Legislature(2001 - 2002)
10/25/2001 01:19 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
October 25, 2001
1:19 PM
Anchorage LIO
TAPE HFC 01 - 119, Side A
TAPE HFC 01 - 119, Side B
TAPE HFC 01 - 120, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee
meeting to order at 1:19 PM.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Eldon Mulder, Co-Chair
Representative Con Bunde, Vice-Chair
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
Representative Eric Croft
ALSO PRESENT
Senator Kim Elton; Representative Lisa Murkowski;
Representative Gary Stevens; Representative Andrew Halcro.
PRESENT VIA TELECONFERENCE
Anchorage: James, A. Crary; Mike Savage, Brown Jug; Don
Grasse, Alaska Wine and Spirits Wholesale
Association; Karen Rogina, Alaska
Hospitality Alliance; Kacch McDowell,
Executive Director, Alaska Cabaret Hotel and
Restaurant Retail Association (CHARR); Elmer
Lindstrom, Special Assistant, Department of
Health and Social Services; Laura Sarcone,
Alaska Nurses Association; Larry Persily,
Deputy Commissioner, Department of Revenue;
Obed Nelson, President, Council on Alcohol
Abuse and Public Safety; Lee Chipman,
General Manager, Hilton; Jeff Jesse,
Executive Director, Alaska Mental Health
Trust Authority; Tim Schrage; Bob Bailey;
Susan, Fischetti, Alaskans for Tax Reform.
Fairbanks: Mr. Jeff Carter, K&L Distributors; Mr. Larry
Hackenmiller, Club Manchu.
Homer: Sandy Barker, Salty Dog Saloon; Melvyn
Strydom, Finance Manager, Patel Enterprises
Incorporated.
Juneau: Judy McDonald, Bar Owner; Butch Tangney,
Techniques of Alcohol Management; Cindy
Cashen, Mothers Against Drunk Driving.
Ketchikan: John Nixon, Social Club Manager, Eagles FOE
#162; Bill White, Pastor, Ketchikan; Stan
Berntson, Clergy, Ketchikan; Marge Hobart,
Sourdough Bar; Wes Loe, Newtown Liquor;
Lynda Adams, Alaskans for Drug Free Youths.
Kodiak: Bobbie Hutcherson.
Nikiski: Chrystal Schoenrock Chrystal Schoenrock, 4-
Lands Bar.
SUMMARY
HB 225 "An Act relating to municipal taxation of
alcoholic beverages and increasing the alcoholic
beverage tax rates."
HB 225 was heard and HELD in Committee for
further consideration.
HOUSE BILL NO. 225
"An Act relating to municipal taxation of alcoholic
beverages and increasing the alcoholic beverage tax
rates."
REPRESENTATIVE LISA MURKOWSKI expressed her appreciation to
the Chair for hearing the legislation.
Vice-Chair Bunde expressed concern regarding the
expenditure of the tax. He questioned if there was a way to
direct the money generated from an alcohol tax to alcohol
abuse prevention and treatment.
Representative Murkowski observed that revenue cannot be
dedicated short of a constitutional amendment. She noted
that the decision to direct the funds toward treatment and
prevention could be made through intent language and the
appropriation process. She acknowledged the importance of
prevention and treatment.
Vice-Chair Bunde suggested that if the purpose is to raise
money it should be presented honestly. He had hoped that
there would be a way to tie the revenues to treatment if
that is the intent.
Representative John Davies maintained that a fund could be
created to support the programs mentioned by Vice-Chair
Bunde. He stressed that it is a statutory designation of
funds not a constitutional dedication. He observed that
legislatures seldom violate statutory dedications, even if
they can be appropriated for any purpose under the
Constitution. He recommended the creation of a sub fund in
the general fund for treatment programs and the dedication
of revenues from any similar legislation. He acknowledged
that there would be no guarantees that funding from such a
fund would be used as indicated, but emphasized that a
moral fence would be built.
