El Monte leaders plan to consider declaring a fiscal emergency and asking voters to tax sugar-sweetened beverages, which could raise $7 million a year.

Faced with a crippling combination of low revenues, high labor costs and decreasing funding from the state, El Monte is moving to declare a fiscal emergency and seek a tax on sugary beverages sold within the city.

The moves come as the city attempts to stave off the financial problems facing a number of cities across California. So far this summer, three cities — Stockton, San Bernardino and Mammoth Lakes — have moved to seek bankruptcy protection, and Compton officials announced the city could run out of cash in a matter of months.

El Monte officials said they are not at the edge of bankruptcy but need the sugary drinks tax revenue as a protection against insolvency down the road. In a sign of growing concern, Fitch downgraded portions of El Monte’s debt in May.

“People are looking for who’s the next one [to declare bankruptcy]. El Monte is not the next one … not today, not now,” Finance Director Julio Morales said. “What we’re doing is financial planning. We’re trying to take the right steps.”

The declaration of a fiscal emergency, which El Monte’s council members will consider at a meeting Tuesday, would allow the city to hold a special election this fall for the tax proposal, Morales said. If approved by voters, the tax would collect one cent per ounce of “sugar sweetened” drinks sold. It could generate as much as $7 million in total annual revenues, according to a city report.

The San Gabriel Valley suburb, which has a population of more than 113,000, was hit hard by the Great Recession. Car dealerships that had provided a steady stream of tax revenues struggled. Several folded.

Sales tax dollars have fallen off sharply since, forcing El Monte to reduce its workforce to 290 employees this year, from about 410, and to eliminate some programs. The city’s reserves have decreased drastically, and this year, it lost much of the redevelopment money it had received from the state.

El Monte has also awarded generous benefits to some of its top employees. Former Police Chief Thomas Armstrong, who retired in May 2011, collected nearly $430,000 in his final year with the city through a combination of salary and payouts for unused time off. Armstrong and two other former police chiefs now receive yearly CalPERS pensions of more than $200,000.

“We’re paying for the sins of our fathers,” Mayor Andre Quintero said in a recent interview. “For years we just did not manage our contracts well. We were giving away the store.”

Quintero, who was elected in 2009, said that although the city is working with labor unions to cut costs, it still needs to find a way to make up for a half-cent sales tax that will expire in 2014.

The sugary drinks tax would fill that funding gap, Quintero said, as well as combat the health problems caused by sodas and other sweet beverages, which he likened to cigarettes.

“These drinks have a similar secondary impact; it may not be to the lungs, but it will be obesity anddiabetes and dental decay,” Quintero said. “We’re chemically altering our bodies in a way that’s very dangerous.”

El Monte officials modeled the tax after a proposal in Richmond, Calif., as well as similar plans that failed in Pennsylvania and Hawaii. In New York City, Mayor Michael Bloomberg has called for a ban on the sale of sugary beverages larger than 16 ounces, sparking an aggressive lobbying campaign from the American Beverages Assn. and protests outside City Hall.

Quintero said he was optimistic that such a tax would pass in El Monte, pointing out that a majority of the city’s residents voted in favor of Proposition 29 this year, which would have added a $1 tax to packs of cigarettes. But he is also expecting pushback from soda companies.

“The beverage industry is going to make it controversial,” he said. “They want people to buy their products and, frankly, eat and drink unhealthily because that’s how they make their money

Reprinted from the Los Angeles Times (July 25, 2012)

By Marc Lifsher,
Los Angeles Times

SACRAMENTO — A fight over genetically engineered foods has been heating up in the nation’s grocery aisles. Now it’s headed for the ballot box.

Voters will soon decide whether to make California the first state in the country to require labels on products such as sweet corn whose genes have been altered to make them resistant to pests.

Proposition 37 promises to set up a big-money battle pitting natural food businesses and activists against multinational companies including PepsiCo, Coca-Cola and Kellogg. Backers and opponents have already raised nearly $4 million combined for campaigns to sway voters, an amount that’s likely to swell into the tens of millions of dollars as the November election approaches.

So-called GMO foods — those made from genetically modified organisms — have been declared safe by U.S. regulators. But concern persists about the unforeseen consequences of this laboratory tinkering on human health and the environment.

The outcome in California could rattle the entire U.S. food chain. An estimated 70% to 80% of processed foods sold in supermarkets could be affected, industry experts said, along with a variety of fresh fruits and vegetables. The measure qualified for the California ballot with nearly 1 million signatures; labeling in the state could set a precedent that’s followed nationwide.

“This will be a big fight,” said Shaun Bowler, a UC Riversidepolitical scientist specializing in initiatives. “This is a popular issue because people are very afraid of the words ‘genetically engineered.’ And the people who sell this stuff are worried about losing sales.”

