On Thursday, the California State Senate approved a measure to further increase the state’s minimum wage to $13 per hour beginning in January of 2017, with annual increases thereafter tied to inflation. The bill passed on a strictly party line vote with 21 Democrats supporting and 12 Republicans in opposition.

Specifically, SB 935 (Leno) would boost California’s minimum wage to $11 per hour beginning 1/1/15, $12 per hour beginning 1/1/16, and $13 per hour beginning 1/1/17. Annually thereafter, the wage would be adjusted upward using a formula based on the Consumer Price Index (CPI).

The bill faces an uncertain future in the State Assembly, where it must be approved before it can be sent to the Governor. It is unclear whether Governor Brown would be willing to sign another increase so soon after last year’s approval of a measure to increase the minimum to $10 in 2016.

CGA joined with a broad coalition of business groups to oppose the measure and will continue to do so as it moves to the Assembly.

The State Senate also approved SB 1000 (Monning), to require warning labels on all sugar sweetened beverages with 75 calories or more of added sugar per 12 ounce serving. This bill narrowly made it off the Senate floor with 21 votes. After a third attempt, Senators Hill, Block and Torres voted for the measure.

SB 1381 (Evans) that would require product labeling on all food products that contain genetically modified material failed only garnering 19 of the required 21 votes needed for passage to the Assembly. Senators Roth (D,Riverside) and Correa (D,Santa Ana) were the sole Democrats who abstained from the measure.

Today is the house of origin deadline, whereby all bills introduced in their original house must be passed. The Senate will not convene today, meaning Thursday was the last chance for any pending measures to move to the Assembly in 2014.

California lawmakers on Wednesday rejected a proposal to label foods that contain genetically modified ingredients despite calls from advocates who say consumers should know when they’re buying food that has been bioengineered.

Sen. Noreen Evans, D-Santa Rosa, said her measure would have added California to the 64 countries around the world that have laws requiring labeling on genetically-engineered foods. Senate Bill 1381 would allow people who are concerned about their diets to have more information about what they eat, she said.

Opponents of GMO labeling – including major growers and biotech companies – have argued that genetic engineering is safe and labels are not necessary. The process is so common with certain crops, opponents argue, that labels would be required on most packaged food that is not organic. Most of the corn, sugar beets and soybeans grown in the United States are genetically engineered, and those commodities make their way into many common foods.

Evans’ bill was supported by organic farmers and environmental organizations, and opposed by major business interests, including grocers, retailers, chambers of commerce and non-organic growers. The same interests engaged in a multi-million dollar battle in California in November 2012 when voters rejected Proposition 37 to label genetically-engineered foods.

Evans’ bill fell two votes short of passage in the 40-member Senate. The measure is eligible for reconsideration Thursday.

The California Supplemental Nutrition Program for Women, Infants, and Children (WIC) is reminding vendors that the provisions of WIC Regulatory Bulletin 2014-03 dated April 4, 2014, regarding the implementation of new peer group criteria and a corresponding reimbursement system is effective June 1, 2014. This reminder is included in WIC Vendor Alert 2014-07.

WIC authorized vendors were mailed letters in April 2014 with their new peer group category assignment for their authorized store. These peer group assignments are based on information WIC currently has on file for each authorized store. Currently, MADR rates become effective on a Friday. However, for this initial implementation, vendor MADR rates will become effective on Sunday, June 1, 2014. After this initial implementation, subsequent MADR effective dates will be on a Friday.

Should you have any questions, please do not hesitate to contact Keri Askew Bailey or Tim James.

Former CGA Chairman of the Board W.R. “Bill” MacAloney died May 21, 2014, after a long battle with cancer.

Bill was President and CEO of Jax Markets, Anaheim, CA, and served as CGA Chair in 1999.

