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Issues and Answers about Food Fees

Restaurants are already struggling and going out of business. This fee will only make the situation worse. It’s not a good time to be imposing additional fees.

Response: For a business that is open year round, the increase when fully implemented in two years, will cost approximately 40 cents per day. For schools, the increase will cost full pay students an additional 2/10ths of 1 penny per meal. While the recent media attention would have the public believing the restaurant industry is collapsing, the reality is that the public health districts have seen an increase in the number of licenses issued for calendar year 2009. Even in the best of economic times, food retail businesses often go under.

I own a small hot dog stand. Why should I being paying as much as a large retailer?

Response: In many instances the small hot dog vendor will take more time to inspect than a small restaurant. The fee is based on actual cost to provide the service, not on an establishment’s perceived ability to pay. It is neither practical nor the desire of the food fee workgroup to set more than the three-tiered fee structure proposed in this legislation. All types and sizes of businesses were represented on the food fee work group through participation of the Idaho Retailers Association.

I’m a member of a Not-for-Profit organization. We only do business once a year at the county fair. I think my organization, and others like it, should be exempt.

Response: The food fee work group, representing all sizes of food service establishments, met over the spring and summer of 2008. The membership chose not to exempt this group. They reasoned that if Fraternal, Benevolent and Non-profit organizations (FBNs) are exempted, the rest of the food establishments required to pay the fee would see an even larger increase, just to cover the cost of delivering service to everyone. The work group’s preference was to address these issues at a later date.

A couple of additional key points:

FBNs are exempt if they only operate one day per week, which allows them to operate over a full weekend within a week beginning on Sunday. Most bacteria that cause foodborne illness can begin growing in improperly handled food in as few as four hours. Therefore, a food service function that lasts more than one day could in fact put those consuming the food at risk of a foodborne illness. While the duration of time a facility operates could theoretically place the consumer at greater risk, there is another issue at play. Most food activities associated with FBNs are staffed by individuals who typically do not work in the retail food industry and therefore have no background or training in the preparation and handling of food for public consumption.

For most multi-day temporary events, health department inspectors will perform the inspection on the first day of the event in effort to ensure the operation is functioning within health and safety standards and more importantly, to provide a brief on-site food safety training. In reviewing a sample of inspection reports over the past few years, approximately 60% of FBN inspections found one or more critical violations of the Idaho Food Code. These involved practices such as improper holding or cooking temperatures, unsanitary food preparation surfaces, and hand washing/hygiene violations. This compares to a violation rate of about 40% found in traditional restaurant type food establishments operating year round.

A fair booth set up for one week should not have to pay the same as the large business open year round.

Response: The fee is based on the cost to deliver the service, not on the establishment’s ability to pay. A three-tiered fee structure was put in place in the proposal to adjust the fee based on the time it takes to perform an inspection. Temporary, Mobile and Intermittent (farmers’ markets) will pay the least and high risk food establishments, such as sushi restaurants, will pay the most.

Why should government organizations have to pay the fee?

Response: The proposal is supported by the Idaho Association of Counties, whose members have regulated kitchens in jails. The Departments of Juvenile Justice and the Department of Correction have no issue with our proposal for their facilities. The Idaho School Board Association has no issues with our proposal. The fee impact for the state’s approximately 600 schools would be passed on to full pay families at the cost of 2/10ths of 1 penny per meal.

Schools have to get two annual food safety inspections so they would have to pay twice.

Response: The second school inspection is a requirement of the USDA school lunch program and has nothing to do with Idaho Code or the public health districts. The public health districts offer the second school inspection for a fee, but the schools can look to alternative resources to meet the second school inspection requirement.

As the owner of a food establishment I already pay taxes, I shouldn’t have to pay for this service.

Response: No other fees for services offered by public health districts are set below the actual cost to deliver the service. The only exceptions are Food Establishments, Day Care and Public Pools. Even when fully implemented the proposed legislation discounts the fee to 67% of the FY 2008 actual cost of delivering the service. The 33% discount is the portion of the public health district budget comprised of state and local funds.

An increase of 208% is just too big. Why so much, so soon?

Response: When fully implemented the increase is about $135 dollar a year or 40 cents a day for a business operating year-round. It will also take two years for the increase to be fully implemented.

All other public health district fees are adjusted annually to keep pace with inflation. The only exceptions are those fees set in Idaho Code, which are the ones for Food Establishments, Day Care and Public Pools.

The public health districts were able to offer this service free for decades and then most recently for the $65.00 annual fee. What changed?

Response: Federal contracts administered primarily through the Department of Health and Welfare have not kept pace with general inflation or the growing demand for services. These contracts account for 42 percent of overall health district budgets. This growing shortfall has been brought to the attention of JFAC. The direct impact in the past 3 years has been a reduction of 54 FTEs or 8% of the local public health workforce. To put this into perspective, when the Governor’s staff recently mentioned having to cut 100 FTEs from state government that equates to less than .4% of the total workforce.

We recognize that all public agencies are facing budget deficits, but don’t you think it’s unfair to try to balance the public health district budget on the backs of food service establishments?

