Utah Food Industry Newsletter

January, 2012

Wed, 25 Jan 2012 07:47:56 -0700

Fireworks Win for Retailers
After many, many month of work with the Fire Prevention Board on the rules for sale and display of aerial fireworks, we were able to get the Board to adopt a more flexible standard. The key accomplishment for retailers is that the stores will no longer be required to dedicate an exclusive employee to supervise the fireworks display and the fireworks will not longer be required to keep aerial fireworks physically separated from consumers. Stores will now be able to use any of the following 3 methods to comply with the rules:
Method 1: Provide constant visual supervision by direct line of sight by a designated store employee where the aerial display is not more than 25 feet from the designated employee’s workstation. (Note: this employee could also be a cashier provided the aerial display is within his/her direct line of site)
Method 2: Provide constant visual supervision by direct line of sight by a designated store employee where the aerial display is not more than 40 feet from the designated employee’s workstation if the devices are restrained by using at least one of the following methods:
o The aerial devices are placed in a bin or bins that meets the definition stated in Section 2.3.
o The aerial device shall have an additional layer of packaging requiring that the additional layer of packaging be punctured or torn to gain access to the fuse cover.

Method 3: Place the aerial devices in an area that is physically separated from the public so that the customer cannot handle the aerial devices without the assistance of an employee. This is the same standard from last year.
The same signage requirement will continue to exist as well as the requirement that the aerial devices be placed in a location that gives the customer access to the aerial devices just before the customer checks out and exits the store. If you have questions about the rules or encounter any difficulty with a fire marshal, please contact Dave Davis or Kate Bradshaw

Legislative Overview: Key Issues to Watch
Main Street Fairness
Your Association staff has been working closely with State Legislators for the pass several months to put together a Utah specific state strategy for addressing Main Street fairness. While a federal solution still makes the most sense we can all agree that relying exclusively on the U.S. Congress to act is a dicey proposition at best. Therefore, for the sake of Utah based retailers, the Association will be introducing two bills to address the inherent inequities between on-line retailers and brick and mortar retailers.
The first bill will address required notices that any online retailer must provide if the retailer is not going to collect and remit the consumer’s sales tax. The notice would inform the consumer that they have an obligation to pay the use tax (the same amount as sales tax) when they file their tax returns and the end of the year.
The second bill would more clearly define nexus and make it clear that if an online retailer has manufacturing facilities, distribution facilities or employees in Utah that the retailers by definition has nexus. Once nexus has been established then the retailer will be required to collect and remit sales tax. Not only will these two bills provide some degree of fairness in Utah they will also serve to spur on the conversation at a federal level.

Pharmacy Audit Standards Bill – Let’s Be Reasonable…
The issue of pharmacy audits has dominated the last 12 months for many Utah pharmacy retailers. After going through an attempt by the Medicaid program to claw back significant dollars based on clerical / scrivener errors, retailers a justifiably “gun-shy” about future pharmacy audits. Furthermore, the federal mandate that States use outside contractors to conduct audits has only fueled our membership’s concerns over this issue. Based on the foregoing your association staff has been working hard with Rep. Evan Vickers (R-Cedar City) to put together a pharmacy audit standards bill.
This bill will address appropriate procedures for entities that conduct audits of pharmacy records. The bill will ensure that reasonable notice is provided to ensure that the audit does not interfere with the location’s operations and to ensure that appropriate procedures are followed when conducting an audit. Our members operate the lion’s share of retail pharmacies in the state of Utah. We understand that there is a legitimate place for pharmacy audits in order to maintain the integrity of payment systems. Our members also believe that reasonable standards should be maintained during the course of these audits in order to protect the interests of all parties involved.

Association Addressing Underground Storage Tank Inspections
The association staff will be supporting a bill that will change the underground storage tank (UST) tagging system in Utah. Currently, a state inspector is required to tag every UST that is in compliance and tanks that are out of compliance are not tagged. This has created some confusion when tags are lost or destroyed in the normal course of business. The proposed bill would reverse this system and use a “red tag” approach that would require than an inspector only tag those tanks that are out of compliance. This red tagging system is not only more common across the country, but both regulators and retailers prefer this type of system. The bill is currently being drafted by the Office of Legislative Research and General Counsel and we anticipate it will be introduced during the early part of the 2012 session. Stay tuned for more details.