Backers of the initiative are encouraged by a pair of recent national opinion surveys showing that about 9 out of 10 consumers support labeling. A California-specific poll, released Thursday by the Business Roundtable and the Pepperdine University School of Public Policy, showed Proposition 37 has an almost 3-to-1 ratio of support, with 64.9% of prospective voters favoring it, compared with 23.9% opposed.

“People are interested in knowing what’s in their food,” said Grant Lundberg, a Sacramento Valley organic rice grower who’s helping spearhead Proposition 37. “It’s something they think is important.”

Opponents say labeling would unfairly besmirch popular and reputable products, raise food prices and spur frivolous lawsuits while doing little to protect the public’s health. Passage of the initiative could create a cumbersome patchwork of state food-labeling laws if other states follow California’s lead, they contend.

“It really boils down to … guilt by association that makes genetic engineering something bad, a ‘Frankenfood,’” said Bob Goldberg, a UCLA plant molecular biologist and a member of the National Academy of Sciences.

What’s clear is that the genetically modified foods have quickly and quietly become a fixture at the American dinner table. If you ate a bowl of cereal this morning, drank a Coke for lunch or prepared packaged macaroni and cheese or an ear of corn for dinner, then you probably ate something that has been genetically engineered. A majority of the foods on supermarket shelves that come in a box, bag or can probably would need to be labeled if Proposition 37 becomes law.

Most meat and dairy products, eggs, certified organic foods, alcoholic beverages and restaurant meals would be exempt. In addition, foods could not be labeled “natural” if any of their ingredients were genetically engineered.

The initiative defines genetically engineered food as produced from a plant or animal whose biological traits contain DNA that has been manipulated in a laboratory at the cellular level. The technique was pioneered more than two decades ago to boost productivity by making crops resistant to insects, plant diseases, pesticides and herbicides. The biggest successes have been with commodities that are staples in most processed foods. Genetically engineered crops account for about 90% of U.S. corn, soybean and sugar beet production.

And the trend is growing. Genetically modified fresh fruits and vegetables, including Hawaiian papayas, sweet corn, zucchini and yellow squash are now widely sold. Agribusinesses and their seed subsidiaries are pushing to develop melons that taste sweeter, onions that don’t bring tears and tomatoes that stay juicy longer.

The U.S. Food and Drug Administrationhas decreed genetically engineered foods to be safe. Although the agency requires that most food products carry labels with detailed health and safety information including ingredients, calories, sodium levels and potential allergic reactions, the agency has ruled that labels need not reflect whether ingredients have been genetically engineered.

TheFDA’slabeling policy has remained essentially unchanged since 1992, when it said it “has no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way.”

But some consumers and scientists worry about unforeseen risks, such as the potential for GMO foods to cause allergic reactions in humans or contamination of non-genetically engineered fields. Critics also fear that big companies could gain monopolies over supplies of expensive patented seeds that make crops resistant to being doused with herbicides.

“More safety assessments are needed,” said Michael Hansen, an evolutionary biologist and senior scientist at Consumers Union in Yonkers, N.Y.

About 50 countries across Europe, South America and Asia have passed labeling requirements for genetically engineered foods. In the U.S., similar efforts in 20 states, including Oregon, New York and Vermont, failed to overcome opposition from the processed food and biotech industries.

Labels are “very costly, are not going to be informative, and there’s absolutely no basis in science for this,” said Martina Newell-McGloughlin, director of life and health science research initiatives at UC Davis. The labeling campaign, she said, is sowing “fear and doubt.” She said organic farmers and food processors could use the initiative as a marketing tool to boost market share for their products, which are typically more expensive.

Proposition 37 supporters contend that if the government, industry and farmers are confident that genetically engineered foods are safe, then they shouldn’t mind if consumers know what they’re eating. They’ve dubbed the measure the California Right to Know Genetically Engineered Food Act.

As proposed, labels saying “genetically engineered” would have to be placed on the front of individual packages of raw GMO food products sold beginning Jan. 1, 2014. Similar labels for bulk food would appear on shelves or bins. Processed foods, including canned, frozen and milled products, would carry labels saying they were “partially produced” or “may be partially produced … with genetic engineering.”

Enforcement of the act would be left to state agencies and private attorneys, who can file lawsuits seeking court injunctions against the sale of a product.

The clash is expected to be thick with dueling scientific studies and experts of all kinds, with millions of dollars devoted to television spots. For now, most of the action is on the Internet. Proponents are at carighttoknow.org and opponents at noprop37.com.

