FISCAL NOTE

Date Requested: January 12, 2018
Time Requested: 11:24 AM
Agency: Agriculture, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
1884 Introduced HB2566
CBD Subject: Agriculture


FUND(S):

Various

Sources of Revenue:

Special Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The purchase threshold of 20% locally-sourced fresh produce for state-funded entities established by HB2566 will have some impact on the costs of Department of Agriculture's Cedar Lakes Camp and Conference Center. However, as noted below in the Memorandum section, there could be a much greater impact on agencies with a higher ordering volume since there is potential for a 10-15% cost increase.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 646 646
Personal Services 0 0 0
Current Expenses 0 646 646
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    In calendar year 2017, the Department of Agriculture's Cedar Lakes Camp and Conference Center ordered approximately $21,500 in fresh produce for guest food service. If 20% of these expenditures were to be made to local producers, at an estimated 15% cost increase over established industry sources, the increase in cost would be $646/year (from $4,312 to $4,959).
    
    A high tunnel has been erected on-site at the Cedar Lakes facility, which in 2017 provided approximately two (2) months of fresh vegetables for food service at this location, reducing the demand and expense of obtaining fresh produce from external vendors.



Memorandum


    The potential cost increase is minimal for the Department of Agriculture due to its relatively small food service operations. On a statewide scale, however, the potential increase in cost for institutions with higher ordering volumes would be significantly greater. Institutions may initially have difficulty meeting the 20% requirement immediately, due to lack of WV growers with sufficient in-state output to meet demand, variety of "in season" produce of equal quality to outside sources, and processing and/or distribution infrastructure. In other instances, institutions may already have ordering constraints or regulations in place that conflict with this legislation, such as school food programs which are required to order a certain amount of federally-sourced products (including fresh produce through the USDA-coordinated Department of Defense Fresh Fruit and Vegetable Program [DoD Fresh]).
    
    Aside from logistical concerns, there are areas of vagueness in SB2566, including an unclear definition of what is included in the term "fresh produce"; no guidance on how the 20% requirement will be monitored or self-reported; no central registry of local producers for agency reference; and lack of specific language for how institutions who grow food products on their own premises (in high tunnels, for example) can offset the sourcing requirement (that is, by volume or fair market value of self-grown products).



    Person submitting Fiscal Note: Alan Clemans, on behalf of Sandra Gillispie, CFO
    Email Address: sgillispie@wvda.us