Other Key Issues to Watch:
The joint Government Relation committee is tracking a long list of bills this session, but here are a few that have grabbed our attention very early in the process:
• HB 44 by Rep. Ray. Increases penalties for retail theft with multiple offenses.
• HB 54 by Rep. Pitcher Rural pharmacy mail order bill. Would bar health plans or PBMs from requiring mail order prescriptions in rural areas of state.
• HB 61 by Rep. Kiser would require insurance licensing to sell warranties and/or insurance policies for portable electronics.
• SB 34 by Sen. Anderson. Would prohibit federal regulation of an agricultural product that remains in Utah after it is made, grown or produced in Utah.

Feel free to contact Dave Davis or Kate Bradshaw if you have questions about a bill or issue.

Follow Us During the Session on Twitter
The association staff will be providing ongoing updates of events and key issues during the legislative session via Twitter. Please take the opportunity to follow us on Twitter at @UtahFood. This will enable our members to keep up on key Utah legislative happenings without cutting into your very busy daily schedules. For more information feel free to contact Dave Davis or Kate Bradshaw.

Dues Statements and Updated Contact information
Each of you should have received your 2012 association dues statement. Each of these statements should include contact information for your organization. We would ask that all members review their current contact information and provide updates where appropriate. Also if there are additional individuals within your organization that you would like to receive communications from the association please let us know so we can add them to our mailing lists. Finally, please take the opportunity to share the value of association membership with members of the industry who may not be participating with us. The Association has a new Director of Business Development who can quickly follow up on any referrals that members provide. Please contact Don Mathews at 801-512-9141 or dmathews@utfood.com if you have key contacts for companies not participating with our Association.

December, 2011

Wed, 21 Dec 2011 14:14:19 -0700

Thank You and Happy Holidays
The Association staff would like to thank each of you for your support during 2011. Without this continued support we would not be able to provide the government affairs and other services that are so important to our industry. We have achieved many legislative and other victories during 2011 that have provided significant benefits to your organizations as well as for the retail organizations that do not participate with our Association. We again thank you and invite each of you to share with your friends and colleagues, in the retail community, the importance of participation in your state trade Association. Your endorsement and encouragement will do more to expand our membership, and thus our voice, than a thousand calls from sales staff.
As a staff we collectively express our gratitude for our opportunity to associate with each of our members and wish you and your families a Merry Christmas and Happy New Year.

Legislative Overview: Standing on the Threshold of Another Important Session
The annual session of the Utah Legislature is just around the corner. The legislative work will get under way January 23rd and run for 45 days. There are already rumors that a record number of bill requests have been filed. The legislative session in Utah is more of a sprint than a marathon and thus preparations have been underway for many months on a variety of bills. The budget situation is much improved over the past few years, but that doesn’t mean there won’t be plenty of wrangling over the limited revenue. The Association staff will be tracking a number of bills and revenue appropriations.
A joint Government Relations Committee from the Utah Food Industry Association and Utah Retail Merchants Association will meet weekly during the legislative session with the Association staff to review newly filed bills and discuss policy positions. Hold on for what promises to be another wild ride.

Election/Candidate Update: 2012 Promises to Be a Fascinating Election Cycle
A number of factors are bringing 2012 election fervor to Utah earlier than usual. State law prohibits legislators from soliciting campaign funds during the legislative session. In addition, party caucus meetings will fall in mid-March, which doesn’t leave candidates much time to raise funds between the end of the legislative session and caucus night. Some legislators are choosing to resign in order focus on campaigning and fundraising. Sen. Dan Liljenquist (R-Bountiful) resigned last week in order to challenge Sen. Orrin Hatch (R-UT) and Rep. David Clark (R-Santa Clara) resigned this week in order to focus on his campaign for the 2nd Congressional District. Other legislators rumored to be weighing the decision of whether to resign include: Gubernatorial candidate Rep. Ken Sumsion (R-American Fork), 4th District candidate Rep.Carl Wimmer (R-Herriman), and 4th District candidate Rep. Steve Sandstrom (R-Orem) and Salt Lake County Mayor candidate Sen. Ben McAdams (D-Salt Lake City).
Redistricting has also created a lot of early 2012 election buzz. Congressman Matheson (D-UT2nd) shocked nearly everyone when he announced he would run for election in the new 4th District rather than re-election in his current 2nd District seat. A number of candidates are making the bold move of running for congressional seats outside of the district in which they reside. At the Congressional level, it is not a requirement that an office holder or candidate live in the district they represent, just the state they represent. It is somewhat of an unusual move to run for a district other than the one in which a candidate resides, but Congressman Jason Chaffetz (R-UT3rd) was able to do so successfully two years ago. The election scene is guaranteed to continue to heat up in the New Year as candidates continue to come out of the woodwork for federal, state, legislative and local races.

