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HomeMy WebLinkAboutMINUTES - 04031990 - S.6 TO: BOARD OF SUPERVISORS � L`'°� Contra FROM: Tom Torlakson Costa Supervisor, District 5 County DATE: April 3 1990COS SUBJECT: LEGISLATION: ASSEMBLY CONSTITUTIONAL AMENDMENT 38 (Cortese) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS 1. Adopt a position in OPPOSITION to ACA 38 by Assemblyman Cortese which would preempt the pending Alcohol Tax Initiative and place a lower level of alcohol tax into the State Constitution than is being proposed in the initiative effort. 2. Direct the County Administrator to send letters to the members of the Senate Revenue and Taxation Committee who represent Contra Costa County indicating the Board of Supervisors opposition to ACA 38 and requesting their "no" vote when the measure is heard by the Committee on April 4, 1990. BACKGROUND- Current statutory law places an excise tax on alcoholic beverages. These taxes have not been raised for many years. The Legislature has been unable to generate the will to increase these taxes. As a result, Assemblyman Connelly has headed up an initiative effort which would place on the ballot a substantially increased level of tax on alcoholic beverages. It is hoped that this initiative will qualify for the November 1990 ballot. The initiative would raise about $800 million a year, nearly all of which would be dedicated to specified drug, alcohol and health care programs at the local level. The proposed initiative effort is an initiative statute which simply increases the level of tax which is now in the statutes and specifies how much of the increased tax will go to each of the specified programs. CONTINUED ON ATTACHMENT: ye.SBYES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE O/T�]H/jE/]R SIGNATURE(S): TOM TORLAKSON ACTION OF BOARD ON Apr 1 , APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: I, T T L, T V,V NOES: T T AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. APR 3 1990 CC: County Administrator ATTESTED Health Services Director PHIL BATCHELOR,CLERK OF THE BOARD OF Drug Program Administrator SUPERVISORS AND COUNTY ADMINISTRATOR Alcohol Program Administrator ' �J BY %����`/Q DEPUTY M382 (10/88) -2- Apparently fearing that the Alcohol Tax Initiative will qualify for the November 1990 ballot, the alcoholic beverage industry has convinced Assemblyman Cortese and 18 co-authors, including the Speaker of the Assembly and the majority and minority leaders of the Senate, to amend ACA 38 to provide for an alternative increase in the alcohol tax. (The Committee analysis done for the hearing on April 4, 1990 lists as supporters of ACA 38 the California Beer and Wine Wholesalers Association, the Distilled Spirits Council of the U.S. and the Wine Institute) . The intent is apparently to place ACA 38 on the November 1990 ballot along with the Alcohol Tax Initiative, assuming the initiative qualifies for the ballot. The problem is that the initiative is a statute, whereas ACA 38 is an amendment to the State Constitution. As a Constitutional amendment, ACA 38 would take precedence if both ACA 38 and the Alcohol Tax Initiative are approved by the voters. ACA 38 locks into the Constitution the present level of alcoholic beverage taxes and then imposes a surtax on these taxes. The proposed level of taxes which are contained in amendments which will be offered at the Senate Revenue and Taxation Committee hearing on April 4, 1990 are as follows: BEVERAGE PRESENT TAX PROPOSED SURTAX TOTAL (all figures are cents per gallon) Wine - 140 or less alcohol July - December 1990 1 14 15 1991 1 15 16 1992 1 16 17 1993 1 17 18 1994 1 18 19 1995 and thereafter 1 19 .20 Wine - More than 14% alcohol July 1990 and thereafter 2 18 20 Beer July - December 1990 4 6 10 1991 4 11 15 1992 and thereafter 4 16 20 Distilled Spirits July - December 1990 $2.00 $0.60 $2.60 1991 $2. 00 $0. 87 $2 . 87 1992 and thereafter $2. 00 $1. 17 $3 .17 The proceeds from the surtax would be transmitted to counties according to county population and could be used for county general purposes. The new revenue would be exempt from the "Gann" limit. The Committee analysis indicates that the intent of the author is that the measure be voted on at the June 5, 1990 election, and would be effective July 1, 1990, although it may be too late at this point in time to place the measure on the June 5, 1990 ballot. -3- The estimate of the revenue which would be produced by the surtax is as follows, according to the staff from the Board of Equalization: Revenue Increases in Millions of Dollars 1990 1991 1992 Wine $ 7. 8 $ 16. 8 $ 17.9 Beer $ 20.7 $ 77. 3 $114.7 Distilled Spirits $ 13.2 $ 39. 5 $ 52.0 TOTALS $ 41.7 $133 .6 $184.6 These amounts of revenue should be placed in perspective. The proposed Alcohol Tax Initiative would raise an estimated $800 million annually, more than four times as much as would be raised by ACA 38 in 1992. Those who have been advocating support for the Alcohol Tax Initiative should oppose ACA 38 on the following grounds: 1. Specific levels of taxes should not be locked into the State Constitution. This is an appropriate subject for statutes and is being placed in the Constitution solely to preempt the Alcohol Tax Initiative. 2. The level of tax increase which is proposed in ACA 38 is much too small to address the level of problems our communities have with drug and alcohol abuse. 3. The revenue in ACA 38 would not be committed to any particular program and therefore would not necessarily do anything to assist in prevention, treatment or law enforcement efforts directed at alcohol and drug abuse. 4. Distribution of the funds on the basis of population ignores the fact that the problems created by the abuse of alcohol and the use of illegal drugs are not evenly distributed among counties on the basis of population. By locking this formula into the Constitution it would not be possible for the Legislature to alter the formula even if there were general agreement on the need for a different method to distribute the funds. 5. Any future effort to increase the tax on alcoholic beverages would require a Constitutional amendment to be qualified for the ballot and voted on by the people. Given the past reluctance of the Legislature to increase alcoholic beverage taxes it is likely that any future efforts to increase the tax on alcoholic beverages would require an initiative campaign to qualify a Constitutional amendment for the ballot, a lengthy and expensive effort.