Legislature(1993 - 1994)
02/18/1993 01:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 18, 1993
1:00 p.m.
MEMBERS PRESENT
Representative Harley Olberg, Chairman
Representative Jerry Sanders, Vice-Chairman
Representative Con Bunde
Representative John Davies
Representative Cynthia Toohey
Representative Ed Willis
Representative Bill Williams
MEMBERS ABSENT
None
OTHER MEMBERS PRESENT
Representative Kay Brown
COMMITTEE CALENDAR
*HB 52: "An Act relating to municipal taxation of
alcoholic beverages; and providing for an
effective date."
MOVED OUT OF COMMITTEE WITH INDIVIDUAL
RECOMMENDATIONS
*HB 53: "An Act increasing the tax on alcoholic beverages;
and providing for an effective date."
HELD IN COMMITTEE FOR FURTHER CONSIDERATION
(* first public hearing)
WITNESS REGISTER
Representative Kay Brown
Capitol Building, Room 517
Juneau Alaska 99811-1182
Phone: 465-4998
POSITION STATEMENT: Prime Sponsor, HB 52 and HB 53
Kent Swisher, Executive Director
Alaska Municipal League
217 Second Street, Suite 200
Juneau, AK 99801
Phone: 586-1325
POSITION STATEMENT: Supported HB 52
Rick Urion, Lobbyist
Alaska Wine and Spirit Wholesalers Association
P.O. Box 20868
Juneau, AK 99802
Phone: 463-5088
POSITION STATEMENT: Opposed HB 52 and HB 53
Rick Lauber, Lobbyist
Anheuser Busch Co. Inc.
321 Highland Drive
Juneau, AK 99801
Phone: 586-6366
POSITION STATEMENT: Opposed HB 52 and HB 53
Lennie Gorsuch, Lobbyist for the Miller Brewing Co.
Capitol Associates
P.O. Box 240504
Douglas, AK 99824
Phone: 463-3531
POSITION STATEMENT: Opposed HB 52 and HB 53
PREVIOUS ACTION
BILL: HB 52
SHORT TITLE: RELATING TO TAX ON ALCOHOLIC BEVERAGES
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) BROWN,B.Davis,Davies,
Nordlund,Nicholia
TITLE: "An Act relating to municipal taxation of alcoholic
beverages; and providing for an effective date."
JRN-DATE JRN-PG ACTION
01/14/93 59 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/93 59 (H) CRA, STATE AFFAIRS, JUDICIARY,
FINANCE
01/27/93 168 (H) COSPONSOR(S): NORDLUND
01/29/93 183 (H) COSPONSOR(S): NICHOLIA
02/18/93 (H) CRA AT 01:00 PM CAPITOL 124
BILL: HB 53
SHORT TITLE: INCREASING TAX ON ALCOHOLIC BEVERAGES
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) BROWN,B.Davis,Nicholia,Ulmer
TITLE: "An Act increasing the tax on alcoholic beverages;
and providing for an effective date."
JRN-DATE JRN-PG ACTION
01/14/93 59 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/93 59 (H) CRA, STATE AFFAIRS, JUDICIARY,
FINANCE
01/29/93 183 (H) COSPONSOR(S): B.DAVIS, NICHOLIA
02/01/93 201 (H) COSPONSOR(S): ULMER
02/18/93 (H) CRA AT 01:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 93-6, SIDE A
Number 000
CHAIRMAN HARLEY OLBERG called the meeting to order at 1:02
p.m. He noted for the record that Representatives Sanders,
Toohey, Bunde and Willis were present.
HB 52: RELATING TO TAX ON ALCOHOLIC BEVERAGES
HB 53: INCREASING TAX ON ALCOHOLIC BEVERAGES
Number 030
REPRESENTATIVE KAY BROWN, PRIME SPONSOR of HB 52 and HB 53,
testified saying, "HB 52 would allow municipalities to enact
a sales tax on alcohol at any rate whether or not they had
sales taxes on other commodities. The need for this bill
comes primarily from an Alaska Supreme Court interpretation
of our existing law in 1991 where they found that the
community of Sitka did not have the authority to impose an
alcohol sales tax that was four percent above their tax on
other commodities. As the law is currently interpreted,
municipalities are prohibited from enacting an alcohol sales
tax in excess of or different than an existing commodity
sales tax or having only a sales tax on alcohol."