Your Association Welcomes a New Director of Insurance Services
Your Association continues to grow. With new growth sometimes comes the growing pain of staffing changes necessary to accommodate expanded operations. Long-time staff member Kathy Diston has left the Association, creating an opening for Craig Cheney to come on board as the new Director of Insurance Services.
Craig Cheney has worked with employers in the business services industry for over 14 years. His specialty is working with business owners to design and manage company sponsored and discretionary benefits, including group health, vision, dental, vision, life and disability insurance. Craig has also worked with business owners to manage workers compensation risk and other commercial business needs.
Most recently, Craig worked with Benchmark Insurance Agency as an Associate Vice President. The strategic partnership between Benchmark and the Utah Food Industry Association means that the Association staff and members know Craig well as he has worked with many members on their insurance needs for the past year. Now Craig will take over as the Director of Insurance Services with a focus on meeting the insurance needs of our membership.
Craig grew up in Sandy and graduated from Brigham Young University in 1994 with a degree in Business Finance. He currently lives in Draper with his wife, Capri, and their four children. Craig enjoys coaching his kids, playing golf and playing softball.

Association Working on Bill to Address Underground Storage Tank Inspections

The Association staff, in conjunction with several of our members that operate fuel facilities, are working toward changing the underground storage tank (UST) inspection process to work better for businesses and regulators alike. Currently, a state inspector is required to tag every UST that is in compliance and tanks that are out of compliance are not tagged. This has created some confusion when tags are lost or destroyed in the normal course of business. The proposed bill would reverse this system and use a “red tag” approach that would require than an inspector only tag those tanks that are out of compliance. This is the more common approach across the country and creates less confusion with fuel haulers, fuel center operators and state regulators. While this may seem like a small change it will provide for smoother operations and a better relationship with state UST inspectors.

Battle for Main Street Fairness Continues at the Federal and State Level

While the battle to create a level playing field in the area of on-line sales tax collection rages at a federal level, the Association staff continues to examine options at the state level. The fundamental idea at issue here is whether or not on-line sellers should be required to collect and remit the sales tax that Main Street brick and mortar businesses are currently required to collect and remit. Requiring this collection would not only generate additional revenue at the state level by enforcing collection of a tax that consumers are already obligated to pay, but it would also remedy an unfair pricing advantage that on-line retailers have been exploiting for over a decade. While members and staff have acknowledged that the best solution to this issue is a federal solution, your Association staff continues to explore state solutions that will provide some modicum of relief for our members in Utah. Stay tuned during the legislative session for more information regarding the Association’s efforts to craft a state specific solution. If any member has input regarding this issue please feel free to contact Dave Davis, President or Kate Bradshaw, Vice President at the Association offices.

The Gas Tax That Will Keep Giving and Giving and Giving…

The Salt Lake Chamber of Commerce is pushing to increase the tax on fuel in an effort to address the deterioration infrastructure of roads in the state. The Association agrees that the transportation infrastructure in Utah must be addressed with additional funding in order to ensure the continued flow of goods within and across our state. The Association further agrees that, because the tax on fuel is dedicated to transportation infrastructure, raising the gas tax is an appropriate way to fund this important obligation. However, in addition to a gas tax increase the Salt Lake Chamber is advocating for indexing the gas tax so that increases in this tax would be automatic and would require no further legislative action.

The Association finds the indexing approach to be bad tax policy and fundamentally flawed. By indexing this tax the Salt Lake Chamber is proposing that all political pressures and dynamics be removed from the tax increase process. Legislators would in essence create a taxing scheme that would provide for perpetual tax increases without any accountability associated with raising taxes. While the Association will continue to fight for adequate transportation funding to ensure that all of our members can move goods safely and efficiently through our state, we will oppose efforts to create automatic tax increases that are devoid of political accountability.