LEE CHIPMAN, GENERAL MANAGER, HILTON GENERAL MANAGER,
ANCHORAGE testified in support of the legislation. He read
from a letter signed by representatives of major Anchorage
hotels: Captain Cook, Hilton, Millennium, Downtown
Marriott, and Sheraton.
As General Managers of major Hotels in Anchorage, we
would like to go on record opposing any increase in
the alcohol tax.
The world is different since September 11th and the
hospitality world is different in a major negative way
since September 11th. Airline travel is down, Hotel
bookings are down, several conventions scheduled for
Anchorage in September were cancelled, most notably
the Council of State Governments which all of you
would have attended, tourism bookings for next season
are down considerably, people are eating out less in
restaurants. We could go on and on with specific
examples, but the point is it is hard to find a
positive indicator in the hospitality industry at this
point in time.
The last thing the hospitality industry needs at this
point in time is a tax that will not add any value to
the industry! It will be one more negative factor
piled onto a slew of other negative factors that we do
not need at this time.
As public policy makers we need your positive help to
rebuild the hospitality industry in Alaska. We don't
need and we strongly oppose the addition of one more
negative factor for our industry at this time. Thank
you for your consideration.
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
explained how the tax is collected. Taxes are collected at
the wholesale level. Goods are taxed when the are sold or
leave the warehouse. If the warehouse is non-bonded goods
are taxed when they are imported or sold into Alaska. The
tax rate is $5.60 dollars for a gallon of hard liquor,
which would equate to .044 cents a drink per once. The
national average for hard liquor in state taxes is $3.30
dollars per gallon. The federal tax is $13.50 dollars a
gallon. The state tax on wine is approximately .85 cents a
gallon. A six once glass of wine would be taxed at .04
cents. The national average in state taxes for wine is .60
cents a gallon. The federal tax on wine is $1.07. The state
tax on beer is .35 cents a gallon or .035 cents per can or
bottle. The national average is .19 cents a gallon. Federal
tax is .58 cents a gallon. The state portion of the tax
would be between .035 and .045 cents a drink. Alaska first
imposed a beer and wine tax in 1933; hard liquor tax was
imposed in 1937. The last increase was in 1983; before that
the tax on beer had not been increased since 1957. Wine and
hard liquor had been unchanged since 1961.
Mr. Persily noted that the high tourism states of Hawaii
and Florida have among the highest alcohol rates in the
nation. There are not many taxpayers in Alaska at the
wholesale rate. There have been an average of less than 30
tax returns per month. Alcohol tax collections have
fluctuated between $12 and $12.3 million dollars in Alaska.
Mr. Persily observed that there is one halftime position
for enforcement and collection of alcohol taxes. No returns
were audited in the last year and enforcement is minimal.
If the alcohol tax were increased they would expect some
stockpiling, which would drop revenues immediately after
the passage. The increase could result in greater revenues
of $30 - $34 million dollars if consumption is not reduced.
The Department of Revenue is asking for one full-time
enforcement position if the alcohol tax is increased. He
suggested that the legislation should look at increasing
mail orders of alcohol for personal use, which are not
subject to tax in Alaska. He recommended changing the law
so that the tax is payable on any alcoholic beverage
brought into the state. Such a change would require an
additional enforcement position, which would likely
generate more than its cost in additional revenue.
Representative Harris asked if the problems associated with
alcohol would be addressed through a tax. Mr. Persily
stressed that the Department of Revenue cannot address the
social impact but would be happy to collect the tax.
Vice-Chair Bunde observed that combined state and federal
tax on alcohol is approximately .15 cents a drink.
Mr. Persily did not know of any other states with a similar
percentage increase that could be used as a model.
JOHN NIXON, SOCIAL CLUB MANAGER, EAGLES FOE #162, KETCHIKAN
testified via teleconference. He is the president of a
social club. The club is supported through its membership.
He noted that the club contributions to charities. He
observed that their organization contributes more than
$20,000 dollars a year to local charities.