“Both sides have fairly credible arguments to make, and they’ll dress them up in white coats, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. “Expect to see a lot of scientists, a lot of doctors and a lot of parents back and forth all campaign long.”

(Reprinted from The Los Angeles Times)

Nutrition continues to drive decision making in supermarket aisles across the country, according to Shopping for Health 2012, the 20th in a yearly study released July 18, by the Food Marketing Institute (FMI) and Prevention, and published by Rodale Inc.

For the past few years, shoppers have recognized and increased their purchases of foods containing desirable ingredients including whole grains, fiber, and protein. That number continues to grow, with 32 percent of shoppers reporting that they are buying more foods based on nutritional components versus last year.

Customers are attempting to make more of their calories count for better overall health, with 55 percent of shoppers switching to whole grain bread, 33 percent showing an interest in protein on the label (up 10 points since 2009), and 30 percent switching to Greek yogurt (up 9 points versus 2011).

“More and more shoppers are making the switch to foods with benefits. They are steering away from empty calories and asking, ‘what’s in my food, and how is it good for me?’” says Cary Silvers, Director of Consumer Insights forPrevention.

The desire to eat healthier and the stagnant economy appear to be two drivers that have led consumers to do more cooking at home, with 57 percent of people reporting having tried a new healthy recipe in the last year, an increase of five points from 2009. Shoppers recognize and use a variety of reliable sources when it comes to healthy meal ideas, with shoppers finding recipes through a variety of sources including the Internet (39 percent), cooking shows (37 percent), magazines (34 percent), cookbooks (33 percent), word-of-mouth (31 percent), recipes on labels (26 percent), culinary magazines (12 percent), and supermarket recipes (11 percent).

With the economy still in a slow growth mode, many of the tactics shoppers started using in 2008 are still in place, with 63 percent of shoppers reported only buying what they need (down 1 point from last year), and 60 percent switching to store brands (up 6 points from last year). While switching to store brands began as a money-saving tactic, improvements to quality, labeling and promotion have strengthened their position versus national brands.

Consumers are aware of their options at the grocery store, as 54 percent of respondents recognized the effort of food manufacturers to reduce sodium level in their foods. Sixty-seven percent of shoppers say that sodium is important to them, with 32 percent of shoppers saying that they are buying more low-sodium products versus 2011.

“Our food retail members are witness to these trends on a daily basis,” said Cathy Polley, RPh, vice president of health and wellness and executive director of the FMI Foundation. “Just as consumers are increasingly aware of the health-conscious opportunities afforded to them in the grocery aisles, FMI is also renewing its emphasis through its advancements in health and nutrition research and education with its Foundation.”

Publisher of Prevention, Lori Burgess, noted, “Shopping for Health is an invaluable source of information for the food industry, as it gives us a glimpse into the lives of consumers and the shifts that are taking place at grocery stores and in kitchens throughout the country. Each year, together with FMI,Prevention is able to uncover shoppers’ changing behavior, preferences and concerns as it pertains to food purchasing and preparation.”

The Shopping for Health survey of America’s supermarket shoppers examines their interests and attitudes regarding health and nutrition, their efforts to manage diets, and the ways in which health and nutritional concerns play out in buying decisions at the supermarket. To purchase Shopping for Health 2012, visit the FMI Store at FMI.org or call 202.220.0723.

Methodology: The data for Shopping for Health 2012 were collected through an online survey, conducted between November 19 and December 1, 2011, among a nationally representative sample of 1,471 U.S. shoppers. The margin of error associated with the survey is 3.0 percent at the 95 percent confidence level.

The respondent must have met the following requirements to participate in the survey:

• Reside in the U.S.
• A minimum of 18 years of age.
• Does 50 percent or more of the grocery shopping for their household.
• Have shopped for groceries in the past month.

(Reuters) – Visa Inc, MasterCard Inc and banks that issue their credit cards have agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of credit and debit card fees in what could be the largest antitrust settlement in U.S. history.

The settlement, if approved by a judge, would resolve dozens of lawsuits filed by retailers in 2005. The card companies and banks would also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.

The settlement papers were filed on Friday in Brooklyn federal court.

Swipe fees – charges to cover processing credit and debit payments – are set by the card companies and deducted from the transaction by the banks that issue the cards, essentially passing on the cost to merchants, the lawsuits said.

The proposed settlement involves a payment to a class of stores of $6 billion from Visa, MasterCard and more than a dozen of the country’s largest banks who issue the companies’ cards. The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months for a total consideration to stores valued at about $1.2 billion, according to lawyers for the plaintiffs.

The deal calls for merchants to be allowed to negotiate collectively over the swipe fees, also known as interchange fees.