Bag Taxes and Bans: Association Calls for Utilization Data

As has been reported in previous newsletters, Salt Lake City (and there are rumblings in Park City) is looking at options to address the utilization of paper and plastic “one time use” bags. Your Association staff has been in contact with leadership of the Salt Lake City Council and begun discussions regarding how we can work together on this issue to fashion a potential solution that can work for the city and businesses alike. Salt Lake City has asked if we might be able to compile some data regarding the utilization of plastic, paper and reusable bag as well as recycling efforts in our member’s stores. Any data that your operations may be able to provide in any of these areas would be extremely helpful. Members can submit data to Dave Davis at ddavis@utfood.com. All data submitted will be held confidential and de-identified before utilization. Thank you in advance for your help with this research project.

Intermountain Retailer: Extra, Extra Read All About It
The Association staff is putting the finishing touches on the 2012 Intermountain Retailer. Look for your copy to arrive the first week of January. Each member and/or store location will be sent a copy of the directory. If you would like additional copies, please contact Kate Bradshaw at kbradshaw@utfood.com.

November, 2011

Wed, 30 Nov 2011 16:11:00 -0700

Association Forms Alcohol Policy Committee
The Association has formed a joint Utah Food Industry Association and Utah Retail Merchants Association Alcohol Policy Committee to study and make suggestions on desired political changes with regard to the sale and distribution of alcohol within the State. Alcohol policy within Utah has always been a delicate dance due to the dominant religious culture. However, recent developments with regard to a legislative financial audit which revealed mismanagement and possible criminal malfeasance by the former Executive Director Dennis Kellen and the release of a Legislature-commissioned study on alcohol which recommended broader use of retail principles, has created a unique environment to review the current system and to suggest changes.
The following Association members have agreed to serve on the committee: Bob McIntyre (Walgreens), Jim Davis (Davis Jubilee), Kevin Fitz (AFS), Trish Weatherman (7-Eleven), Marsha Gilford (Smith’s), Hans Khote (Maverik), Kenny Kimball (Smith’s), Mike Brennan (General Distributing), Dean Peterson (Harmons), Tracey Hester (Target), Russ Neilsen (7-Eleven), Jeff Twiss (General Distributing).
If you have any questions or suggestions with regard to alcohol policy, please contact Dave Davis or Kate Bradshaw.

State Budget Update: Are Happy Days Here Again?
The Governor will shortly be releasing his proposed budget for the coming year. For the first time in a few years, the budget outlook is positive. Early estimates show State revenues up by $400 million over last year ($128 million from one-time revenue sources and $280 million from on-going revenue sources).
While the positive revenue is fantastic news, the $280 million in on-going revenue will likely be quickly consumed by growth and inflation in existing State programs. For example, 12,500 additional school children will be entering the public school system next year. The Legislature will also have to consider how best to address $52 million in structural deficits from last session caused by funding on-going programs with one-time funding during the worst of the recession. The State is also nearing its bonding cap, which means the additional one-time funding will be applied toward building and road projects so as to preserve room within the bonding cap. Still this is much better news than what we have reported in past years. Let’s all hope for a busy holiday retail season so those estimates continue to grow.

Provo City Council Considering Significant Increases in Business Licensing Fees

Retailers that have operations within Provo City limits may be subject to a substantial increase in business licensing fees. Utah State law requires cities to base business license fees on the actual costs of regulating a business. The State law essentially creates three basic cost areas on which a city can base its business license fee. These areas are: Administrative costs, Disproportionate Service costs and Enhanced Service Level costs. The City Council retained a consultant to divide businesses into classes and determine the disproportionate service cost for each class of business. The consultant’s report was provided to the Mayor and Council and concluded that there was a significant disproportionate cost associated with: large grocery ($15,327 per location), big box retail ($13,053 per location) and convenience stores ($2,540 per location). In most cases the “disproportionate costs” were associated with police calls to address perpetrators of retail theft in our stores.

Based upon the consultant’s report the Council’s current proposal is to pass a portion of this cost on to the businesses in the form of an increased business license fee. This proposal would increase the fee over the course of the next 5 years as follows:

Type of Business Current Business License Fee Business License Fee in 2017
Large Grocery $475 $4,008
Big Box Retail $475 $3,663
Convenience Store (Gas) $475 $2,768

The Provo City Council will consider this proposal and vote on its implementation this Tuesday, December 6, 2011. The hearing will be held at Provo City Hall located at 351 West Center Street, Provo, Utah. Any retailers that are concerned about this significant increase please contact Dave Davis or Kate Bradshaw for further information regarding a plan of action.