REPRESENTATIVE BROWN continued, saying, "The restrictions on
local alcohol sales tax were put into the statute in 1985
and at that time there were three municipalities that had
additional sales tax on alcohol and those were grandfathered
in. They are Juneau, Craig and Kotzebue. And their's can
continue but this ruling applies that they wouldn't be able
to increase them or change them. With respect to others,
Anchorage as you might have been reading in the press, is
now considering a tax and the tax they're considering is at
the same rate as their other tax which is the bed tax at
eight percent."
(Representative Bill Williams joined the committee at 1:05
p.m.)
Regarding HB 53, REPRESENTATIVE BROWN said, "What that bill
would do is address the state's tax on alcohol and it would
slightly more than double our state excise tax on alcoholic
beverages which has not been changed or increased since
1983. The proposed increase would equal about ten cents per
drink on beer, wine and spirits and at the current rate of
consumption would raise roughly 19 million additional
dollars into our general fund. That would bring our total
collection from our alcohol tax to about 30 million which is
roughly ten percent of the overall costs to the state of
dealing with alcohol abuse."
Number 140
REPRESENTATIVE BROWN continued, "One reason I think it's
appropriate that we consider an increase in the alcohol tax
is that users of this substance would be paying a little bit
more toward the overall cost to society that alcohol is
causing us and that the costs people would be paying would
be in direct proportion to what they are consuming.
Research shows that an increase in the alcohol tax would
have a significant and long-term effect on the alcohol
consumption particularly of young people."
(Representative John Davies joined the committee at 1:12
p.m.)
REPRESENTATIVE BROWN added, "Polls show that of all
potential taxes of any type or description, this is the one
that has the most popular support, the most public support.
Nationally, about two thirds of those surveyed indicated
that they support additional taxes on alcoholic beverages...
We have a significant alcohol problem in our state, I
understand that Alaska ranks fourth in the nation in per
capita consumption."
Number 253
REPRESENTATIVE CYNTHIA TOOHEY asked, "Are you saying that
the people within the municipality will have the right to
vote on whether to increase the tax in HB 52?"
REPRESENTATIVE BROWN said, "Anchorage, whether or not we
pass HB 52, if the Anchorage Assembly chose to put this
issue on the ballot they could only do it at the same rate
as we already have an existing sales tax on other
communities. If we had HB 52, the Anchorage municipality
would not be limited to considering it at that rate, they
could consider it at some other rate without regard to any
other taxes."
Number 291
REPRESENTATIVE CON BUNDE pointed out he did not feel that a
price increase would discourage use and gave an example of
expensive cocaine abuse. He also asked if HB 52 would
require municipalities to dedicate funds toward alcohol-
related problems specifically, or into a general fund.
REPRESENTATIVE BROWN said municipalities had a choice of
placing those funds in either a dedicated fund or the
general fund.
REPRESENTATIVES BUNDE and BROWN discussed the principles of
taxes being produced at a municipal level by HB 52 and state
revenues increasing through HB 53.
Number 380
REPRESENTATIVE JOHN DAVIES asked if there was any other
commodity limited by state statute in the same way that
alcohol was limited "relative to sales tax" and gave an
example of fuel taxes which were not limited.
REPRESENTATIVE BROWN did not believe any other commodity was
limited by state statute in the same way as alcohol.
Number 400
REPRESENTATIVE DAVIES indicated his experience at the
municipal level brought him to the conclusion that this was
an exclusive situation. He said, "If it is true, then I
would say that what we're really doing here is we're
removing what I would consider to be an unnecessary
limitation on municipalities to decide how and when and if
and under what terms they want to impose taxes."
REPRESENTATIVE ED WILLIS asked if Anchorage, being a first-
class city, currently had the right to tax alcohol.
REPRESENTATIVE BROWN replied in the negative and referred to
the statute as it currently reads.