JUDY MCDONALD, BAR OWNER, JUNEAU testified via
teleconference in opposition to the legislation. She
maintained that the tax would be devastating to her
business. She stated that she would have to lay off
employees. She stressed the impact of the 9/11/01 tragedy
on her business. She acknowledged the need to balance a
budget but maintained that all sources of revenue need to
be reviewed.
Vice-Chair Bunde questioned if a 5 percent statewide sales
tax in place of an alcohol tax would impact her business.
Ms. McDonald responded that a statewide sales tax would not
have as great an impact as the proposed increase in the
alcohol tax.
SANDY BARKER, SALTY DOG SALOON, HOMER testified via
teleconference in opposition to the legislation. She
acknowledged the need to increase revenues but felt that
the hospitality industry is being unfairly singled out. She
expressed concern that the hospitality industry will suffer
even more as a result of the economic downturn, which would
be worsened by HB 225.
CHRYSTAL SCHOENROCK, 4-LANDS BAR, KIKISKI testified via
teleconference against HB 225. She did not think that the
increase in taxes would help anything and would adversely
affect her business. She maintained that there would be a
300 percent increase in taxes, which would be too great.
BOBBIE HUTCHINSON, BARTENDER, KODIAK testified via
teleconference against the legislation. She maintained that
the tax would cause her to work longer hours for the same
amount of money. She agreed that a 300 percent increase is
too much. She felt that education, not taxation, is the
answer to the state's problems.
JEFF CARTER, K & L DISTRIBUTORS, FAIRBANKS testified via
teleconference against the legislation. He questioned why
the state needs a tax that is 6 times the national average
in order to educate people on alcohol awareness.
JAMES A. CRARY, ANCHORAGE testified in support of the
legislation. He noted that he is a former municipal
prosecutor. He noted that 80 percent of his cases as a
prosecutor were related to alcohol abuse. He pointed out
that the occurrence in New York on September 11, 2001 had
nothing to do with the issue of alcohol tax. He maintained
that an increase in tax would decrease consumption. He
observed the uniqueness of Hawaii and Alaska in terms of
their isolation from other states. He observed that the tax
would be a .10-cent a drink increase. He expressed support
for an increase of .15 cents a drink. He questioned if a
moderate drinker would decrease consumption due to a .20-
cent increase. He maintained that heavy drinkers would be
the most affected.
Representative Hudson asked where the additional revenues
raised by the tax would be best spent in order to eliminate
the problems of society. Mr. Crary spoke in support of
additional law enforcement on the streets and in the rural
areas.
Representative Harris pointed out that the state of Alaska
has more people incarcerated per capita than any other
state in the nation. He questioned how the populace can be
educated. He observed that there are drug problems in rural
Alaska where alcohol is not available. Mr. Crary reiterated
that the additional revenue could go toward law enforcement
and education. He stressed that 80 percent of those in jail
are there for alcohol related crime. Alcohol is the worst
abused drug in the state.
BILL WHITE, PASTER, KETCHIKAN testified via teleconference
in support of the legislation. He noted that the clergy
supports a substantial increase in the alcohol tax rate.
Vice-Chair Bunde questioned if the support was directed
toward prohibition and treatment or toward raising funds.
Mr. White expressed support for both aims. The cost of
alcohol abuse to the state of Alaska exceeds the current
revenues [raised from alcohol taxes]. The clergy works with
those whose lives have been broken by alcohol.
STAN BERNTSON, CLERGY, KETCHIKAN stated that they are aware
of the affect on consumption.
Vice-Chair Bunde maintained that there would be less
funding available for treatment if consumption were
reduced.
CINDY CASHEN, MOTHERS AGAINST DRUNK DRIVING, JUNEAU
testified via teleconference in support of the legislation.
She spoke in support of a tax of at least .10 cents a
drink.
MIKE SAVAGE, EMPLOYEE, BROWN JUG ANCHOARGE testified
against the legislation. He felt that the alcohol industry
was being singled out.
