Alcohol tax bills come up empty

Bipartisan House measures sought to funnel more revenue toward recovery services, substance abuse prevention

The fight to raise New Mexico’s alcohol taxes or reform its tax structure altogether ran dry again this year when two measures met their end in a House committee Friday morning.

The bipartisan House Bill 213 would have overhauled alcohol taxes by moving tax collection from the wholesale to the retail level. The bill would have made the tax a percentage of the price a consumer pays for a drink, lowering taxes on cheaper booze and raising revenue collected on more expensive spirits.

Meanwhile, House Bill 179, sponsored by Democrats, would have raised the state’s wholesale liquor excise tax by an average of 25 cents per serving.

Both measures sought to funnel more tax revenue toward alcohol and substance abuse prevention and recovery services.

After two days of discussion and testimony on the bills, members of the House Taxation and Revenue Committee chose to take no action on the tax reform bill Friday. The quiet foundering came with the blessing of a co-sponsor, Rep. Micaela Lara Cadena, D-Mesilla, who agreed the ambitious reform package should be discussed more in depth by interim legislative committees after this year’s session ends next week.

“I did not imagine we could pull something like this off in a 30-day [session],” Cadena said. “I introduced this to have a good debate and now it seems like we might be onto something.”

Committee members voted down HB 179 on a 10-4 vote. The only committee members to support the bill were Rep. Christine Chandler, D-Los Alamos; Rep. Javier Martínez, D-Albuquerque; Rep. Kristina Ortez, D-Taos, and Rep. Linda Serrato, D-Santa Fe.

Committee chairman Derrick Lente, D-Sandia Pueblo, who co-sponsored the bipartisan bill, said he voted against HB 179 because he wanted to look more closely at both measures after the session ends.

“We understand this is a big issue in the state, and we are very much committed to solving [it] and bringing resolve and help to those that need it the most all across our state,” Lente said. “... There are some very valuable options … and I’d like to see that fleshed out during the interim.”

A number of unsuccessful efforts have been made in the last three decades to raise or reform New Mexico’s alcohol excise tax, including last year, when a measure was vetoed by Gov. Michelle Lujan Grisham.

The alcohol tax reform proposal would have shifted collection by making taxes a percentage of a drink a consumer pays for based on alcohol type — spirits at 4%, wine at 3% and beer at 2%. It would have meant the cheapest alcohol would carry lower taxes than pricier alcohol or drinks ordered at a bar or a restaurant.

“If you were buying packaged [alcohol], which is overwhelmingly where people are consuming in rural New Mexico and likely what people struggling with alcohol use and dependency are, they would not be bearing the burden of the big tax increases,” Cadena said. “... If you’re a top-shelf drinker, you will be a top-shelf taxpayer.”

Cadena said the bill is not designed to increase revenue from alcohol taxes. But it would direct tax revenue currently going to the state general fund to the state Medicaid program. That could increase the state’s behavioral health reimbursement rate, she said.

The bill “is designed to fix a flawed tax policy,” she said, adding that also has allowed certain jurisdictions, including the city of Farmington and several counties, to get the first cut of some of the current alcohol excise tax revenue, while other jurisdictions have access to a much smaller downstream amount of money.

While the New Mexico Association of Counties supported the bill, other organizations, including the New Mexico Retail Association and New Mexico Restaurant Association as well as alcohol industry representatives, opposed it on the grounds the state needs more time needed to hammer out details of how retailers would collect taxes.

Some speakers during public comment also opposed the bill; they said it would not increase tax revenue and could encourage drinking by making cheap alcohol even more affordable.

The bill garnered praise from Republicans and Democrats on the Taxation and Revenue Committee for its “creativity,” but most lawmakers noted they need more time to analyze the legislation than is possible during a 30-day session.

The tax hike measure, meanwhile, would have sent most of the tax revenue — nearly $2.1 million monthly — to the local DWI grant fund, while $250,000 monthly would have gone to the Drug Court Fund. All other revenue would have gone to a new Alcohol Harms Alleviation Fund, which lawmakers could appropriate to prevention, treatment and recovery programs.

Opponents of the measure included lobbyists for the alcohol industry, the New Mexico Restaurant Association and the Greater Albuquerque Chamber of Commerce, which said it punished “responsible” drinkers and criticized increasing taxes when the state has a record high budget.

Speakers representing Mothers Against Drunk Driving, the New Mexico Alliance of Health Councils, New Mexico Voices for Children and the city of Gallup, among other organizations, supported the bill. A number of people testified Wednesday alcohol addiction has wrought extreme harm on families and communities in New Mexico, which has the highest alcohol-related death rate per capita of any U.S. state, and said some programs need consistent funding.