Number 427
REPRESENTATIVE BUNDE asked what communities throughout the
state thought about HB 52.
REPRESENTATIVE BROWN said, "I know, as you do, all the local
governments are tight and looking for ways to raise money to
support local services."
REPRESENTATIVE DAVIES concurred that the municipality of
Fairbanks had discussed what HB 52 would do and realized
this was currently a limitation.
Number 458
REPRESENTATIVE TOOHEY asked if Representative Brown had
alcohol revenue figures for the state.
REPRESENTATIVE BROWN referred to the Department of Revenue
fiscal note provided with HB 52.
Number 491
KENT SWISHER, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL LEAGUE,
testified saying, "This is an additional revenue opportunity
for local governments and we certainly need those. It's
also one that very probably is well geared towards a
specific problem that will be pretty large on the local
government horizon and we would certainly welcome the
opportunity to levy these taxes, independently or in a way
that is not coupled to the rate of other taxes within the
jurisdiction."
REPRESENTATIVE BUNDE doubted municipalities would be able to
raise taxes "on booze" through the various assemblies or a
"vote of the general public" and pointed out that HB 52 "may
be an exercise in futility."
Number 505
MR. SWISHER said, "If a jurisdiction is locked to another
sales tax rate, that may have the effect of taking the
option of the sales tax on alcohol at that specific rate off
the table for consideration. If a jurisdiction had the
option of setting the tax on alcohol at some other rate, it
might leave that question on the table and, therefore, lead
to a selection of that tax as an option. The flexibility
enhances the viability of the option."
Number 530
CHAIRMAN OLBERG verified that Mr. Swisher was limiting his
testimony to HB 52.
MR. SWISHER concurred.
Number 540
RICK URION representing the ALASKA WINE AND SPIRITS
WHOLESALERS ASSOCIATION, testified against HB 52 and HB 53
saying, "Only alcohol was picked out as an item to increase,
so if a local government picked fish or automobiles or
wheaties to tax at a higher rate you would see those
interest groups here to convince the legislature to limit
those items. So it is an issue of equity... that was singled
out so we oppose that bill (HB 52)."
MR. URION continued, "On HB 53, the people I represent are
the people who pay this tax to the state. We pay it on a
monthly basis, we remit money to the state based on our
inventory depletions... We understand the problems
associated with abusing alcoholic beverages and as an
industry we spend a lot of time and effort and money to
preach moderation. I think we're being successful. Most
people who drink are not abusers as you've heard the sponsor
say... We do not think that alcohol is the cause of all our
social ills as some would have you believe. Most reports
that you read that associate purported costs to society to
alcohol are subjective at best. Including the ones that are
in your packet."
Number 580
MR. URION concluded, "Cost only affects those people who
treat alcohol responsibly and the passage of this bill will
not bring about the purported results and we urge you not to
pass it."
Number 590
REPRESENTATIVE BUNDE asked what portion of the cost of
alcohol was presently taxed.
MR. URION indicated approximately 29 percent of a 750 ml.
bottle was taxed, of which 18 percent was federal, and 11
percent state and local. He disputed Rep. Brown statistics
through example.
REPRESENTATIVE BILL WILLIAMS questioned whether the alcohol
industry really preached moderation through advertisements.
He asked if the revenues from HB 53 could be dedicated to
education or something similar instead of going into the
general fund.
REPRESENTATIVE BROWN indicated dedication of revenues would
probably take a constitutional amendment.
Number 650
REPRESENTATIVE DAVIES addressed Representative William's
concern and said, "Whenever there's a strong legislative
intent and the funds are shown as program receipts going
into a particular program there's a fair amount of momentum,
budgetary momentum, behind using those funds in that way."
REPRESENTATIVE DAVIES added, with regard to Mr. Urion's
comments, "I certainly agree with you about the statistics.
A lot of kinds of statistics are kept in very inappropriate
ways ... however, having conceded that, I will not concede
that alcohol is not the most significant social problem in
this state and I would challenge you to develop appropriate
statistics that would demonstrate anything other than that."
MR. URION declined to respond.