MARGE HOBART, SOURDOUGH BAR, KETCHIKAN testified via
teleconference against the legislation. She felt that a tax
of 300 percent would hurt her livelihood.
BUTCH TANGNEY, TECHNIQUES OF ALCOHOL MANAGEMENT, JUNEAU
testified via teleconference against the legislation. He
noted that Alaska already spends more per capita on alcohol
treatment than any other state.
TAPE HFC 01 - 119, Side B
Mr. Tangney added that most of the people against the
legislation are small business owners. He felt that the tax
could cause closure or layoffs in many businesses. Since
September 11, 2001 there have been other blows to the
hospitality industry.
MELVYN STRYDOM, FINANCE MANAGER, PATEL ENTERPRISES
INCORPORATED, HOMER testified via teleconference in
opposition to the legislation. He maintained that taxing
only the alcohol industry would place an undue burden on an
industry that already pays a substantial tax. He suggested
a state sales tax be introduced as a vehicle to raise
additional revenue. Each state resident could receive a
sales tax rebate on the first $10,000 thousand dollars
spent each year.
LARRY HACKLENMILLER, CLUB MANCHU, FAIRBANKS, testified via
teleconference against the legislation. He maintained that
federal grants would be reduced to rural areas due to [the
cost of] the War Against Terrorism. He anticipated that
treatment funding would be reduced. He pointed out that the
majority of the revenues are assessed in urban areas but
spent on problems in rural areas. He questioned if equal
protection laws would apply. He maintained that the tax
would not solve the state's fiscal problems.
LAURA SARCONE, ALASKA NURSES ASSOCIATION, ANCHORAGE, spoke
in support of the legislation. She noted that health care
workers see daily the problems resulting from alcohol
abuse. She spoke in support of the dedication of funds for
treatment and education.
LYNDA ADAMS, ALASKANS FOR DRUG FREE YOUTH, KETCHIKAN
TESTIFIED VIA TELECONFERENCE, spoke in support of the
legislation. She recounted her experience in alcohol
related programs. She expressed support for at least a .10
cent per glass tax on alcohol.
Vice-Chair Bunde questioned if addicts are price sensitive
and if the price of alcohol would affect consumption. Ms.
Adams stressed that prevention, intervention and treatment
work together and is the focus of the legislation.
JEFF JESSE, EXECUTIVE DIRECTOR, ALASKA MENTAL HEALTH TRUST
AUTHORITY testified in support of the legislation. He
acknowledged the concern regarding jobs. He pointed out
that there are other ways of creating jobs and stressed the
cost of alcohol abuse. He noted that treatment jobs are
currently being reduced. He addressed the issue of spending
revenues on treatment and prevention programs. He suggested
that a group of stakeholders could recommend a package to
be presented to the legislature by the Alaska Mental Health
Trust Authority for treatment and prevention services. The
legislature could be required to write a report indicating
why they are not willing to spend the money on treatment
and prevention services if the recommendations are not
funded. He disagreed with statements that the tax would be
300 percent higher than the highest tax. He noted that
Hawaii's tax on beer is 300 percent higher than Alaska's.
Mr. Jesse stated that he is also involved in the state PTA.
He thought that the state PTA would come out in support of
the alcohol tax at their next meeting.
Vice-Chair Bunde asked how if mental health clients are
price sensitive. He stated that he is having a hard time
assessing the prohibition affect of the legislation.
Mr. Jesse acknowledged the power of alcohol addition, but
emphasized that even forced treatment works. He observed
that any increase in the cost of alcohol will be
universally applied. A fifth of Wild Turkey will go up the
same amount as a fifth of Jack Daniels. He maintained that
cheap alcohol consumed by juveniles wanting to get drunk
would incrementally go up more than more expensive liquors
[as a percentage of cost].
Representative Andrew Halcro questioned if support for the
tax increase by the PTA is tied to the desire that money go
to treatment. Mr. Jesse agreed. He clarified that the state
PTA has not taken a position on the issue. The Anchorage
PTA and other local PTA's have taken positions [in
support]. The Anchorage Council's resolution states that a
significant portion should go to treatment and education
programs.
