Senate Finance approves dime-a-drink alcohol tax increase

Posted: Sunday, March 17, 2002

JUNEAU -- A Senate committee on Friday approved a measure to raise the state's alcohol tax by a dime a drink.

The bill would also give local communities the option to impose a similar tax if approved by local voters.

Senate Finance Co-Chair Dave Donley, R-Anchorage, sponsored the measure. Donley said the bill -- which is similar to a measure introduced in the House this session -- is good public policy and has widespread support in Alaska.

Alaska ranks high among states for alcohol consumption and incidents of Fetal Alcohol Syndrome, a sponsor statement said. Alcohol is also implicated in more than half of suicide attempts, child abuse investigations, domestic violence reports and sexual assaults, the statement said.

The tax on beer and wine is about 3 cents per drink currently, according to legislative information. The tax on hard liquor is about 4 cents per drink.

The bill would increase the alcohol tax on beer and wine to about 13 cents per drink and increase the cost of hard liquor to about 14 cents a drink.

The bill passed Senate Finance by a 5-1 party-line vote. Sen. Jerry Ward, R-Anchorage, was not present for the vote but later said he was opposed the measure. Sen. Lyman Hoffman, D-Bethel, cast the lone vote against the bill.

If enacted into law, the increased alcohol tax would bring in about $30 million in new revenues for the state.

Debate turned from an alcohol tax to devising a plan to close an expected billion dollar deficit in the state budget next year after Ward offered an amendment.

Ward unsuccessfully sought a provision that made the alcohol tax take effect only after voters approve a plan to cap state spending.

Despite Republican initiatives in past years that claim $250 million less in state general fund spending, Ward said the Legislature spends too much money. He said a constitutional amendment is needed that caps spending to 2 percent of the previous year.

''I don't trust us to reduce the budget. I don't trust us at all,'' Ward said.

Hoffman argued a spending cap is not needed since the Legislature already has the power to reduce spending. ''We decide how much money we want to spend,'' he said.

Sen. Alan Austerman, R-Kodiak, said lawmakers also need to create a stable source of revenues to fund state government. Oil revenues make up about 80 percent of the state's revenue source and is on the decline.

''The constant call is to live within our means. If the price of oil drops to $8 per barrel, our means go down the toilet,'' Austerman said.

Donley's bill would increase the current 35 cents per gallon tax on beer to $1.42 per gallon. Cider with less than 7 percent alcohol would also be taxed at that rate.

Taxes on wine and other beverages would increase to $3.41 per gallon, from 85 cents per gallon. Hard liquor taxes would increase to $18.40 from $5.60 under the measure.

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