2001 Legislative Package

AB 780 (Thomson)

Mill Assessment Reauthorization
Sponsor: Department of Pesticide Regulation

Summary:

This is a spot bill that is intended to be used as the legislative vehicle for the Department of Pesticide Regulation’s legislative proposal (CEPA-01-05) which would reauthorize the pesticide mill assessment, scheduled to sunset at the end of 2002. Reauthorization is needed prior to the sunset to ensure that the department is fully funded in 2002-2003 budget year.

Background:

DPR is mandated by law to regulate the sale and use of pesticides to protect public health and the environment. The pesticide regulatory program is largely funded by a mill assessment on the wholesale price of pesticides that was enacted in 1971. The initial mill assessment was set at 8 mills (.8 cents per dollar of sales). In 1990, DPR lost General Fund revenues as part of the effort to address a statewide budget crisis. The mill assessment was increased to 18 mills (with counties receiving 31.25 percent of the total mill to keep their level of funding constant). The increased mill included a sunset provision. In 1992, DPR lost additional General Funds as California continued to face large budget deficits, and the mill assessment was correspondingly increased to 22 mills with a sunset in 1997. This funding and some other minor industry sources make up the DPR Fund, which constitutes approximately 70% of DPR’s budget.

In 1997, SB 1161 was enacted which reduced the mill assessment to a formula that allowed for spending down a substantial surplus ($19 million) that had accrued in mill collections, with a cap of 17.5 mills, plus ¾ of a mill for CDFA. Six mills go to the counties to cover the costs of their programs. In the event of a sunset in 2002, the mill would revert to 9 (the 1989 level) and counties would continue to receive six mills, leaving DPR with three mills to cover the costs of the regulatory program.

Problem:

The mill assessment is currently set at a rate (17.5) significantly below what is necessary to fund 70% of the Department’s activities. The DPR Fund has been adequate to cover the costs of the program up to now because the Department has been spending down the $19 million surplus that accrued from mill collections in the mid-1990s. That surplus is now exhausted. Without reauthorization, DPR could face a funding shortfall of several million dollars in 2002-2003. DPR estimates that a mill rate of 24-26 mills (depending on assumptions about program growth and mill value projections) would be sufficient to keep the DPR Fund at a level that would cover about 70% of departmental activity. Many industry group stakeholders would like industry fees to pay 50% of DPR’s expenses with another five year sunset.

Analysis:

AB 780 as introduced would delete the current sunset and continue the mill rate at 17.5 indefinitely. This is insufficient to cover DPR costs at the current 70% rate. Either the mill rate needs to be increased or the state General Fund contribution needs to be increased in order to maintain current program. DPR is working with stakeholders to find common ground for a compromise measure.

Contact:

Adrienne Alvord, Legislative Director
Department of Pesticide Regulation
(916) 445-3976

Back to the 2001 Sponsored Legislation home page