Representative Hudson questioned what percentage of the
mental health client base is a result of abusive use of
alcohol or the use of alcohol by their parents. Mr. Jesse
stated that the combined rate would be very substantial.
Chronic use would be about 25 percent of the beneficiary
base. He observed that 90 percent of the persons with
mental illness admitted to Alaska Psychiatric Institute
have a serious alcohol problem. He emphasized that alcohol
abuse among the elderly has been overlooked.
Representative Harris spoke in support of increasing the
support to treatment programs without putting an undue
burden on the alcohol industry. He noted that 80 percent of
the users who are not problem drinkers pay for the 20
percent of those that have problems related to alcohol.
Mr. Jesse spoke in support of allowing the Alaska Mental
Health Trustees to design a package of services that would
augment the health and social services budget in areas that
already exist. It's difficult to provide treatment to all
of those that suffer from alcohol related problems. He
emphasized the extent of the problem. If funding is taken
from other areas of the mental health budget to fund these
programs other areas will suffer. He maintained that all
Alaskans should share the burden of caring for alcohol
related problems. He pointed out that the cost of treatment
is greater than the amount raised through the alcohol tax.
He noted that a program in Fairbanks designed to take
chronic alcoholics off the street folded because the
community withdrew its local match. He stated that he did
not understand the argument that the tax would devastate
the alcohol industry but not make any difference to
consumption. He argued that there would not be a net loss
in jobs because instead of paying people to serve alcohol
the state would be paying people to help stop alcohol abuse
through treatment.
Co-Chair Mulder questioned how much is spent on alcohol
treatment programs. Mr. Jesse thought that basic alcohol
grants were approximately $20 million dollars in general
funds. There is another approximately $4 million dollars in
mental health trust funds. Co-Chair Mulder pointed out that
there are also substantial federal funds. He estimated that
$40 to $50 million dollars in funds are being spent on
alcohol related problems and questioned how this compares
to other states.
Mr. Jesse did not know how the state's spending on alcohol
treatment related to that of other states, but emphasized
that Alaska has the highest ratio of alcohol problems per
capita. Co-Chair Mulder suggested that something is not
working and questioned why "is more money going to make it
better". Mr. Jesse responded that it is impossible to take
any problem to zero. He emphasized that the issue is "what
measure of adequacy do we want to set as a state for where
we want to be and are we satisfied today that the level of
the consequences of alcohol abuse [is] where we want it to
be. If we are satisfied with the measure of pain that comes
with alcohol today, then putting more money toward it isn't
a very good investment. If you think we are paying too much
in that respect [then] we do have programs that can drive
those numbers down." He emphasized the need for better
data.
Co-Chair Mulder stated that he wanted to cure the problem
but questioned if it was the time to look into other
alternatives before making more investments. Mr. Jesse
agreed that a real initiative is needed to assess what is
trying to be accomplished in concrete numbers, how programs
would be evaluated and to develop a database to track the
programs. He maintained that the request for proposal
process should include the measured outcome before being
funded.
Co-Chair Mulder stated that he was concerned with the
emotional aspect of the issue versus a well thought out
process such as: "Here is a well thought out defined policy
that will be effective; that will produce the results we
want; this is what it is going to cost; this is what we
need to raise; [and] this is what we are going to do". He
stated that he is concerned that there not be a knee jerk
reaction.
Mr. Jesse acknowledged Co-Chair Mulder's concerns and
emphasized that intelligent public policy has been designed
through working with the legislature and stressed the need
to continue to develop intelligent public policy and not
just respond to people that want to throw money on the
problem.
Representative Harris stated that [as the Chair of the
House Finance Subcommittee for the Department of Health and
Social Services] he is trying to defined and measure if
programs are working, identify which programs are failures
and why they are failures: are programs failing because
they do not have sufficient funding or for a variety of
other reasons? [The House Finance Subcommittee for the
Department of Health and Social Services'] focus will be to
try to help those programs that are working and that are
making a definable difference. Programs that are not
working for reasons other than funding may not receive as
much money. The intent is to use missions and measures to
target and emphasize programs that truly work.
