Legislature(1993 - 1994)

03/17/1994 03:00 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 413 - INCREASE TOBACCO & ALCOHOL TAXES                                    
  Number 040                                                                   
  SHELBY STANSBY, Director, Office of Management and Budget,                   
  Office of the Governor, reviewed HB 413 for the committee.                   
  He explained that while no one likes taxes, they are a part                  
  of the overall plan the Governor is promoting.                               
  MR. STANSBY stated that compared to the rest of the states,                  
  Alaska is near the bottom in the amount of gas taxes it                      
  levies.  It is still the intention to use the money                          
  generated by the gas tax for the repair and maintenance of                   
  the roads in the State.                                                      
  MR. STANSBY commented that the intention behind the alcohol                  
  and tobacco tax is along the same lines.  Users will pay the                 
  costs through taxes for the health and treatment programs to                 
  combat drug and alcohol abuse.                                               
  MR. STANSBY noted that there is talk that raising revenues                   
  will take the pressure off reducing the budget, but the                      
  amount of revenue raised by the taxes is only about 1/8 the                  
  amount needed.  He further noted that the reserves the state                 
  currently has will only last another two or three years at                   
  the current spending pattern.                                                
  MR. STANSBY finished by suggesting that the committee pass                   
  the two tax bills on so that the Finance Committee can                       
  consider them in the overall financial plan.                                 
  Number 200                                                                   
  CHAIRMAN HUDSON commented that the alcohol and tobacco tax                   
  is estimated at bringing in approximately $15 million and                    
  the motor fuel tax is estimated at raising $82 million.                      
  Number 218                                                                   
  REP. MULDER asked what the Governor's standpoint was on the                  
  constitutional amendment on the dedicated motor fuel tax.                    
  Number 221                                                                   
  MR. STANSBY responded that the Governor supports the                         
  amendment, but whether he's pushing it this year he doesn't                  
  know.  He thought Commissioner Campbell could address that.                  
  He added that his intention was to use the taxes to help                     
  close the fiscal gap and use the money to fix roads.                         
  Number 226                                                                   
  REP. MULDER observed that his constituency is much more                      
  inclined to dedicate funds than to be taxed and have it go                   
  directly into the general fund.                                              
  Number 231                                                                   
  MR. STANSBY stated that he agrees with that observation, but                 
  felt that the scenario has gotten a lukewarm reception by                    
  the legislature.                                                             
  Number 234                                                                   
  CHAIRMAN HUDSON noted that HB 509 is not a dedicated tax.                    
  Number 245                                                                   
  ELMER LINDSTROM, Special Assistant, Department of Health and                 
  Social Services, testified in support of HB 413.  He stated                  
  that his agency doesn't collect the taxes nor do they have                   
  any direct revenue stream from these taxes.  The department                  
  believes HB 413 can stand on its own as a public health                      
  measure and the taxes are a vehicle to provide this.                         
  MR. LINDSTROM stated that history tells us that an increase                  
  in tobacco and alcohol taxes equals a decrease in                            
  consumption, especially among the young.                                     
  Number 285                                                                   
  CHAIRMAN HUDSON noted that the backup showed some high                       
  figures regarding state expenditures for substance abuse and                 
  asked Mr. Lindstrom what those expenditures were.                            
  Number 300                                                                   
  MR. LINDSTROM replied that the figures Mr. Stansby referred                  
  to were simply the funds appropriated for substance abuse                    
  treatment.  The costs of the abuse of alcohol and use of                     
  tobacco show up in all levels of state government.                           
  Number 328                                                                   
  RESA JERREL, National Federation of Independent Business                     
  (NFIB), testified that her group opposes HB 413.  She said a                 
  1993 survey of NFIB members found overwhelming support -- 92                 
  percent -- to reduce state government spending before                        
  increasing taxes.                                                            
  Number 350                                                                   
  REP. WILLIAMS asked Ms. Jerrel if she thought the people who                 
  abuse products should be responsible for paying for the                      
  Number 365                                                                   
  MS. JERREL reiterated that the NFIB members uniformly oppose                 
  any new taxes until government spending comes under control.                 