For an executive summary and staff report of the process go here:
http://provo.org/current_issues.licensing.html

For the full consultant’s study go here:
http://www.provo.org/userfiles/downloads/current_issues/business_license_fee_study.pdf

Association Staff Meets with the Mayor’s Office and Salt Lake City Council
Regarding Plastic Bags

Recently, the Salt Lake City Council listed “plastic bag ban” as an agenda item for the Council work session. Association staff immediately contacted Council staff to inquire why our membership was not included and notified of this discussion item. As a result the item was pulled from the Council work session agenda. Association staff then met with both the Mayor’s staff responsible for sustainability as well as the SLC Council Chair and Vice Chair. From these meetings it became clear that Salt Lake City (both the Mayor and the Council) would like to see retailers doing more to promote recycling and the use of reusable bags. However, after a significant amount of discussion, both the Mayor’s office and the Council Chairs better understood the implications of plastic bag bans. Both groups committed that they would not go forward with any proposal without including our Association in the discussions.

While the likelihood of this proposal spreading statewide is minimal it will continue to be a significant issue in Salt Lake City and Park City in particular. The Council and Mayor’s office also requested that we provide some data regarding use of reusable bags in stores and recycling data. Any member that may be able to provide some information in the area of either reusable bags or recycling please contact a member of the association staff.

Fireworks Update
The Association staff has provided several updates on aerial fireworks since they were made legal for sale and use in the State earlier this year. There continues to be on-going legislative and rulemaking issues and efforts with regard to the aerial fireworks.
Rulemaking:
Earlier this year the Fire Prevention Board adopted rules for the sale and display of fireworks within retail stores. The rules were somewhat onerous for retailers to comply with because they 1) required the aerial fireworks to be physically separated from other products and 2) required a dedicated store employee handle the fireworks for the customer among other requirements. At the end of the July fireworks season, which passed without any major fireworks incidents, the Association staff requested the Fire Prevention Board review the rules for sale and display and consider the financial impact to retailers as compared to safety gains.
The Board agreed to review the rules at its November 8th meeting. Mike Oxborrow from Smith’s, Darin Peirce from Macey’s, Julie Ward from Harmons, and Jerry Farley from TNT Fireworks joined with the Association staff in testifying about the high cost to retailers created by the rules without any measurable safety gains for the customer. After lengthy testimony from retailers and fire professionals, the Board voted to create a workgroup to further study the issues. This request is somewhat frustrating from a retailer perspective, as we have already spent a good portion of the year engaged in a workgroup with fire personnel drafting rules, which were ultimately not adopted by the board after all our hard work. This will be an ongoing issue as your Association staff work to ensure retailers are fairly treated by the Fire Prevention Board. We will continue to explore other options for fair treatment on this issue as well.
Legislation:
Aerial fireworks were a big hit with Utahns this year. In fact nearly $8 million dollars of the new fireworks were ignited during July 2011. Unfortunately, the fireworks were so popular they created a significant noise problem that frustrated city officials and public safety personnel who couldn’t keep up with the noise complaints. Rep. Jim Dunnigan (R-Taylorsville) has introduced legislation for the 2012 Session that would return the firework discharge window back to the time frames that existed prior to the passage of last year’s fireworks bill. If passed, the bill would restrict the dates fireworks could be discharged to 3 days before and 3 days following the July 4th and 24th holidays between the hours of 11:00 am and 11:00 pm. In exchange for agreeing to return to a more limited discharge window, retailers will be able to start selling fireworks on June 23rd, three days earlier than the current law allows. We hope these additional sales days will alleviate some of the inspection problems retailers experienced this year.
If you have any questions about either the rule making or legislative issues surrounding fireworks, please contact either Dave Davis or Kate Bradshaw.

Intermountain Retailer Directory
The Association staff is putting the finishing touches on the 2012 Intermountain Retailer Directory before it heads off to the printer. Look for your new copy of the directory to arrive in your mailbox the first part of January. Thanks to all our members that placed ads and updated their entries. If you would like to request additional copies of the directory, please contact Kate Bradshaw.

Holiday Hours

For those members that may be planning to stop by the association offices, please note the following schedule of when our offices will be closed:

Christmas
Office closed
Monday, December 26th

New Years
Office closed
Monday, January 2nd

Please remember that, in the case of pressing needs, members can always reach Dave Davis, President and Kate Bradshaw, Vice President on their cell phones during non-office hours. Thank you for your continued support and have a great holiday season.

Dave Davis (cell) 801-647-0013
Kate Bradshaw (cell) 801-599-9017