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F I S C A L I M P A C T R E P O R T

SPONSOR Nunez

DATE TYPED 1/28/05

HB 455/aHAFC

SHORT TITLE Food Permit Fees

SB

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB328

SOURCES OF INFORMATION

LFC Files

Comments received from:

Department of Environment (NMED)

SUMMARY

Synopsis of HAFC Amendment

The amendment would make expenditure of funds in the Food Service Sanitation Fund subject to

legislative appropriation. This amendment addresses the concern raised by the Legislative Fi-

nance Committee (LFC) with respect to the original bill, which included a continuing appropria-

tion. With this amendment, the bill no longer makes an appropriation. The title should be

amended accordingly.

Synopsis of Original Bill

House Bill 455 would allow the Environmental Improvement Board to increase fees for issuance

and renewal under the Food Service Sanitation Act such that no fee would be less than $100.00

or more than $200.00 annually for a food service establishment with not more than a $25.00 in-

cremental increase per fiscal year. Currently, statute sets the minimum at $75.00 and the maxi-

mum at $100.00 annually for a food service establishment and sets no maximum rate of increase.

The bill would also appropriate funds from the Food Service Sanitation Fund to the Department

of Environment.

House Bill 455/aHAFC -- Page 2

Significant Issues

According to the Department of Environment (NMED), the $100 current limitation on food per-

mit fees allows the Department to collect about one third of the cost of permitting and inspecting

food service establishments in the state. All neighboring states presently have higher food per-

mit fees than what New Mexico is requesting. The City of Albuquerque, who inspects food ser-

vice establishments within the city limits, currently has a maximum permit fee of $350. Cur-

rently only one inspection per year occurs at restaurant establishments. One inspection per es-

tablishment per year in addition to the many temporary food permits that the Department issues

for special events such as county fairs, Indian Market, and the State Fair is not as protective of

public health as other states provide to its citizens and tourists, especially for high risk establish-

ments.

PERFORMANCE IMPLICATIONS:

According to NMED, HB455 will facilitate the agency’s capacity to collect additional fees, sub-

sequent to EIB approval, and will enhance future performance measures. For example, the cur-

rent performance measure for FY05 requires the Field Operations Division to perform one an-

nual inspection per year for each restaurant facility. However, in many instances this is not suf-

ficient, especially for the high risk facilities that are frequented by many patrons. Currently, due

to budgetary and staff constraints, NMED has not identified food facilities that pose a high risk

and require more frequent inspections than once a year. Additional fee revenues are needed to

implement this Risk Based Food Establishment Inspections Program, which will have a definite

positive impact by reducing the probability of serious food-borne illness outbreaks and provide

better protection to persons in New Mexico. Additional fee revenues will allow NMED to en-

hance the current program, provide greater food service personnel training, continue and provide

more public outreach programs, implement a high risk inspection program and antiterrorism pro-

tection.

FISCAL IMPLICATIONS

NMED indicates there are no recurring costs or additional revenues needed from general funds

directly occurring from the passage of this bill. A future increase of $25 in the permit fee would

generate approximately $160,000 in revenues per year.

ADMINISTRATIVE IMPLICATIONS: Additional revenues collected will allow for addi-

tional FTEs to assess, classify and conduct increased food safety and compliance inspections and

implement the High Risk Based Food Establishment Inspection program. Environmental Im-

provement Board approval will be required to raise the permit fees, which may take a few

months. In FY06, the assessment and classification of the facilities can be completed with in-

creased inspections of high-risk food facilities starting in FY07. Current staff will absorb the

additional tasks of review of the food establishments for risk classification. This will also pro-

vide administrative directive for implementing training and outreach education to the regulated

industry and public.

OTHER SUBSTANTIVE ISSUES:

According to NMED, in December 2004, NMED responded to a major food borne illness out-

House Bill 455/aHAFC -- Page 3

break in Alamagordo in which 93 people became violently ill. Additional revenues will aid the

Department to provide greater sampling and protection to better determine the source of the

food-borne outbreaks and prevent and eliminate the source, whether it is Salmonella, C.

Botulinum, Escherichia Coli, or Campylobacter. Inspecting and permitting all food service es-

tablishments in the state is both a performance efficiency measure and required by law. In-

creased fees would aid the Department’s ability to implement significant improvements to the

overall food sanitation program for public safety and protection and provide for additional in-

spections for high risk facilities.

NMED indicates that the food program must develop and implement a bioterrorism emergency

response plan to aide New Mexicans in the event of an emergency or terrorist attack. The addi-

tional funds in HB455 will support a high risk as well as an antiterrorist

program.

DH/lg