Mr. Jesse identified one problem with the mission and
measures approach. He stated that this approach tends to be
"big picture" on the department level, such as to reduce
binge drinking or DWI's. He emphasized that the focus needs
to penetrate down to the grant manager/grantee level
because that is where individual programs are held
accountable. He pointed out that if half the programs were
reducing binge drinking by 50 percent and the other half
contributed to the problem that there would be no reduction
in the overall numbers for binge drinking. He stressed that
grantees must step up to the plate and not avoid
responsibility and accountability.
Vice-Chair Bunde pointed out that 100 percent of Alaskans
do not pay for these problems. He expressed concern that
taxes are being fragmented. Mr. Jesse responded that all
Alaskans pay for the consequence of alcohol abuse.
WES LOE, NEWTOWN LIQUOR, PRESIDENT, KETCHIKAN CABARET HOTEL
AND RESTAURANT RETAIL ASSOCIATION (CHARR), KETCHIKAN
testified via teleconference against the legislation. He
maintained that the tax would devastate the hospitality
industry in Ketchikan. He pointed out that a $10 bottle of
whiskey would be $21.49 dollars. He suggested that he would
have to reduce his staff by 2.5 positions. The hospitality
industry is the second largest industry in Ketchikan. He
argued that an increase in cost would not reduce
consumption.
Vice-Chair Bunde referred to statements that the increase
on cheap liquor would be greater than the increase on more
expensive alcohol. Mr. Loe did not think that the lower end
would be affected.
TAPE CHANGE, HFC 01 - 120, Side A
Representative Hudson questioned if there are programs that
work to reduce heavy consumption. Mr. Loe thought that the
Wellness Court was having a good effect. He emphasized that
different programs work for different people. He
acknowledge the benefit of treatment but stressed that if
someone has a serious problem that it doesn't matter how
expensive is the alcohol.
ELMER LINDSTROM, SPECIAL ASSISTANT, DEPARTMENT OF HEALTH
AND SOCIAL SERVICES provided information on the
legislation. He pointed out that there is an enormous cost
to the state of Alaska from the use and abuse of alcohol.
Significant portions of those costs are born by the
Department of Health and Social Services. Welfare reform
was initiated in 1997 in Alaska. Since that time welfare
rolls have decreased dramatically. Those that remained on
assistance are beginning to reach their 60-month lifetime
benefit limit. He questioned what is keeping these families
from going to work and becoming self-sufficient. One of the
most common reasons is alcohol abuse. Several years ago the
legislature passed reform of the child welfare system.
Alcohol abuse in the family is frequently sighted in child
neglect and abuse cases and is an impediment in successful
resolution of many cases under the new law. Many persons
with mental illness also have a recurring alcohol problem.
Alcohol is also a factor in many juvenile related crime and
delinquency cases. All of these issues fall under the
purview of the Division of Alcohol and Drug Abuse and the
agency charged with providing alcohol treatment for low-
income persons. The Division of Alcohol and Drug Abuse is
unable to met the demand for services. Waiting lists for
alcohol treatment exists in many areas of the state.
Persons referred for treatment by the Division of Family
and Youth Services, Division of Public Assistance,
Community Mental Health Programs, Corrections and the
Courts may have to wait months before they receive
treatment, if they receive it at all. In many areas of the
state there are no treatment programs. The inability to get
treatment at the time when clients are most amenable to
treatment make them less likely to be successful in
achieving sobriety. The ultimate result will be more cost
to other systems, whether it is the revocation of
probation, failure to identify a family in the child
protection system, or the committing of a new alcohol
related offense.
Mr. Lindstrom stated that the department feels that the
increase of the alcohol tax is one concrete thing that can
be done to defray costs to the state.
