'Dime-a-drink' alcoholic beverage fee bill fails first vote

SACRAMENTO, April 23, 2009 -- Proposed legislation that would levy a 10-cent "mitigation fee" on producers of alcoholic beverages to fight claimed alcohol-related impacts on public health and safety failed to garner enough votes to move out of a state Assembly committee.

After a hearing on Tuesday the 19-member Committee on Health voted 3-7, with nine not voting, against Assembly Bill 1019. The bill – introduced Feb. 27 by Assemblymen Jim Beall, D-San Jose, and Tom Torlakson, D-Antioch – seeks to raise $1.44 billion a year starting in January 2010 from a fee of:

* $1.07 a gallon on beer

* $2.56 a gallon on wines up to 14 percent alcohol content and sparkling wine

* $4.27 a gallon on wine and sparkling hard cider with more than 14 percent alcohol

* $8.53 a gallon for distilled spirits

That would represent a 1,280 percent increase on the tax and fee burden the state puts on the lower-alcohol tier of California wine and likely increase the cost per bottle of wine up to $1, based on analysis of state Senate Bill 558, which proposes fees half that of AB 1019, by the San Francisco-based advocacy group Wine Institute. The group, which also opposes AB 1019, estimates that level of cost increase could result in the loss of thousands of industry jobs statewide and could push the some of the cost of the fee back on grapegrowers.

The committee also voted unanimously to take another vote on AB 1019 on April 28.

A trade group representing family-owned wineries and one of 45 opponents to the bill was encouraged by the vote Tuesday. A San Rafael-based alcoholic beverage industry watchdog group that sponsored the bill is "disappointed" about the vote and is hopeful the assemblymembers who didn't vote on the bill Tuesday will vote in favor next week.

Paul Kronenberg, president of Sacramento-based Family Winemakers of America, one of 45 industry and commerce groups plus wineries and grapegrowers opposing the bill, said the small wineries the trade group represents would have been significantly affected by the bill.

"We're being effective in fighting these efforts," Mr. Kronenberg said. "Wine and grapes are one of the top agricultural products in California."

Robert Koch, president and chief executive officer of the Wine Institute, also asserted the projected economic impact of AB 1019.

“AB 1019 was overwhelmingly defeated in an Assembly Health Committee because committee members recognize that increasing the wine excise tax would eliminate thousands of California jobs, raise prices on hard working consumers and create an environment for subsidized foreign wine to replace California wine on store shelves.”

SB 558, called the nickel-a-drink bill by supporters, has been put on hold to focus attention on AB 1019, according to Michael Scippa, advocacy director for AB 1019 sponsor Marin Institute of San Rafael. Senate Bill 297, proposed in 2007 to allow for local taxes on alcoholic beverages, stalled in a Senate committee.

"We're disappointed, but it was not unexpected given the clout of big alcohol," said Mr. Scippa. "We think they are waiting for a signal or key to support the bill without incurring the wrath of the industry."

He discounted as "hyperbolic rhetoric" industry claims that AB 1019 is a tax and that it will claim of thousands of jobs. Rather, it would partially fund the $38.4 billion the group estimates is spent in California annually related to alcohol and would create hundreds of jobs in treatment, prevention, law enforcement and recovery, Mr. Scippa asserted.

"It's time for this industry to be held accountable for the harm caused," he said.