A celebration of Bill’s life will be:

Sunday, June 1, 2014
12:30 pm
Fairhaven Memorial Park & Mortuary
Historic Mausoleum/Rose Window Chapel
1702 Fairhaven Ave.
Santa Ana, CA 92705
(714) 633-1442

A reception will follow. The family has requested that “in lieu of flowers”, donations be made to the:

BeAware Foundation
13681 Newport Avenue, Suite #8
Tustin, CA 92780
Attention: Peggy Brooker, Director/President

Bill was an active philanthropist and received numerous awards for his service, leadership and philanthropy. His awards include Retailer of the Year from the Mexican-American Grocers Association (MAGA), the Golden Globe Award from Anaheim Union School District, Spirit of Life Award from the City of Hope, Humanitarian Award from the National Conference of Christians and Jews, Distinguished Community Service Award from the Anti-Defamation League of B’Nai B’rith and in January, 2009, The Founders Award for outstanding leadership and extraordinary achievement from the Friends of the Industry from the Food Marketing Institute.

Bill was appointed to Gov. Arnold Schwarzenneger’s Board of Accountancy (4 years), and he was on St. Joseph Hospital Board of Trustees and was Chairman of their Planning Committee.

Bill and his wife, Gwen, have been married 47 years and have resided in Villa Park for more than 35 years.

State Sen. Alex Padilla is locked in a tight four-way primary race for the California secretary of state job. As the only officeholder officially in the race, he’s seen as the guy to beat.

The biggest challenge to his campaign is coming not from the other top candidates, however, but from an industry that doesn’t have a dog in the race: plastic bag makers, and, boy, they are mad.

Padilla’s bill to ban single-use plastic bags in California is the reason why. If this legislation passes, the nation’s plastic-bag factories will lose a huge market.

The American Progressive Bag Alliance, the lobbying group for those factories, has targeted Padilla in a new ad campaign for television, radio and online that launched last week. The ads, on CNN and at Bagtheban.com, paint him as a “dirty” politician who only pretends to care about the environment so he can collect money from “special interests.”

Though such ruthless attack ads on one person are a staple of modern-day elections, it’s unusual for them to come from an industry opposed to a specific piece of legislation.

But there’s a lot at stake – millions of dollars in profit and jobs, though exactly how many is not clear.

More than 100 cities and counties have enacted some version within the last decade, and the results have been dramatic and immediate – usage of plastic bags has been cut in half from 30 billion to 14 billion.

Two previous attempts at a statewide ban since 2010 were successfully beaten back by pressure from the bag industry that cowed legislators. The crucial difference this year is that two pivotal Democratic senators voted against last year’s ban – Kevin de Léon and Ricardo Lara. Both signed on as co-sponsors. De Léon took a lot of grief for his vote from environmental advocates in his Los Angeles district after last year’s bill failed, and admirably responded by joining Padilla this year.

The bill passed a committee Wednesday and is scheduled to be heard in the Assembly’s Appropriations Committee this week.

Support in the Assembly isn’t as clear-cut, but it’s too close for comfort for the multimillion-dollar industry. You can tell because they’ve called in the big guns. The alliance has spent about $646,000 in the past two years on some of the best connected lobbyists – Mercury Public Affairs and Sloat Higgins Jensen, plus more on consultants including Steve Schmidt, a longtime communications specialist who has worked on big-name political campaigns.

Why so worried? Isn’t there plenty of market share left for plastic bags outside California? Maybe, but California is influential, Schmidt told me Friday, “in that what starts in California has a tendency to move to other places in the country.”

Whatever the industry spends to fight it, it probably won’t be enough to turn the changing tide of public opinion in California – and in the Capitol. During a hearing of the bill in Assembly’s Natural Resources Committee, supporters outnumbered opponents at least 3 to 1. The line of supporters was so that long most didn’t get time to say anything more than their names and who they represented.

Among them: Rite Aid, Target, the grocers and retailers associations, a number of California counties, Sierra Club, Heal the Bay and Californians Against Waste, the United Food and Commercial Workers, Chico Bag Co. and Command Packaging – a single-use plastic-bag maker planning to transition to making more durable bags.

The line for those speaking against the Senate Bill 270 was considerably shorter. They included a salesman for Crown Poly, a bag manufacturing company in Los Angeles, who said local bans were already cutting into the company’s business, an employee of Crown Poly who said she was afraid for her job, and representatives from companies that supply or recycle single-use bags.