Number 686
REPRESENTATIVE TOOHEY asked how much money was set aside by
the Alaska Wine and Wholesalers Association to help young
people of Alaska.
MR. URION said his client only contributed to a national
group.
TAPE 93-6, SIDE B
Number 022
RICK LAUBER, representing ANHEUSER BUSCH, CO., INC.,
testified against both HB 52 and HB 53 saying, "Referring to
advertising...the alcohol consumption in general, and beer
consumption in particular, has gone down. Fortunately for
Anheuser Busch, their share of the market has gone up and
that's probably due to the fact that they do better
advertising and take customers away from their competitors."
He cited the historical increases of taxes on alcohol.
MR. LAUBER continued, "The thing that often is ignored by
people who want to raise the taxes on liquor, and people in
so-called health related fields, is that there's a growing
body of literature and work that's being done that has found
that moderate use of alcohol has health benefits. If you
increase the price, for any reason, you will reduce the
consumption but there are many studies quite frankly that
show you do not reduce the abuse...You're reducing the
consumption of alcohol by the moderate users of alcohol, not
the abusers of alcohol. And if you factor in the health
benefits, you're then saying, the person terminates the
moderate use of alcohol that is beneficial because they
can't afford it."
Number 157
REPRESENTATIVE TOOHEY identified herself as a nurse, a
mother, and a child of an alcoholic. She said, "Warn
children if they have alcoholic parents, which is very
normal up here in Alaska, that these children too have a
predisposition and they must be careful of this. They must
watch this. I mean there are all kinds of things we can
do." She added, "The increase in that little bit of tax
wouldn't stop anybody..."
REPRESENTATIVE WILLIAMS asked what Mr. Lauber would suggest
to the legislature to "take care" of alcoholism and the
associated problems.
MR. LAUBER revealed his experience with alcohol abusers and
gave a synopsis of the more positive trends relating to
alcohol consumption.
Number 251
REPRESENTATIVE BROWN asked Mr. Lauber to reveal the studies
he referenced in his testimony because she had studies which
came to the opposite conclusion.
MR. LAUBER gave the author and title of one study.
REPRESENTATIVE BROWN asked to see that study since an
author's name was also found within her data.
MR. LAUBER said he would retrieve the study for her.
Number 290
REPRESENTATIVE BUNDE said, "The advertising I still see
especially relating to sports, sends the wrong kinds of
messages. It doesn't send responsible drinking messages and
encourages, I think, the kind of legislation we're looking
at today... It undermines what you say in 'when to say
when'."
Number 314
LENNIE GORSUCH representing MILLER BREWING COMPANY,
testified against HB 52 and HB 53 saying, "With respect to
HB 52, Miller Brewing Company does oppose that legislation.
As well we believe it's not good public policy to isolate
one industry or one commodity for differential tax
treatment. With respect to HB 53, I can speak only to the
sections dealing with beer because we don't handle the other
alcoholic beverages. ....Already Alaska's tax rate per
gallon is above the national average where it stands today
and with this increase it would be by far the highest in the
nation and that is for state tax."
MS. GORSUCH also said, "Beer excise taxes, we believe, are
highly regressive in that they place a disproportionate
burden on the lower income individuals, particularly with
respect to beer drinkers, they traditionally fall into the
middle and low income status bracket. This only means that
more of their disposable income would go to pay the taxes to
take care of those problems that you've identified here.
Taxation does not solve alcohol abuse... Raising the price
of alcohol only forces alcoholics to spend more of their
money on the alcohol that they're going to buy no matter
what, and decreases the amount of money that they're going
to have to spend on food and shelter."
Number 377
REPRESENTATIVE DAVIES said, "I fail to see the equity
argument associated with HB 52. It seems to me it's in fact
the other way around, the legislation that was passed a few
years ago...made a protected class out of that commodity
relative to all other commodities."
MS. GORSUCH said, "To undo it at this particular time would
be to focus it back on the one industry..."
Number 400
REPRESENTATIVE DAVIES asked Ms. Gorsuch to share the dollar
amounts that go into educational programs versus
advertising.
MS. GORSUCH said she could provide that information for the
chair later.
