed to revise and lengthen the compliance timeline and to work with industry stakeholders to develop compliance forms that are standardized and user-friendly. These changes, along with others, will offer greater flexibility and will provide a higher chance of success and compliance.

If you have any questions, please contact Rachael O’Brien at ph. (916) 443-4887 or Rachael@agcouncil.org.

Click HERE for our comment letter.

Update on Nitrate in Groundwater

Due to various legislative and regulatory changes in recent years, the State Water Resources Control Board has threatened enforcement actions against several farmers in specific regions for contamination of groundwater due to nitrate levels. These enforcement threats essentially require growers to provide clean drinking water to impacted communities. Ag Council expects the Board to pursue these potential actions and to incorporate more farmers into this process in an effort to pressure groups to find a statewide solution for drinking water.

As a result, Ag Council is extensively engaged in a process to develop a statewide solution for impacted communities while seeking relief for farmers from threats of enforcement from the Board. Ag Council and others are working to potentially have a solution developed before the end of the legislative session this year.

June 2, 2017

State_Capitol_2012jpg.150414State Senate Approves Bill to Boost Compliance with the Buy American Provision

This week, the California State Senate unanimously approved SB 730 by Dr. Pan (D-Sacramento), a bill sponsored by Ag Council, which will establish steps for California to monitor compliance with and enforcement of the federal Buy American provision in school lunch and breakfast programs. SB 730 will improve local farm to fork food options for school children.

Ag Council President Emily Rooney said, “SB 730 is needed given that the Buy American provision is not being adequately monitored and enforced, and as a result, multiple school districts have purchased food products from foreign sources. State agencies have the responsibility to provide oversight and ensure compliance, so SB 730 creates mechanisms for the California Department of Education (CDE) to provide guidance to school food authorities to ensure transparency in school food purchases and improve enforcement of the provision.”

Through stronger monitoring, SB 730 helps hold our state accountable regarding school food purchases as taxpayer dollars should be spent to source food products for our school children that are in line with the state’s ambitious goals regarding environmental, labor and food safety standards.Given that California grows two-thirds of the fruits and nuts in the U.S., one-third of the vegetables and is the nation’s leading dairy state, SB 730 also supports locally grown and produced food, as well as jobs and our economy.

Under the Buy American provision, schools and entities within the jurisdiction of the CDE that participate in the National School Lunch Program and the School Breakfast Program are required to purchase domestically grown and processed foods to the maximum extent practicable.

With Senate approval, SB 730 is now awaiting policy committee referral in the Assembly.

Legislature Passes Hundreds of Bills to Meet “House of Origin” Deadline

The policy deadline to approve bills out of the house of origin (Senate or Assembly) was this week. In order to consider a bill beyond June 2, approval from the Rules Committee is needed and a two-thirds vote is required to waive the rules. Voting sessions ran late into the evening as legislators considered hundreds of measures this week. Listed below are some of the key measures Ag Council has been engaged in this year. As always, please feel free to contact us at ph. 916.443.4887 with any questions.
Climate Change – Cap & Trade Measures
Given the governor has a goal to pass a cap and trade reauthorization bill by a two-thirds vote in June, Ag Council is engaged in discussions in order to help seek the best possible outcome for our members. None of the cap and trade-related measures passed to meet the house of origin deadline this week. However, because the governor has made passage of a cap and trade bill a high priority, it is widely anticipated that legislative leaders will move a bill forward if/when a deal is struck this year to reauthorize cap and trade beyond 2020.
Agricultural and business objectives in the cap and trade discussions 
Ag Council is working with a group of agricultural advocates and others in the business community to pursue specific objectives, including the following: 1) maintain the current allowance allocation at 90 percent for food processors in the cap and trade program, 2) leverage funds for ag-related emission reduction projects and efforts to reduce greenhouse gas emissions, short-lived climate pollutants, air toxics and criteria pollutants, including those in disadvantaged communities, and 3) continue to allow the use of offsets in the cap and trade program at eight percent.