Mr. Lindstrom pointed out that the 20 percent of those that
have chronic alcohol related problems come from the 80
percent that are occasional drinkers. He doubted that many
people chose to become alcoholics. The nature of the
disease is that it is a gradual progressive and chronic
condition. Many of those that do not see themselves as
alcoholic may be in the future.
Vice-Chair Bunde questioned how much the state of Alaska
should invest to address the problem. Mr. Lindstrom
responded that further data would be provided in January.
He noted that the department is looking at those that are
on the various waiting lists to identify how they can be
reduced. He observed that in the past budget cycle the
department requested an additional $4 million dollars,
which it felt would make a good faith effort to address the
issue.
Representative Harris clarified that the Department of
Health and Social Services receives approximately $40
million dollars for alcohol related programs for a variety
of services.
Representative Davies noted that there has been
privatization in the Governor's budget.
DON GRASSE, ALASKA WINE AND SPIRITS WHOLESALE ASSOCIATION,
ANCHORAGE testified against the legislation.
KACCH MCDOWELL, EXECUTIVE DIRECTOR, ALASKA CABARET HOTEL
AND RESTAURANT RETAIL ASSOCIATION, ANCHORAGE testified
against the legislation. She noted that there are
approximately 26,000 persons in the Association.
KAREN ROGINA, ALASKA HOSPITALITY ALLIANCE, ANCHORAGE
testified against the legislation. She noted that the
Alliance includes the Alaska Hotel and Motel Association
and the Alaska Hotel and Beverage Association.
Mr. Grosse Read the Hospitality Industry's position against
HB 225:
Alaska has a serious and growing fiscal problem. The
Department of Revenue projects that by fiscal year
2005, the state's budget gap will be more than $1
billion and the Constitutional Budget Reserve Fund
will be depleted. We in the hospitality industry
appreciate the need to develop a fiscal plan to solve
this growing threat. Alaska's hospitality industry
also believes it can play a part in the overall
solution, but that arbitrarily singling out individual
sectors of the economy for enormous tax increases
without addressing the underlying issues necessary to
balance the state's budget is unfair and unwarranted.
It is, therefore, the consensus of Alaska's
hospitality industry that legislative efforts to
increase excise taxes on alcohol products by more than
three hundred percent (300%) are discriminatory,
unreasonable and will do nothing to cure the state's
alcohol problems.
Beverage alcohol is already the most heavily taxed
consumer product in the United States and Alaskans
currently pay some of the highest beverage alcohol
taxes in the nation. The hospitality industry stands
ready to discuss our role in supporting a fair and
equitable tax policy for our industry, but only under
condition that the discussions be part of a
comprehensive legislative package designed to solve
the state's fiscal problems. While the industry
realizes that state revenues cannot be dedicated, the
legislature should be prepared to identify which
social programs would benefit from these additional
revenues and how the effectiveness of the programs and
the use of the funds would be evaluated.
We are very concerned that the tax increases in HB 225
will seriously jeopardize the future of many small
businesses, which play a vital role in our state's
economy. The hospitality industry is already reeling
from the current economic slow down and the aftermath
of the events of September 11, 2001 as fewer Americans
travels, dine out or entertain outside the home.
Adding significantly to the cost of doing business at
this juncture could cause many of these establishments
to fail thus worsening the current economic situation.
Accordingly, Alaska's hospitality industry opposes HB
225 until a comprehensive solution to the state's
fiscal problems is adopted by the legislature.
Representative Davies asked that the hospitality industry
express their support when a comprehensive fiscal policy is
proposed.
Ms. McDowell thought that the profit margin not consumption
would be reduced. She explained that the loss in business
would be the result of the reduced profit margin.
Mr. Grosse acknowledged that 20 percent of the drinkers
drink 80 percent of the alcohol. He clarified that only 1 -
2 percent of the drinkers in the United States are abusers
and chronic problems. Just because someone consumes more
than the average doesn't mean that they are creating
problems.
