Senate panel OKs dime-a-drink legislation

First revenue-raising measure headed to floor

Posted: Friday, March 15, 2002

The Senate Finance Committee this morning approved the "dime-a-drink" increase in the alcohol excise tax.

The bill is the first revenue-raising measure apparently on the way to the floor in either house of the Legislature. The bill next goes to the Rules Committee, which schedules bills for floor action.

In the House, the $30 million dime-a-drink measure, sponsored by Anchorage Republican Rep. Lisa Murkowski, is still pending in the Finance Committee. In early February, a major amendment was added to the bill for income, sales and corporate taxes, and the bill was tabled.

Cindy Cashen of Juneau's chapter of Mothers Against Drunk Driving said she's cautiously optimistic about the chances for the legislation, given today's Senate committee vote.

But given experiences in previous legislative sessions, Cashen said she remains nervous. "I'm worried this might be a setup."

Most of the debate today concerned the prospects for a constitutional amendment limiting increases in state general fund spending.

Sen. Jerry Ward, an Anchorage Republican, said the amendment, which passed the Senate last year and is now pending in the House in a different version, should be a prerequisite for raising new revenue.

He offered an amendment to make the alcohol tax increase effective only upon passage of the constitutional change by voters in November.

Sen. Lyman Hoffman, a Bethel Democrat, said Ward shouldn't be worried about increased spending. Without significant new revenue, the state faces a projected billion-dollar budget gap in two years, he noted.

"This is the Legislature, and we decide how much we want to spend," Hoffman said.

"Senator, I don't trust us to reduce the budget," Ward responded. "I don't trust us at all. ...

"I don't like alcohol. I don't like the problem it causes. The problem is we took the tobacco money and we spent it on more government."

Almost $30 million of the $45 million raised by tobacco taxes annually goes into a state fund for debt payments on school construction, and the remainder goes into the state general fund, said Larry Persily, a state revenue official.

Hoffman noted that Alaska was alone in making actual cuts to its general fund during the 1990s.

"The state of Alaska was the most frugal state in the United States," he said. "What other state are you going to trust?"

But in looking at per capita expenditures, Alaska is at the top, Ward said. "I think we're spending too much."

Senate Finance Co-Chairman Dave Donley, an Anchorage Republican who sponsored the proposed constitutional limit on spending, said he was not comfortable linking the alcohol tax with that amendment. The committee voted 5-2 against Ward's amendment.

The committee then voted 5-1 to pass the bill. Hoffman voted no because he said there should be a complete long-range fiscal plan. Ward left before the final vote.

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