Beer tax raise tastes bitter to opponents.

Byline: David Steves The Register-Guard

SALEM - Public safety and alcohol treatment advocates squared off Wednesday with Oregon brewers when a House panel took up a six-pack of proposals to raise Oregon's beer tax.

To hear the two sides talk about the six proposals was like listening to entirely different debates.

Advocates focused almost entirely on the need to restore shrinking Oregon State Police patrols and to build back the system of treating alcoholics' addiction and preventing others from becoming problem drinkers. To them, Oregon's lowest-in-the-nation beer tax (80 cents per gallon) is prime for an increase of a nickel or a dime.

But Oregon brewers saw the proposals as an unprovoked assault on the heart of "Beervana," as Oregon is sometimes called because of its reputation for the state's numerous producers and consumers of regionally brewed craft ales and beers. By their calculations, the six bills discussed before the House Revenue Committee would drive up their taxes by up to 1,235 percent - from $2.60 to $32 per barrel.

The committee devoted two hours to testimony on the beer tax question. With dozens of people still waiting to speak when the hearing was scheduled to close, Chairman Phil Barnhart, D-Eugene, scheduled an additional round of testimony for today.

One of the bills discussed is backed by Sen. Bill Morrisette, D-Springfield, and Rep. Jackie Dingfelder, D-Portland. It would increase the tax by the equivalent of 10 cents per drink, applying it to breweries that produce more than 125,000 barrels - effectively exempting Oregon breweries, Morrisette aide Don Bishoff told the committee. The tax increase would raise about $122 million every two years for state and local police, and alcohol treatment and prevention.

The proposal drew support from those who have seen the number of prevention and treatment slots disappear because of budgetary reasons. Lane County Circuit Court Judge Darryl Larson, who came to Salem to testify, said the county's criminal justice system processes thousands of people with drug or alcohol addictions, but its treatment slots number only in the hundreds.

"There really isn't readily available treatment," he said, explaining that for judges who want to require treatment in order to avoid lengthy prison sentences and repeated offenses, "there really aren't any good options."

Morrisette and Dingfelder's bill attempts to insulate Oregon breweries from the increase. It would apply only to breweries that produce more than 125,000 gallons - in excess of what individual Oregon breweries put out per year.

Eugene brewer Jamie Floyd said attempts to "market it as a sales tax" by saying it would raise the consumers' tax from less than a penny to a nickel or a dime per 12-ounce beer was misleading. And he said to exempt Oregon breweries wouldn't work.

"A nickel a drink or a dime a drink doesn't really reflect the way our industry works," said Floyd, part owner of Ninkasi Brewing.

He and other Oregon brewers said that's because their products are transported to retailers by wholesale companies that also distribute beers from the big out-of-state breweries such as Coors and Anheuser-Busch. And they would end up passing some of the big-brewery tax increase to the little guys from Oregon.

Paul Romain, lobbyist for the Oregon Beer and Wine Distributors Association, acknowledged as much.

`You don't just say, `I got a tax increase on 80 percent of my beer so I'm going to raise the costs on that same 80 percent,' ' he said. "I'm to raise my costs on everyone to cover it."

Despite their 31-vote majority in the 60-member House, Democrats have struggled to move those proposals forward because of a constitutional 36-vote supermajority requirement for tax measures to get through that chamber. That means that at least five Republicans would have to go along.

House Speaker Jeff Merkley said it was too early to say what might become of the beer tax proposals. Gov. Ted Kulongoski and the House's Democratic leaders have made a higher priority of other tax increases - a boost in the excise on cigarettes to pay for children's health care, the continuation of about-to-expire taxes on medical and senior care providers and an increase in the minimum tax paid by corporations - that are tied to specific health and education program areas.

"I don't think you'll see an extensive exploration of this until more pressing issues have been resolved," said Merkley, a Portland Democrat, adding that even then, bipartisan support for a beer tax increase would be necessary to move forward.

HEARING THURSDAY

Wednesday's hearing on various beer tax proposals continues today.

Where: House Revenue Committee, hearing room A, the Oregon Capitol in Salem.

When: 1 p.m.

More information: www.leg.state.or.us