REPRESENTATIVE BROWN pointed out the bar chart provided by
Ms. Gorsuch did not provide the rates of higher tax states
for comparison. (A copy of this chart may be found in the
House Community and Regional Affairs Committee Room, Capitol
Room 110, and after the adjournment of the second session of
the 18th Alaska State Legislature, in the Legislative
Reference Library.)
MS. GORSUCH said the chart came from the west coast
headquarters and reflected the taxes of western states only.
CHAIRMAN OLBERG asked for further testimony or discussion.
Number 433
REPRESENTATIVE DAVIES MOVED that HB 52 be passed out of
committee with individual recommendations.
REPRESENTATIVE JERRY SANDERS OBJECTED.
CHAIRMAN OLBERG called an at ease at 2:12 p.m.
Number 435
CHAIRMAN OLBERG reconvened the meeting at 2:17 p.m. with all
members present.
REPRESENTATIVE BUNDE said, "What we're really saying is,
"Drink yourself to death because the city needs the money,"
and "I would feel a lot more comfortable with [HB] 52 if the
monies gained from it went directly dedicated to alcohol
abuse."
REPRESENTATIVE DAVIES spoke at length saying, in part,
"Those issues are interesting and should be debated but it's
not at this point, I believe. The point of [HB] 52 is to
allow a municipality the local option to decide." He
reiterated his concern about alcohol receiving special
protection under the law.
Number 511
REPRESENTATIVE TOOHEY concurred that HB 52 offered only a
local option of alcohol taxation and said she could not
support HB 53.
REPRESENTATIVE WILLIAMS supported HB 52 and HB 53. "I think
[HB] 53 is an area where we can generate some money back
into the general fund," he said.
REPRESENTATIVE WILLIS expressed a concern that the
legislature was not devising a state fiscal plan. He said
he might introduce legislation to form a commission to
address a long-term fiscal plan for Alaska. "We're
piecemealing," he added.
REPRESENTATIVE DAVIES reminded the committee of the motion
before them.
REPRESENTATIVE SANDERS rendered some personal experience
with alcohol. He said, "I don't know what the answer is but
I don't know that tacking monies on to it is going to help
with the alcohol problem. If it's to raise money, I think
we have too much taxes, I think we have too much government
and I'm not for taxes in any way, shape or form. ...I'm not
inclined to go along with this for those reasons, I'm not
sure which it's trying to address and I don't think it
addresses either one of them adequately."
Number 591
CHAIRMAN OLBERG called for a roll call vote on the motion to
move HB 52 out of committee with individual recommendations,
which resulted in the following:
Representatives Toohey, Willis, Williams, Bunde and
Davies voted to move HB 52 out of committee with
individual recommendations; and, Representative Sanders
and Olberg voted against the motion.
THE MOTION CARRIED.
REPRESENTATIVE BUNDE MOVED that HB 53 be moved out of
committee with individual recommendations.
REPRESENTATIVE SANDERS OBJECTED.
REPRESENTATIVE BROWN testified again, "I view it as a
socially responsible way to raise needed revenue. The
amount raised by this bill would not even cover the
incremental increases in one public safety agency, the
Department of Corrections, that we have right now before us
in their increase that's requested for the coming fiscal
year. A prior commissioner testified at a meeting I was at
that 85 percent of the prisoners in Alaska's prison system
today are there because of involvement with alcohol in their
crime."
Number 693
REPRESENTATIVE DAVIES reminded the committee that he
cosponsored HB 53, and reiterated his support for the bill.
TAPE 93-7, SIDE A
Number 000
REPRESENTATIVE BUNDE said, "This is raising state taxes:
That was not my goal when I came to the legislature."
A roll call was taken on the motion that HB 53 be moved out
of committee with individual recommendations, which resulted
in the following:
Representatives Sanders, Bunde, Olberg and Toohey voted
against the motion; and Representatives Willis, Davies
and Williams voted for the motion.
THE MOTION FAILED.
ADJOURNMENT
Number 055
CHAIRMAN OLBERG adjourned the meeting at 2:40 p.m.
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