Ms. McDowell pointed out that the hospitality industry is
facing a variety of legislation that could adversely affect
it, such as increases in the minimum wage and unemployment
tax. She noted that things that affect the state's tourism
marketing dollars also affect the hospitality industry. She
asked the Committee to consider the impacts of the big
picture on their industry when making decisions.
SUSAN FISCHETTI, ALASKANS FOR TAX REFORM, ANCHORAGE
testified in opposition to the legislation.
Proposals to raise alcohol taxes constitute a
political statement of social policy, not a serious
solution to budget problems. Legislators who suggest
that higher alcohol taxes will solve the current
spending shortfall are using political rhetoric to
hide the fact that they want to discourage alcohol
consumption by raising taxes. Raising taxes in this
manner will not solve either drinking or budget
problems.
Solving spending shortfall problems requires fiscal
discipline. Legislators should cut spending in
response to shortfall projections rather than commit
to surplus-era spending promises that cannot be
enacted without raising taxes.
Especially during an economic downturn, raising taxes
on brewers, distillers, bottlers, retailers,
wholesalers, and manufacturers will further depress
the ability of these businesses to conduct profitable
and productive commercial transactions. Raising
alcohol taxes hurts businesses that employ and service
Alaskans.
Ms. Fischetti noted that she has alcoholics in her family
that do not want treatment. Persons that cannot afford to
feed themselves or families will still drink.
Representative Davies pointed out that it would take $1
billion dollars in cuts over the next 5 years to balance
the budget.
TIM SCHRAGE, ANCHORAGE testified in opposition to the
legislation. He pointed out that the alcohol industry
supported the 1983 increase in the alcohol beverage excise
tax with the caveat that it would fund treatment and
education programs. The programs were funded but they have
not been evaluated. He maintained that the cart is being
put before the horse. He pointed out that industry is being
taxed instead of the average Alaskan through a sales tax.
He maintained that the proposed tax is even more regressive
than a sales tax. He spoke in support of accountability and
a long-term fiscal plan.
BOB BAILEY, ANCHORAGE spoke against the legislation. He
spoke in support of a broad based comprehensive fiscal
plan. He stressed that there should be no new taxes or
increases in existing taxes until there is a broad based
comprehensive fiscal plan. Targeted taxes treat individual
industries unfairly and their additional revenues go into
the "black hole" of the general fund with no accountability
and no meaningful contribution to an Alaskan solution. He
stated that he would consider a reasonable increase in the
alcohol tax when a comprehensive fiscal plan is on the
table for discussion. A comprehensive fiscal plan must
include further cuts in spending, and broad based
individual taxes, citizens of the state must become assets
instead of liabilities. A broad based comprehensive fiscal
plan must also include some portion of the earnings of the
Permanent Fund. Permanent Fund earnings are the largest
single source of income.
Representative Hudson pointed out that each law introduced
must be a single subject. He noted that he has introduced
an income tax. He emphasized that the state is $500 million
dollars in deficient. Just because there is only one
subject before the Committee does not mean that it is the
only part of the solution.
Mr. Bailey stated that the comfort factor in the industry
would be greater if there were a collection of bills being
considered at the same time.
OBED NELSON, PRESIDENT, COUNCIL ON ALCOHOL ABUSE AND PUBLIC
SAFETY, ANCHORAGE testified in support of the legislation.
The reduction in consumption is the only factor
contributing to their support. He stressed that youths are
most affected by price in sales. The greatest strategy in
prevention is the reduction of the per capita consumption
of alcohol, particularly in youth. He expressed support for
the legislation as a measure to reduce consumption in
youth.
Vice-Chair Bunde questioned if he would support legislation
that would prohibit sale of any item that is less than $10
dollars in order to reduce the sale of cheap liquors. Mr.
Nelson stated that he would support anything that reduced
consumption. He pointed out that death by cirrhosis of the
liver was the lowest in the United States during
prohibition.
Co-Chair Mulder asked for statistics on the reduction of
consumption based on price.
HB 225 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:35 p.m.
| Document Name | Date/Time | Subjects |
|---|