Despite what the industry says about the public’s low regard for the bans, it has adapted with little outcry. The arguments against single-use bags just have not resonated, or are specifically addressed in this bill: That they can be reused (true, but not the 125 times required by reusable replacements that would be required to by Padilla’s bill); that a ban would hurt poor people (the fee for paper bags would be waived); that single-use bags can be recycled (a vast majority are thrown away); that reusable bags are germy (so, wash them); that paper bags, which would still be allowed for a 10-cent fee, are worse for environment because of how they are made (no one has to use a paper bag); and that this is all just a giveaway to the grocers who will get to pocket the 10-cent fee for paper bags.

The last is the most ridiculous claim – and the basis of the attack against Padilla. It’s true that the grocers’ group has given millions to legislators in the last four years, some of it – though not that much – directly to Padilla. It’s also true that those opposed to this ban – the alliance, bag companies and the American Chemistry Council – have spent millions fighting it and other attempts. That included an ad campaign targeted at the entire Legislature in 2010.

Indeed, Hilex Poly, the South Carolina company instrumental in fighting this and other attempts to ban single-use plastic bags across the country, has donated more than $115,000 to California legislators since 2011 – including a $3,900 donation to Padilla. If this bill were really about payback to special interests, it’s not paying out well for any of them.

Though a study commission by the bag alliance contends that grocers could make collectively between $189 million and $442 million a year by selling paper bags and reusable bags, data I’ve seen don’t bear that out.

Consider recent figures from Los Angeles County about the effects of its 2011 ban. The 73 stores affected, on average, made about $8,000 a year from the 10-cent fee on paper bags, the county reports. And that figure is likely to drop; before the ban, stores in unincorporated Los Angeles County supplied consumers with 200,000 paper carry-out bags a year, in addition to more than 2 million plastic bags. After the ban, the number of paper bags used fell to just 168,000 in 2013. That’s exactly the point of the proposed statewide ban – not to substitute one disposable bag for another, but to change behavior.

It seems to be working. No wonder the plastic-bag industry is worried.

Reprinted from The Sacramento Bee (5/18/2014)

Cashiers smiled as they welcomed customers to the Foods Co supermarket in East Oakland during the much-anticipated opening of the 75,000-square-foot store just over a month ago. Grocers showed off stacks of colorful fresh fruits and vegetables, the kind of nutritious foods residents said were impossible to find on the liquor-store shelves that were previously their only neighborhood option.

Then the Foods Co grudgingly began turning away some of their neediest shoppers.

The celebrated new store – like many others across the state – is caught up in California’s drive to clean up a federally funded program it administers, the Special Supplemental Nutrition Program for Women, Infants, and Children, which gives low-income pregnant women and new moms vouchers to pay for specific healthful food items, such as low-fat milk, eggs and fresh produce.

Stores must apply for state permission to accept the WIC vouchers from customers. But for the past three years, the federal government has placed a moratorium on new store applications in California because the state has been unable to adequately monitor existing stores amid complaints of price-gouging. Among the complaints were some that vendors offered WIC participants questionable incentives to shop at their stores and then inflated the price of WIC items charged to the state.

Profit-driven vendors reaped $90 million in unnecessarily high reimbursements in one year alone – a bill footed by taxpayers – according to the California Department of Public Health, which oversees the state’s WIC program. The troublesome vendors mostly consisted of small stores – like liquor stores and corner markets – which flooded the state with applications to become WIC vendors. Between 2007 and 2012, state-approved small vendors grew nearly 300 percent to 1,326 stores selling food to WIC customers.

Now, some grocers say, the lengthy process the state has undergone to shed bad apples in the food program has them hesitant to open new stores in California, particularly in poor communities where many residents rely on WIC vouchers.

In East Oakland, shoppers looking for deals at Foods Co sometimes end up having to use their WIC vouchers at higher-priced places, like the Chico’s Discount Liquor store 3 miles away.

“It will cost us all more money when people use their WIC vouchers at places like that, and you get less product for your voucher,” said state Sen. Holly Mitchell, a Democrat from Los Angeles who is among the state lawmakers who have pushed for an end to the federal moratorium.