Merchants would also be required to disclose information about card fees to customers, and credit card surcharges would be subject to a cap, according to the settlement papers. Surcharge rules would not affect the 10 states that currently prohibit that practice, which include California, New York and Texas.

An additional $525 million will be paid to stores suing individually, according to the documents.

“This is an historic settlement,” said Bonny Sweeney, a lawyer for the plaintiffs. The settlement “will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” said Craig Wildfang, who also represented the plaintiffs.

Noah Hanft, general counsel for MasterCard, said the company believed its interests were “best served by an amicable resolution” of the case. Visa Chief Executive Officer Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.

Not everyone was pleased with the proposed settlement, however. One class plaintiff, the National Association of Convenience Stores, rejected the settlement in a statement on Friday from its president, Tom Robinson, who is also president of Robinson Oil Corp.

“Not only does the proposed settlement fail to introduce competition and transparency, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces,” Robinson said.

The proposed considerations are a far cry from the $50 billion in swipe-fees paid each year by U.S. retailers, he said.

The American Bankers Association, a trade group whose members include the bank defendants, said retailers, not consumers, stood to gain the most from the proposed settlement.

“Big-box retailers will likely seize this opportunity to ask Congress for even more handouts,” said ABA President Frank Keating in a statement, referring to the Durbin amendment passed by Congress in 2010 limiting debit-card swipe fees – a move that banks say resulted in an $8 billion windfall for retailers.

“The legal process worked and should send a signal to Congress that it is wrong to pick winners and losers in a complex dispute between two industries,” the Electronic Payment Coalition, which represents payment networks, said in a statement.

The plaintiffs charged that Visa and MasterCard colluded directly and indirectly through the issuing banks to keep merchants from finding ways to mitigate credit-card costs.

Plaintiffs in the case include supermarket chain Kroger Co, pharmacy chain Rite-Aid Corp and shoe retailer Payless ShoeSource, as well as trade associations such as the National Association of Convenience Stores, National Grocers Association and the American Booksellers Association.

The National Retail Federation, a trade group representing retailers, said that “the test will be whether the injunctive relief is meaningful. Unless it is, the card market will stay broken and neither merchants nor their customers will achieve a long-term benefit.”

A number of banks that issue Visa and MasterCard cards, including JP Morgan Chase & Co, were also named as defendants in the lawsuit, along with Visa and MasterCard’s payment networks.

A spokeswoman for Bank of America NA said it believed the terms of the settlement were fair. JP Morgan declined to comment. Citigroup Inc acknowledged its role in the deal and declined further comment.

A spokesman for Wells Fargo said the company was pleased to put the matter behind it.

An estimated 7 million retailers will be affected by the settlement, according to lawyers for the plaintiffs.

Visa and MasterCard have been plagued by legal problems over their payment-card policies for the last decade. In 2003, the companies paid a combined $3 billion to settle a lawsuit by stores over their “honor all cards” policies, which tied acceptance of credit to debit cards.

The U.S. Department of Justice brought and settled a civil antitrust suit against Visa and MasterCard in 2010. As part of the consent decree, the companies agreed to drop certain policies that kept stores from steering their customers to cheaper forms of payment.

But the decree left intact policies that prohibit stores from charging customers more when they use certain payment cards, according to a July 2011 court filing from plaintiffs.

The defendants denied that any collusion took place.

Visa said its share of the settlement is $4.4 billion, and Mastercard said its share is $790 million.

In December, Visa announced it set aside an additional $1.57 billion to cover the cost of a potential settlement in the case, bringing its litigation reserve balance to $4.28 billion, according to a regulatory filing. MasterCard in the fourth quarter of 2011 recorded a $770 million pretax charge, as an estimate of its potential liability in the case, a filing with the U.S. Securities and Exchange Commission showed.

MasterCard said in a statement that it expected to incur an additional $20 million pre-tax charge in its 2012 second quarter financial statements to cover its portion of the settlement.

Visa and MasterCard together accounted for more than 80 percent of U.S. credit and debit card purchases by volume in 2011, according to data from the Nilson Report, a California trade publication.

Albert Foer, president of think-tank the American Antitrust Institute, said that the settlement should create more transparency for consumers at the cash register. Because merchants had been forbidden from charging customers extra for costlier payment forms, they often built that cost into the retail price, he said.

While it may not lead to lower prices, “it gives the consumers some choice and it should ultimately mean a better deal for everybody,” Foer said. “In the longer run, it should help keep retail prices under better control.”

It may also be the last time retailers are allowed to take Visa and Mastercard to court over interchange fees. The proposal provides for extensive litigation releases that would keep stores that join the settlement from suing over a wide range of issues relating to fees and anti-steering restraints.

The case is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, no. 05-1720.