Milwaukee World: $10 PER BARREL BEER TAX NOT DEAD

PLAN BACK TO LIFE

HEARINGS SET FOR TUESDAY

Special to the Readers of Milwaukeeworld

By Michael Horne

And The Milwaukee World Hound Dog Team

A proposal to increase Wisconsin tax on beer to $10 per barrel is back in the pipeline, with hearings scheduled on AB287 Tuesday, October 13th, 2009 at 10:00 a.m. before the Assembly's Committee on Public Safety in Room 417N of the Wisconsin State Capitol. [Text of AB287].

It is the first hearing on increasing Wisconsin's beer tax in 30 years. The bill is sponsored by Madison Democrats Terese Berceau, Kelda Helen Roys and Steve Hilgenberg of Dodgeville. Sen. Fred Risser of Madison also cosponsors. [Thanks, guys.--Ed]

Current taxes are $2 per barrel, and half that for small breweries (under 50,000 bbl/yr.) The new plan would raise beer tax collections from $10 million to $49.5 million per year, net of the 50% reduction for small breweries.

The increase would be apportioned in the following fashion:

$2 per barrel of 31 gallons ($9.4 million) to provide Office of Justice Assistance grants to law enforcement agencies to prevent alcohol-related crime by hiring and training law enforcement personnel and providing equipment. The OJA is associated with the Department of Administration, and is generally considered to be under the control of the governor. It's the agency that handles Homeland Security programs in the state.
$4 per barrel for Community Aids - Alcohol Abuse Treatment. This is expected to raise $18.8 million per year.
$2 per barrel for substance abuse education. These would include grants to social service agencies.

Sound familiar? It should. Wisconsin's global tobacco settlement was also supposed to support education, enforcement and training programs. Instead the windfall became securitized and the proceeds wound up in the general fund.

ABOUT THE OJA GRANT
The current proposal sets a maximum grant of $250,000 "per municipality or county" for OJA to spend on its allocation. That amount would be about $9,400,000. Ominously, the bill's legislative analysis tells us,
"Criteria that will be used to allocate the funds will be developed by OJA and are not subject to administrative rules."

The state estimates between 35 to 50 awards will be administered by the OJA each year. These awards will require a 10 per cent match. According to the analysis, "As it is not possible to identify which counties and municipalities would be awarded grants in any given year, it is not possible to identify where the minimum of $940,000 funds match would be generated." Thus, we are out nearly another million dollars from unknown sources (how about a new tax?) to expend about $10 million.

But wait! There's more -- "Since the bill would only allow funds raised by the $2 per barrel tax increase to be used for grants it is estimated that OJA would need $325,300 annually and 3.5 FTE for administrative functions." Remember -- these outside expenses have been calculated only for the OJA $2-per-barrel allotment. There will also be a price to pay for the other $8 levied on each and every barrel. Collecting taxes does not come free!

WHY THE $250K MAX PER COUNTY?
The proposal for the OJA funds would allocate a maximum $250,000 per "municipality or county," (itself a bit of phraseological ambiguity, since all municipalities are within counties).
So a smart operator could receive $47.54 per person in Florence County for his $250,000 grant. Meanwhile, the formula would only allocate 26 cents per resident of Milwaukee County. This is hardly an equitable formula, and it certainly puts metropolitan areas at a disadvantage.

HISTORY AND SUPPORTERS

AB287 was introduced in June and languished until the hearing date was set. Meanwhile much greater attention has been given to the proposed increase in the tax on distilled spirits. Governor Doyle is against the beer tax increase according to old reports, but is open to the idea of an increase on the taxes on distilled spirits.

AB287 is supported by Public Health, Family and Children's and Mental Health agencies along with Nurse and Police organizations. The City of Madison is also lobbying for the bill.

The bill is opposed by Anheuser-Busch, (which didn't register until last week) MillerCoors, the Tavern League of Wisconsin, state grocers and convenience stores, the Wine and Spirit institute and Wisconsin's Sheriffs and Deputy Sheriffs, interestingly enough. [List appended below. -- Ed.]

Let's put a cork in this proposal. If the sponsors and their cronies want to raise funds to support treatment programs, provide overtime and new playthings for cops and establish an entrepreneural culture of grant-writing do-gooders, let them legalize pot and tax that.

UPDATE, OCTOBER 12th, 2009 --

Larry Meiller, Wisconsin Public Radio, will be interviewing Lucy Saunders on his show Tuesday at 11 a.m., while the hearings will be under way in Madison. Saunders is a brewing expert and writer who has organized the Great Lakes Craft Brewers and Water Conservation Conference for Pier Wisconsin October 26-27th. Give the show a call and let them hear your views.