The Department of Pesticide Regulation is pitching lawmakers with a dramatic increase to the mill assessment to steer off insolvency and finance a steady stream of new programs at the department while boosting its enforcement authority.
Democrats eager to shift more costs to the regulated community amid a deepening budget deficit are falling in line with the administration’s proposal. Yet farm groups are crying foul over the process, arguing the proposal is circumventing policy debates by tucking the ambitious change into the complex and rapidly evolving budget negotiations.
The Newsom administration has been pushing to overhaul the pesticide sales tax for several years, and the issue came to a head in a Senate budget subcommittee hearing last week.
On the same day, Senate Democrats released a series of emergency actions to pull back another $17 billion in current spending beyond the governor’s initial budget proposal in January. Senate President Pro Tempore Mike McGuire called the shortfall “real and serious” and said the state must move quickly and decisively to make the necessary reductions. While McGuire asserted the Legislature would not increase taxes on Californians, the plan would approve Newsom’s ramp-up in the mill assessment—raising the state’s pesticide sales tax by 36% and increasing the Department of Pesticide Regulation's (DPR) budget by $33 million over three years while adding 117 new positions.
“All of these fee costs are on the back of agriculture,” Gail Delihant, senior director for governmental affairs at the Western Growers Association, told the subcommittee. “With every single department in this state that we have to hand a piece of paper to, we have to pay a fee.”
Delihant also criticized a 40% fee increase on water projects that the subcommittee was considering.
Nicole Quinonez, Household & Commercial Products Association“These fee increases are eating into everything,” she added. “It's causing the small farmer and the medium-sized farmer to completely go out of business.”
Chris Reardon, who directs government affairs at the California Farm Bureau, stressed that the mill is a tax paid by farmers. To remain competitive in a global marketplace, most of those growers will not be able to pass on the costs to consumers, and those who can will be asking for more from “families who struggled to pay constantly for increasing food prices.” Reardon has repeatedly reminded lawmakers that “there hasn't been one minute of policy discussion” on the administration’s sustainable pest management (SPM) agenda, which has become a core component of DPR’s mission and a driving factor behind the mill increase.
More than a year ago DPR released a general strategy for eliminating the use of certain controversial pesticides by 2050 while improving the registration process for new products. It has yet to name the pesticides at the center of the roadmap.
“We still aren't clear about what this really means, to be honest with you,” said Reardon. “Let's fix what we know we have to fix within the department before we create a new program.”
He urged lawmakers to focus first on balancing DPR's budget, identifying a long-term financial fix and streamlining the registration process before advancing the ambitious SPM agenda.
While the budget item would significantly boost the mill over a three-year span, provisions within it allow for DPR to increase it further in subsequent years without requesting permission from the Legislature—a move that cedes the subcommittee’s authority, according to Taylor Roschen, a lobbyist for the firm Kahn, Soares & Conway representing the California Fresh Fruit Association, California Citrus Mutual and the Avocado Commission. She called for DPR to return to the building with a comprehensive proposal before asking for more money, which would enable an open and public discussion on the policy.
Roschen found that just 10% of the proposed new positions would deal with registration and reevaluation and noted that DPR currently takes up to five years to register a product.
“We see a disconnect between the department's priorities and functions and what they've proposed,” she said.
Supporting that sentiment was Dennis Albiani, president of the lobbying firm California Advocates, representing the California Seed Association, California Pear Growers Association, California Bean Shippers Association and several agricultural organizations.
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“It really needs the scrutiny of what elements are necessary, what elements are important for this year and what ones are luxuries going out,” said Albiani.
He argued that California already leads the world with integrated pest management through the University of California and asked why the administration would duplicate those efforts, “especially in these challenging budget times.”
Manufacturing companies for residential chemical products account for about half of the mill revenue DPR raises. They shared similar frustrations at the hearing, represented by the Household & Commercial Products Association, whose members produce disinfectants and pet care products. The association requested more accountability from DPR’s effort to improve the registration process and urged lawmakers to set statutory deadlines. Lobbyist Nicole Quiñonez explained that a five-year check-in has worked well in negotiating fees and timelines at U.S. EPA.
Republican Senator Brian Dahle of Bieber leveled the industry criticism at DPR Director Julie Henderson.
“If we're going to up the rate and we're going to give you the positions you need, they need some guarantee that in some timeframe they're going to actually get these new pesticides,” fumed Dahle. “I would like to see the Legislature put some benchmarks in there.”
Henderson recognized the transition away from higher risk pesticides “is not something that's going to happen overnight” and responded that DPR does have certain accountability metrics built into its process. The first priority is to work through a backlog of products for registration. DPR is also pledging to evaluate applications within 30 days of submission and to establish predictable and expedited timelines.
“Some of what bogs down the process is litigation,” said Henderson. “We recognize that's something we're not ever going to be able to control.”
She hoped the litigation would be less intense over time as the crop protection tools become safer and more sustainable. DPR’s ongoing effort to shift the registration process to a digital format should enable more transparency and visibility, she added.
Henderson defended DPR’s push for raising the mill without a legislative cap. The added flexibility, she reasoned, would allow the department to adapt to the additional responsibilities more easily. She assured the lawmakers that any changes would still go through the Legislature’s budget process as well as the agency’s public regulatory process.
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