AB 378 (C. Garcia) mandates the Air Resources Board (ARB) to account for the social costs of emissions and greenhouse gases when adopting regulations. AB 378 authorizes ARB to adopt regulations establishing a market-based compliance mechanism to meet the greenhouse reduction targets of 40 percent below 1990 levels by the year 2030. The bill requires ARB, with local air districts, to adopt emissions standards for criteria air pollutants and toxic air contaminants for facilities in the cap and trade program. Allowances would only be allocated to facilities meeting those air pollutant emissions standards for criteria air pollutants and toxic air contaminants. Status: AB 378 failed passage on the Assembly floor by a vote of 35-39 and six abstentions. Position: OPPOSED

AB 151 (Burke) improves legislative oversight and accountability over ARB as it continues to implement regulations to reduce emissions. This measure is backed by moderate Democrats and business and ag groups. Status: AB 151 was not considered on the Assembly floor since Speaker Anthony Rendon required that AB 378 (see above) pass before AB 151 could be considered for a vote. Position: SUPPORT

SB 775 (Wieckowski) requires ARB to adopt a regulation establishing a market-based program of emissions limits, applicable on and after January 1, 2021, for covered entities. The bill would ensure that statewide greenhouse gas emissions are reduced to at least 40 percent below the 1990 level by 2030, per statute. SB 775 establishes a price floor and a price ceiling for auction credits, eliminates free allowances, abolishes the ability to bank credits, and ends offsets. Status: SB 775 awaits consideration in the Senate. Position: Ag Council is OPPOSED to this extreme measure, which would have a detrimental impact on our members.

SB 49 (De Leon) establishes that existing federal air, climate, water, labor, and endangered species regulations are enforceable under state law. The measure is intended to maintain current regulations despite any future changes by President Donald Trump. Status: SB 49 passed the Senate and is pending in the Assembly. Position: OPPOSED

AB 975 (Friedman) expands the areas that could be designated as Wild and Scenic from adjacent to a river to one-quarter mile on either side of the river and expands the types of areas that could be considered Wild and Scenic. AB 975 could potentially adversely impact water rights, water supply and future water operations. Status: AB 975 was not considered in the Assembly because it did not have the votes to pass. Position: OPPOSED

Food & Beverages 
AB 841 (Weber) restricts food and beverage reward programs for students who attain academic achievements, such as a high GPA or perfect attendance, and prohibits certain advertising of food or beverages during the school day. Status: AB 841 passed the Assembly and is awaiting consideration in the Senate committee process. Position: OPPOSED

Health Care
SB 562 (Lara) creates a universal single payer health care system, which will result in higher taxes and unsustainable costs. A fiscal analysis states the cost will be $400 billion per year to cover all health care and administrative costs, with half of that coming from existing federal, state and local taxes. The other $200 billion would have to derive from new taxes. Status: SB 562 was approved by the Senate and awaits further consideration in the Assembly. Position: OPPOSED
SB 63 (Jackson) mandates a new maternity and paternity leave policy on businesses and exposes businesses to litigation. When combined with other leave, SB 63 creates a seven month protected leave of absence for certain employees. Status: Bill passed the Senate and is pending consideration in the Assembly. Position: OPPOSED
AB 450 (Chiu) among the provisions of AB 450, it prohibits an employer from providing a federal immigration enforcement agent access to a worksite without a properly executed warrant. With severe fines for violations of the bill’s provisions, AB 450 is extremely punitive towards employers. Status: The Assembly passed AB 450 and it awaits consideration in the Senate. Position: OPPOSEDPesticides
SB 602 (Allen) requires the labeling of seeds and plants treated with neonicotinoids (neonics). The bill is unwarranted, not based in science and threatens agriculture given that neonics are used to fight pests that transmit serious diseases endangering agricultural commodities (e.g. Asian citrus psyllid). Status: This bill stalled on the Senate floor because it did not have enough votes for passage. Position: OPPOSED

AB 313 (Gray) restructures the administration and enforcement of water rights at the State Water Resources Control Board in order to bring more accountability and transparency to California’s water management structure. Status: The bill was approved by the Assembly and is now awaiting consideration in the Senate. Position: SUPPORT

SB 252 (Dodd) adds prescriptive requirements onto individuals applying for new well permits in critically overdrafted basins and undermines the locally driven, collaborative Sustainable Groundwater Management Act (SGMA) process. Status: SB 252 passed the Senate and is pending in the Assembly. Position: OPPOSED

Ag Council is engaged in stakeholder discussions on the nitrate in drinking water issue to develop a statewide strategy going forward. Given those conversations are ongoing, Ag Council has not yet taken a position on SB 623 below.

SB 623 (Monning) establishes the Safe and Affordable Drinking Water Fund in which funds are available upon appropriation to the State Water Resources Control Board. SB 623 requires the Board to expend funds for grants, loans, contracts, or services to assist those without access to safe and affordable drinking water. Status: The Senate approved SB 623 and the bill awaits consideration in the Assembly.