Proposed Increases in State and Local Taxes and Fees, 2004
In fiscal year 2004-2005, states will encounter many of the same economic issues they faced last year, mainly budget deficits, ranging from several hundred million dollars to tens of billions of dollars. Last year, six states passed legislation to increase taxes or fees on all or some alcoholic beverages. Although proposals in the other 24 states did not pass, some made small progress, showing the growing support for alcohol taxes as a means to supplement state budgets.
This year, with the September 2003 release of the National Academy of Sciences' report, Reducing Underage Drinking: A Collective Responsibility, which specifically recommends raising state and federal alcohol taxes to curb underage drinking, we anticipate that raising alcohol taxes will continue to be a hot issue for economic as well as preventive reasons. Following are brief summaries of current state and local alcohol tax and fee proposals. Check back for updates.
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3/26/04 Pursuant to a successful ballot initiative in October, the Fairbanks North Star Borough Assembly voted to implement a five percent alcohol tax starting July 1. The city of Fairbanks already imposes a five percent tax on alcoholic products.
1/14/04 Senator Tim Wooldridge (D) proposed SB 61, which would increase the beer tax from $0.23 per gallon (or $7.50 per 32-gallon barrel) to $0.28 per gallon (or $9.00 per 32-gallon barrel). The revenues collected would go into the new "Educational Adequacy Trust Fund," also created in this bill. The Senate Committee on Revenue and Taxation reviewed the bill on January 14.
1/14/04 Senator Wooldridge (D) also proposed SB 62, to raise the liquor tax from $2.50 per gallon to $3.00 per gallon, and the wine tax from $0.75 per gallon to $1.00 per gallon, effective March 1, 2004. Revenues collected would be put in the same "Educational Adequacy Trust Fund" into which beer-tax revenue would go. The Senate Committee on Revenue and Taxation is reviewing this bill on January 14 with SB 61.
1/14/04 After amending the version introduced last year, Assemblywoman Wilma Chan (D) re-introduced AB 216, also known as "Casey L. Goodwin Memorial Law," to impose a fee on alcohol producers based on the revenue earned from the youth market. The state Department of Alcohol and Drug Programs would collect and distribute the funds to California counties to establish youth prevention and recovery centers. Last year, Assemblywoman Chan strategically removed the bill from debate in order to re-introduce it this year. The Committee on Health reviewed the bill on January 13, with a final vote count of 9-9. Proponents needed at least 13 votes in committee. The vote effectively kills the bill for this legislative session. More than 150 members of the California Alcohol Policy Reform Initiative, mostly high school students, attended the Committee hearing and and lobbied state legislators to support the bill.
4/26/04 On April 16, Senator Dan Grossman (D) introduced SCR 21 (Senate Concurrent Resolution), to raise all alcohol tax rates by $0.024 per gallon. All of the revenues from this increase would go into a newly-created Tony Grampsas youth services program fund. The resolution was referred to the Senate Business Affairs & Labor Appropriations committee. Because of Colorado's Taxpayer's Bill of Rights (TABOR) system, state residents will have the chance to vote on the proposal if it passes in the legislature.
2/4/04 On February 3, Governor John Rowland introduced his budget plan, which includes a 10 percent increase in alcohol taxes. If enacted by the legislature, the change would go into effect on April 1.
3/8/04 Representative Eric Hamakawa (D) introduced HB 2695 on January 27 to impose a $0.25 per gallon surcharge on all alcoholic-beverage tax rates. This additional fee would amount to a $0.66 increase in the price of a six-pack of beer. The estimated $9 million generated from this surcharge would go into the Substance Abuse Prevention, Education, and Treatment Special Fund, also established by the bill. After passing the House Judiciary Committee with amendments, HB 2695 HD1 was referred to the House Finance Committee on February 20. Click here to check on the status of HB 2695.
3/8/04 Senator Bunda introduced, SB 3131 on January 28. This bill mirrors the House version, also proposing a $0.25 per gallon surcharge on top of the current alcoholic-beverage taxes, with the collections going into the Substance Abuse Prevention, Education, and Treatment Special Fund. After being referred to the Human Services Committee and the Ways and Means Committee on February 2, SB 3131 was re-referred to the Senate Health Committee and the Senate Ways and Means Committee on February 5. To check on the status of SB 3131, click here.
2/4/04 Senator Ken Veenstra (R) introduced SF 2050 on January 27 to double the current beer tax from $5.89 per 31-gallon barrel ($0.19 per gallon) to $11.78 per 31-gallon barrel ($0.38 per gallon). Representative Gene Maddox (R) introduced a companion bill, HF 2107, in the House to raise the beer tax by the same amount.
2/6/04 On February 4, the Senate Committee of Federal and State Affairs passed an amended version of SB 305, mainly touted as a bill to allow Sunday liquor sales in the state. An amendment to the bill, proposed by Senator John Vratil (R-Leawood), raises alcohol taxes. The beer tax would increase from $0.18 per gallon to $0.30 per gallon; the tax on light wine would increase from $0.30 per gallon to $0.60 per gallon; on fortified wine, the tax would rise from $0.75 per gallon to $1.50 per gallon; and the liquor tax would go from $2.50 per gallon to $4.00 per gallon. Those changes should generate more than $11 million in added revenue for the general fund. The Senate will probably vote on the bill the week of February 9.
2/13/04 The Senate voted down the bill 24-16. However, the bill was later placed back on the Senate's debate calendar, where leaders can opt to bring it up again.