Response: Even when fully implemented over two years, the fee proposed in this legislation would cover only 67% of the actual cost to deliver the food safety program based on FY 2008 data. When fully implemented in two years it will cover even less.

Through our negotiation process, the public health districts have agreed not to seek complete reimbursement for the cost of providing the food program. All food establishments are receiving a discount proportional to the state and county contribution to our overall budget. This exception is provided to no other recipients of public health services (except Day Care and Public Pools as mandated in Idaho Code).

It is important to keep in mind that the cost of responding to and controlling a foodborne illness outbreak far exceeds the revenues generated by the food program. When a foodborne illness outbreak occurs, public health’s response is 100% state and county funds. The cost to public health can easily exceed $100,000. A study from a foodborne hepatitis A outbreak in Denver concluded the cost to public health for controlling the disease was $1,043,674. This does not include the cost to the business community, lost productivity or health care costs associated with the foodborne illness.

Some public health districts have recently built extravagant offices, they don’t need additional funding.

Response: The cost per square foot for the newer public health buildings are on the lower end of the spectrum when comparing cost to other recently built public facilities.

For example, Public Health District 1’s Hayden Building:

The base cost per square foot of the Hayden building was $106.34. With the contract alternates added, the cost was $116.84 per square foot.
The Hayden building consolidated programs that were located in the old headquarters and renting in four other buildings.
The building was built to house all of the programs from the five rental locations with 15 % expansion for future growth.
Prior to moving to the new facility the annual rent expense for the four locations was $107,886, plus $4,420 for storage space rental - total $112,286/yr.
The annual principal and interest payments on the lease/purchase are $268,284. The annual principal paid in the first years is approximately what we were paying in rent. At the beginning the equity interest was 38%.
The Hayden building is more centrally located for Kootenai County clients, includes community meeting rooms that are well used, and provides a back-up emergency operations center for the county with a back-up generator.
Landscaping for the building was paid for with a federal grant to highlight the efficient use of native plants and water conservation by recycling storm water.

The public health districts are sitting on a mountain of cash. That money needs to be drawn down before we begin imposing higher fees on struggling businesses.

Response: While it appears as though the health districts are flush with cash, there are reasons for it that can be explained. At the end of FY 2008 the Health Districts held a total of $18.1 million in cash. Of that amount, 1.3 million dollars was preparedness pass-through funds that do not belong to the districts.

Another 8.7 million dollars of cash was in the district operating funds, those used to pay daily expenses, for a total of 1.9 months of operating cash. It is important to note that the health districts do nearly 21.2 million dollars in contract work annually. Monthly billings are submitted to the Departments of Health & Welfare and Environmental Quality for work accomplished; however, payment for those services can be delayed on the accounts receivable books for 60 days or more. This means that we must perform the work and cover the expenses with our cash flow account before we are reimbursed. In the meantime the operating cash flow funds are needed to pay on-going day-to-day operating expenses. Cash availability of 1.9 months is not excessive according to past opinions provided by the Legislative Audit Office.

Another 8.1 million dollars are restricted cash held in reserves by local boards of health. Those funds are held for capital expenditures such as new building construction, building remodels, equipment replacements such as automobiles and information technology items, as well as for public health emergencies that would not be covered in a balanced budget, such as an unexpected large-scale communicable disease outbreak investigation.

Health District 1 and 7 have significant long-term debt incurred after completion of needed new building construction. District 3’s Canyon County facility is over 70 years old with serious maintenance and repair issues. That combined with the substantial population growth and demand for public health services has forced them to find an alternative location. District 3 is in the process of purchasing land for construction of a new (45-50 thousand square foot) building. The design phase has begun, with construction to begin late in calendar year 2009. As that process develops their restricted reserve account will be depleted, plus they will have substantial long-term debt in the form of mortgage payments. To fund buildings of this size, mortgage payments can top $25,000 monthly or $300,000 annually.

Reserve accounts are not slush funds.

The public health districts are only out looking for reasons to shut down a business and don’t really care about helping out the business owner.

Response: This simply isn’t true. In 2008 the public health districts closed or suspended 20 food service operations out of approximately 9,000 facilities (2/10ths of 1%). Facilities are closed if they are operating without a license. Permits are suspended for imminent health hazards and remain suspended until the health hazard is corrected. Imminent health hazards include things such as no hand washing sinks, sewer backed up into the facility, no water, or a foodborne illness outbreak. There is no monetary fine for violating Idaho Food Code. The health districts are delegated the responsibility of enforcing the Idaho Food Code. We strive to balance that responsibility with education and enforcement.

The public health districts provide information to the media which then publishes our violations and that is bad for our businesses.

Response: It should be the goal of every food establishment to have no violations. That said, the results of food establishment inspections aren’t secret, they are public records. The versions that appear in local newspapers are something the media asked for. We could stop providing the less specific summary results, but we must consider the media’s right to publish whatever they want, which could include the more specific observations noted on the inspection reports by our health inspectors.

^1.Rosenthal, P. (2003). Cost-effectiveness of Hepatitis A vaccination in children, adolescents, and adults. Hepatology, 37(1), 44-51.