  Number 370                                                                   
  CHAIRMAN HUDSON commented that every time the legislature                    
  comes up with an area to cut spending, out comes advocates                   
  who consider it sacred.  Chairman Hudson assumed that the                    
  NFIB is not opposed to taxes forever but not as the first                    
  thing to go to.                                                              
  Number 388                                                                   
  MS. JERREL responded that the chair was correct in his                       
  assumptions and added that the members of NFIB did have a                    
  priority listing of areas of taxation they would like to see                 
  if raising revenue through taxes is needed.                                  
  Number 400                                                                   
  RICK LAUBER, Lobbyist, Anheuser-Busch Company, Inc.,                         
  testified against HB 413.  Mr. Lauber presented the                          
  following position paper:                                                    
  Anheuser-Busch is proud of it's leadership role in promoting                 
  responsible use of its products.  Our "know when to say                      
  when" educational advertising campaign has been effective.                   
  We have been strong supporters of the designated driver                      
  campaign.  We were the first major brewer to produce a                       
  nonalcoholic malt beverage, O'Douls, and spend millions on                   
  it's promotion as a nonintoxicating alternative to beer.                     
  Anheuser-Busch not only discourages abuse of its products by                 
  adults, but has initiated programs in our schools and                        
  colleges to discourage under-age consumption of all alcohol                  
  and provide alternatives to the use of intoxicating                          
  We oppose a tax increase on beer.                                            
  In Alaska beer is already taxed, at a rate nearly 50% higher                 
  than the national average.  As recently as 1991 the federal                  
  government increased the tax on beer drinkers by 100% from                   
  $9.00 to $18.00 per barrel.                                                  
  A 50% increase in the tax on beer that this legislation                      
  proposes will not translate to an increase on 50% in taxes                   
  collected.  If the federal experience is an indication.                      
  Those opposed to the consumption of any beer will tell you                   
  that is a good thing.  Not so.  Price increases discourage                   
  the responsible drinker, mostly in the middle and lower                      
  income groups.  While studies have shown that beer is not                    
  the beverage of choice of the vast majority of alcoholics,                   
  they have shown that a price increase of this magnitude is                   
  not a deterrent to their abuse.  The vast majority of beer                   
  is consumed by responsible users.                                            
  As more and more studies confirm the health benefits of the                  
  daily consumption of moderate amounts alcoholic beverages,                   
  it does not seem appropriate to discourage the use of                        
  moderate amounts of beer.                                                    
  A tax on the wholesale price of beer will be transferred to                  
  the retail purchaser.  The ultimate tax payer will be the                    
  beer drinkers of Alaska.  We do not object to paying taxes                   
  but feel that the current tax, already far higher than the                   
  average of the nation, combined with the recent increase in                  
  federal taxes of 100%, is a more than adequate tax on the                    
  beer drinkers of Alaska.                                                     
  Number 455                                                                   
  CHAIRMAN HUDSON asked if there was a tax on the nonalcoholic                 
  beer Anheuser-Busch promotes.                                                
  Number 465                                                                   
  MR. LAUBER replied that there was no tax on O'Douls.                         
  Number 479                                                                   
  LENNY GORSUCH, Lobbyist, Miller Brewing Company, testified                   
  against HB 413.  Ms. Gorsuch dittoed Mr. Lauber's testimony.                 
  Number 514                                                                   
  REP. WILLIAMS asked for comments on the administration's                     
  view that those who imbibe should help pay the cost to the                   
  state of alcohol abuse.                                                      
  Number 525                                                                   
  MR. LAUBER stated that if you could design a program that                    
  would make the abusers of anything pay for their own                         
  services the industry would support it.  But the vast                        
  majority of users of beer do not abuse the product.                          