3/1/04 Representative Larry Campbell (R) introduced HR 2786 on February 10. That bill, which would increase the beer tax from $0.18 per gallon to $0.25 per gallon; the wine tax from $0.30 per gallon to $0.40 per gallon; and the liquor tax from $2.50 per gallon to $3.50 per gallon, was referred to the House Committee on Taxation on February 11.
4/8/04 On April 1, the Kansas Senate voted down Senate Substitute for House Bill 2004, which, among other things, would increase alcohol taxes to fund schools. This bill would have raised the tax on beer from $0.18 per gallon to $0.42 per gallon; on wine from $0.30 per gallon to $0.90 per gallon; and on liquor from $2.50 per gallon to $5.50 per gallon.
3/26/04 Governor Ernie Fletcher's (R) JOBS for Kentucky plan proposes to replace the excise taxes on all alcoholic beverages and the liquor-case sales tax with an increase in the wholesale sales tax on all beverage types. The current wholesale sales tax rate of 9 percent on all products would rise to 11.94 percent for beer, 12.86 percent for wine, and 15.53 percent for liquor. The move would decrease the administrative burden on taxpayers and in the state Department of Revenue. It will also build in growth in tax revenues tied to future price increases. The proposal estimates that the general fund would collect $8.8 million in FY 2005 and $10.0 million in FY 2006.
2/11/04 House Delegate William Bronrott (D) and five others introduced HB 889 on February 11, while several Senators, led by Senator Ida Ruben (D), introduced an identical bill, SB 527, on February 6. Both bills would triple the current alcohol excise tax rates, essentially raising the tax on beer, wine, and spirits by about $0.03 per drink (for beer, from $0.09 per gallon to $0.27 per gallon; for wine, from $0.40 per gallon to $1.20 per gallon; and for liquor, from $1.50 per gallon to $4.50 per gallon). The sponsors expect the tax increases to add $51 million to state coffers in the first year. HB 889 has been referred to the House Ways and Means Committee and SB 527 has been referred to the Senate Budget and Taxation Committee.
2/20/04 A hearing on SB 527 before the Senate Budget and Taxation Committee will take place on February 25.
On March 19, the House and Ways Subcommittee held a hearing for HB 889, at
which CSPI's Amy Gotwals testified. No further action is expected for
either HB 889 nor SB 527.
2/17/04 Governor Jennifer Granholm (D) proposed raising the state mark-up on liquor from 65 percent to 74 percent. The state should collect $35 million as a result, with $32 million going to the general fund and $3 million to fund local fire protection grants. Click here to see the Executive Budget 2005.
4/26/04 The House of Representatives rejected Governor Granholm's 2005 budget proposal to raise the liquor tax.
1/14/04 Representative Bill Deeken (R) introduced bi-partisan (11 co-sponsors) legislation (HB 901) to increase the tax rate on beer from $0.06 to $0.24 per gallon; on wine from $0.42 to $0.78 per gallon; and on liquor from $2.00 to $4.00 per gallon. Proceeds would be deposited into a new fund, the "Fund for the Reduction of Alcohol-Related Problems," from which the legislature may appropriate for that purpose. This is the 27th attempt to raise alcohol taxes in the state in over 34 years. A similar bill introduced last year did not move past the Local Government Committee in March. HB 901 had its first reading on January 8, and is expected to be referred to committee soon.
2/20/04 HB 901 was referred to the House Committee on Tax Policy on February 5.
4/26/04 A public hearing on HB 901 was held on April 6, but Representative Shannon Cooper (R), chairman of the House Committee on Tax Policy, decided against holding a vote on the bill.
2/4/04 Senator Cisco McSorley (D) introduced SB 377 that would allow all counties in New Mexico to hold elections to increase local liquor excise taxes by up to 5 percent. Current law permits only McKinley County to vote on increasing local liquor excise taxes.
2/20/04 The Senate Conference Committee referred SB 377 to the Senate Public Affairs Committee on January 30.
1/14/04 County officials will return to the legislature, asking for increases in alcoholic-beverage taxes. The move is an effort to provide counties with funds to meet the increasing costs of law enforcement and criminal prosecutions. The County Commissioners Association seeks to raise the tax on wholesale alcoholic beverages by the equivalent of $0.05 per drink. Such an increase would provide $18 million per year for the counties. Further information will follow when legislation is introduced.
2/6/04 Several Representatives and Senators introduced HB 1169 on January 22 to raise alcoholic-beverage taxes by about a nickel per drink. The beer-tax rate would increase from $0.27 per gallon to $0.80 per gallon; the tax on wine (except for sparkling and light wines) would go from $1.45 per gallon to $3.28 per gallon; the liquor tax would rise from $3.93 per gallon to $10.33 per gallon. Currently, counties do not receive any of the revenues collected from the alcohol tax. This bill would change the distribution formula: 60 percent to going to counties for specific purposes and another 10 percent going to municipalities. The House Committee on Taxation will vote on this bill on February 6.
2/10/04 On February 6, the House Taxation Committee voted 10-5 against HB 1169, thus effectively killing the bill for the rest of this session.
2/20/04 Following the defeat of HB 1169 in the House Committee on Taxation, the Pennington County Commission launched a ballot initiative that would allow South Dakota citizens to vote to raise alcohol taxes to fund county programs.
For more information or to provide updates from your area, please send us an email.
Center for Science in the Public Interest
Alcohol Policies Project
1220 L St. NW, Suite 300
Washington, DC 20005
Phone: 202-332-9110 * Fax: 202-265-4954 * Web: www.cspinet.org/booze