A spokesperson for the U.S. Department of Food and Agriculture‘s Food and Nutrition Services department said California has made “significant progress” in cleaning up the state’s WIC program. As a result, the moratorium could be lifted this summer.

But much remains up in the air.

For a while, it seemed that every store wanted to participate in WIC. And it took California a while to grasp why.

Gaming the system

WIC is designed to supplement the diet of pregnant women and new moms and their young children with specific nutritious foods, such as vitamin C-rich fruit, eggs, milk, cheese and beans.

WIC is intended to create healthy eating habits by providing vouchers for nutritious foods, hosting educational classes and promoting the benefits of breastfeeding, all of which have long-term health benefits.

“You can’t get soda or potato chips” with a WIC voucher, said Laurie True, executive director of the California WIC Association, a nonprofit formed by directors of local WIC agencies. The California WIC Association drew attention to complaints of abuse in the WIC system and supports a moratorium in order to weed it out.

The sharp rise in stores looking to participate in WIC came mostly from small shops, such as liquor stores. “Certain types of store owners figured out how to game the system, and that was driving food costs up,” True said. “There were hundreds of these stores being approved, and the state was on autopilot approving them.”

Customers reported seeing significantly higher prices on milk and other products sold to WIC customers, while cash-paying customers were charged less for the same items.

As California’s economy recovered from the recession, True said the inflated food prices threatened to curtail the number of families WIC could serve.

1.4 million users

California’s WIC program runs on $850 million in federal funds and partners with infant formula manufacturers to receive another $250 million. Each month, food vouchers with a $60 retail value are sent to 1.4 million people enrolled in WIC in California.

As True points out, there is little incentive in the WIC program for participants to bargain-shop. WIC’s vouchers do not have a price affixed to them. Instead, they specify what a person can receive from a participating store, such as low-fat milk, specific brands of cereal like Cheerios or Corn Flakes, and whole grains like corn tortillas or oatmeal.

The store then tells the state the cost of items purchased, although there is a maximum reimbursement rate based on prices at similar stores. When more stores charged the most allowed, that inflated the average prices used when recalculating the maximum reimbursements.

Probing complaints

In 2011, with food prices rising and applications from stores soaring, California imposed a moratorium on new vendors while officials investigated complaints of inflated costs and fraud.

By early 2012, California attempted to lift the moratorium, but USDA officials ordered it to remain in place, saying the state needed better oversight and lower reimbursement rates. The USDA required California to reduce the maximum price small vendors could be reimbursed, an action that True said highlighted the extent of the price-gouging problem.

In the first year, the California’s WIC program saved $90 million.

Cassaundra Peoples and her fiance, Toby Evans, walked into Foods Co in East Oakland for the first time on a recent day and headed straight for the clerk to check the store’s WIC status. It didn’t stop them from shopping, but it did keep them from purchasing milk, produce and bread there.

The couple relies on WIC to feed their 2-year-old granddaughter, Zamiyah Gordon-Evans.

“We only have two carts,” Peoples, who works at the Oakland airport, said as the family walked out of the store. “If they took WIC here, we’d have three. And now we got to stop somewhere to get the WIC (items).”

Evans, who works at a Costco warehouse, said he didn’t understand why the state wouldn’t allow the East Oakland store to accept WIC.

“This is the right neighborhood for it,” he said. “A lot of people here need it.”

Ron Fong, president of the California Grocers Association, said many times customers blame the store for not accepting WIC, which is bad for business. He said it’s not easy for customers, particularly for those who take public transit, to make multiple trips for groceries.

Fong said grocery stores lose 15 to 30 percent of their business when they can’t accept WIC, since many customers buy other products in addition to voucher items.

And that makes grocery store owners hesitant to open new stores in California, particularly in low-income areas.

Eric Lindberg, co-CEO of Grocery Outlet, said his company has slowed its growth in California because of the moratorium.

“The worst part about it is that Grocery Outlet’s proposition is to sell groceries at lower prices than other retail,” Lindberg said.

Melody Gutierrez and Will Kane are San Francisco Chronicle staff writers.
E-mail: [email protected], [email protected]
Twitter: @MelodyGutierrez