  Number 565                                                                   
  RICK URION, Lobbyist, Alaska Wine and Spirits Wholesaler's                   
  Association, testified against HB 413.  Mr. Urion stated                     
  that if HB 413 passes Alaska will be the highest by far in                   
  taxing spirits.                                                              
  MR. URION noted that the Department of Revenue figures in                    
  projecting income from the tax increase did not include the                  
  decrease in consumption that the Department of Health and                    
  Social Services projects.                                                    
  Number 594                                                                   
  CHAIRMAN HUDSON noted that in 1991 the federal government                    
  increased the tax, which resulted in a decrease in actual                    
  revenue and asked if there was also a resulting decrease in                  
  social costs.                                                                
  Number 610                                                                   
  LOREN JONES, Director, Division of Alcohol and Drug Abuse,                   
  Department of Health and Social Services, testified in                       
  support of HB 413.  Mr. Jones stated that he does not know                   
  of any studies that show a correlation between the decrease                  
  in consumption related to the economic costs of abuse.                       
  MR. JONES noted, however, that insurance companies have                      
  looked at the decrease of medical costs after a person has                   
  gone through treatment.                                                      
  TAPE 94-25, SIDE B                                                           
  Number 001                                                                   
  MR. JONES further stated that his office conducted an                        
  economic cost study in 1985 that looked at the costs of                      
  services directly related to alcohol abuse.  These costs                     
  would include enforcement of drunk driving statutes, number                  
  of DFYS cases  of child abuse and neglect by parents who                     
  abuse alcohol, small business losses, and inmates in jails                   
  who committed their offenses while under the influence of                    
  MR. JONES stated he does not believe that the tax would be                   
  disproportionate to the social drinker as it is levied                       
  directly to the volume of alcohol you buy.                                   
  Number 111                                                                   
  JOAN DIAMOND testified via teleconference in support of HB
  413.  Ms. Diamond stated that Alaska has only raised the tax                 
  once since 1960 and has never been adjusted for inflation.                   
  She added that the costs to the public are huge and any                      
  increase in the tax will not only lower consumption but                      
  lower the cost to the public as well.                                        
  Number 192                                                                   
  PETER MCNUMERA, Director, Division of Public Health,                         
  Department of Health and Social Services, testified in                       
  support of HB 413.  Mr. McNumera stated that he is very                      
  concerned about the impact of alcohol on the youth.  He                      
  believes that the increase in taxes will lower the                           
  consumption among youth.                                                     
  Number 234                                                                   
  JIM MURPHY, American Lung Association, testified via                         
  teleconference in support of HB 413.  Mr. Murphy stated that                 
  the legislature has an opportunity now to do two things:                     
  raise some revenue for the state and discourage tobacco use                  
  by Alaskans by passing HB 413.                                               
  Number 262                                                                   
  KATHLEEN DOVE testified via teleconference in support of HB
  413.  She added that she is involved in a prevention program                 
  on alcohol and drug abuse.  She stated that she supports HB
  413 and its efforts to deter young people from using alcohol                 
  and tobacco.                                                                 
  Number 287                                                                   
  LINDA ADAMS, Executive Director, Alaskans for Drug Free                      
  Youth; Advisory Board on Alcoholism and Drug Abuse; and                      
  Mayors Task Force on Substance Abuse in Ketchikan; testified                 
  via teleconference that all three of these groups are in                     
  support of HB 413.                                                           
  MS. ADAMS stated that all the studies have shown that our                    
  youth are very price sensitive and that any increase in                      
  taxes translates to a decrease in consumption among our                      
  MS. ADAMS dittoed the previous supportive testimony.                         
  Number 374                                                                   
  FRANCIS YOUNG testified via teleconference in support of HB
  413.  She stated that the costs to the public is a big                       
  factor and includes the costs to educate children whose                      
  lives have been impacted by alcohol.                                         
  MS. YOUNG stated that users should be willing to pay the tax                 
  which only covers about 17% of the costs incurred because of                 
  Number 395                                                                   
  KATHY STAROSTKA, Executive Director, Sitka Teen Resource                     
  Center, stated via teleconference that the center is                         
  overwhelmingly supportive of HB 413.  Ms. Starostka stated                   
  young people have the least amount of disposable income so                   
  this increase would impact them the most.                                    
  MS. STAROSTKA dittoed the previous supportive testimony.                     
  Number 405                                                                   
  CHAIRMAN HUDSON stated that the committee did not have a                     
  quorum at the table and would not take action at this time.                  

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