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FSMA’s Looming Funding Crisis

The Food Safety Modernization Act, now being implemented nationwide, represents a sweeping change in how the nation’s food supply is regulated. But paying for the costs of enforcing the new law is a looming crisis that could threaten food safety efforts.

A brief background: for years, food safety was a government priority only after-the-fact; that is, federal agencies typicaly took action after a costly and potentially dangerous food contamination issue had occurred. With the new legislation, known by its acronym “FSMA,” the focus has totally shifted to prevention and from government oversight to industry preventive controls. Food manufacturers and processors of human and animal food, shippers, and importers of food and food ingredients all must create and maintain a system of preventive controls to spot problems as they arise and deal with them or face severe fines and the threat of criminal action.

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One aspect of the new law that hasn’t received much attention is the always consequential matter of who pays the costs of enforcement. While users fees collected by the FDA cover some of the expense, Congress envisions FSMA as a federal and state partnership to share inspection costs. The FDA simply has never had sufficient budget authority to fully fund inspection services. States have covered this gap by assigning inspectors from health departments to help oversee the vast food industry.

Two new factors are raising concerns about whether the FDA and state health departments will be up to the task of enforcing FSMA’s many new requirements.

One is the sheer size and scope of FSMA. It covers all domestic food manufacturers and processors, domestic produce suppliers, and importers of foodstuffs or ingredients. The second issue is budget authority under the Trump Administration. It is a matter of record that the White House opposes government regulations as needless interference with business. The unsettled question currently is how that attitude will translate into federal funding (or defunding) for existing programs already authorized and implemented.

At the federal level, the Trump Administration’s budget plans are highly fluid. Its first budget proposal would cut the budget of the Department of Health and Human Services (where the FDA is located) by some 15%. Further details have not been forthcoming but given the Administration’s many public comments about getting rid of government regulation, it’s certainly possible that monies earmarked for FSMA enforcement may be trimmed.

Recognizing this possibility, the National Association of State Departments of Agriculture (NASDA) have asked Congress for an additional $100 million annually for “sufficient funding” to implement FSMA inspections and oversight. Most of that money, if appropriated, would be earmarked for state-level inspection that would augment FDA enforcement activity.

Seeking additional federal dollars, given the prevailing anti-tax sentiment in Washington, may seem like a fool’s errand. But state budgets aren’t all in rosy shape, so governors may not have much choice. According to a new report by the Pew Charitable Trust, “the slow pace of tax revenue growth has left many states with little or no wiggle room in their budgets. Twenty-three states still collect less tax revenue than at their recession-era peaks, after adjusting for inflation, and most have a thinner financial cushion than they did before the last downturn. In addition, 16 states’ employment rates still clearly trail 2007 levels. Despite these challenges, personal income in all states has bounced back above pre-recession figures, though growth has fallen short of historic norms.”

Translated, that means states will be hard-pressed to increase food safety enforcement budgets, much less maintain previous spending for inspections and enforcement actions.

All of which leaves the fate of FSMA up in the air. There’s little indication that the food industry wants to turn back the food safety page — the general public would not like that scenario — but by the same token, lax enforcement resulting from budget cutbacks would put food safety more or less where it was — largely passive and reactive to food borne illness outbreaks.

That can’t be a good solution for anyone.