The Legislature approves alcohol tax

Posted: Tuesday, May 14, 2002

A bill to increase the state's alcohol excise tax to the equivalent of 10 cents a drink the first hike since 1983 is on its way to Gov. Tony Knowles to be signed into law.

The measure, which will raise about $20 million in additional revenues, passed by a 13-7 vote in the Senate Monday. The House concurred with a slight change just before 5 p.m. today by a vote of 27-12.

The bill by Republican Rep. Lisa Murkowski of Anchorage was at times fiercely opposed by the hospitality and liquor distribution industries. But polls showed it to be the most popular tax increase the Legislature could pass, as the state's costs responding to alcohol abuse were well-publicized. Religious leaders entered the fray, and many normally anti-tax Republicans backed the measure.

The state faces an estimated $963 million budget deficit next year, and some lawmakers had viewed the alcohol tax increase and other revenue-raising measures as a way to close that gap.

Senate Republicans had spoken out against a proposed income tax and a plan to use earnings from the permanent fund to close the budget deficit. Instead, Senate Republicans wanted a constitutional amendment placed on the November ballot that limits state spending.

Sen. Jerry Ward, an Anchorage Republican, tried to amend the House bill on Monday to make it take effect only after voters approved a spending cap. The Senate resolution to place the constitutional amendment never passed the House this session.

"We're about to take millions of dollars and put it into a bloated government," Ward said. The amendment failed 15-5.

The alcohol tax measure passed the Senate 13-7. Voting against it were Republican Sens. John Cowdery of Anchorage, Lyda Green of Wasilla, Pete Kelly of Fairbanks, Robin Taylor of Wrangell, Gene Therriault, of North Pole, and Ward.

Sen. Lyman Hoffman of Bethel cast the lone Democratic vote against the measure.

In the House, four Democrats voted no, two or three of them because the alcohol tax didn't amount to a fiscal plan.

"Just pat yourself on the back for doing something we should have done 10 years ago," Murkowski said.

"I think we have to take this," said Juneau Republican Rep. Bill Hudson, the prime mover behind a fiscal plan. "I think this is a work in progress."

The state's current tax on beer, wine and other spirits raises about $12 million a year.

Murkowski originally had proposed a 10-cents-per-drink increase.

Instead, the increase will be 6.7 cents on a 12-ounce beer, now at 3.3 cents; 6.5 cents on a 5-ounce glass of wine, now at 3.5 cents; and 5.6 cents on 1-ounce of hard liquor, now 4.4 cents.

Bill McAllister can be reached at The Associated Press contributed to this article.

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