Legislative update: Committee tables liquor tax
At Montana Tavern Times March 19 news deadline, with about six weeks to go, representatives of licensed business associations were hopeful no devastating tax bills would be introduced in this session of the Montana Legislature, yet remained vigilant and prepared for such an event.
A bill causing some consternation was Sen. Christine Kaufmann's (D-Helena) SB501 which calls for a 5-cent tax on all servings of alcoholic beverages at on-premises locations.
It was heard in the Senate Taxation Committee March 11 and was tabled 7-4 March 20. A fiscal note attached to the bill indicated the tax would cost approximately $150,000 annually to administer and would cost beverage purchasers an additional $5.6 million each year.
A portion of the tax revenue from SB501 was designated for college scholarships for high school students who pledge to not drink alcohol. The bill also would have allocated revenue to counties and Indian Tribes to provide prevention and treatment programs and for enforcement programs.
The Montana Tavern Association, as well as the Gaming Industry Association, Montana Coin Machine Operators Association, Montana Restaurant Association, Wine Institute, Montana Beer and Wine Wholesalers Association and Montana Brewers Association, all testified in opposition to the bill.
Some testimony centered on the duplication of existing programs inherent in SB501. The committee was told $6.9 million of existing alcohol taxes are currently spent by the Department of Public Health and Human Services on prevention and rehabilitation programs. The Board of Crime Control gives grants to local law enforcement ($340,000 each annually) to enforce underage drinking laws, and Indian Tribes through revenue sharing agreements receive close to $400,000 in alcohol taxes.
All opponents stressed that in the current difficult economic climate, this is an exceptionally poor time to increase or add new targeted taxes on the backs of already distressed businesses.
Another bill being closely followed by licensees, HB211 by Rep. Jeff Welborn (R-Dillon), would create a voluntary alcohol server training program that would provide a licensee "responsible server certification" in exchange for one more allowable violation in three years (now four but five under this bill).
It passed out of the House Business and Labor Committee 15-3 Feb. 3, and received a 90-9 approval from the House before being sent to Appropriations where it received a hearing Feb. 12. On March 13 it got an 18-2 committee thumbs up and was passed 88-12 on third reading by the full House March 18.
The bill has since been sent to the Senate and assigned to the Business, Labor and Economic Affairs Committee. It is scheduled for its first hearing March 26.
Another bill that hospitality business owners were following, HB331 by Penny Morgan (R-Billings), would change the way the cost of health inspections are calculated—higher fees for larger establishments—and would put the authority for setting rates in rule rather than law. Most business associations were opposing it.
It was amended in the House Local Government Committee, received a 12-6 do-pass Feb. 17, and was passed out of the House 83-17 Feb. 25. It has since been assigned to Senate Business Labor and Economic Affairs and had its first hearing March 17 with no vote taken by Times deadline.
A bill to clean up the restaurant beer and wine license language, HB195 introduced by Rep. Robin Hamilton (D-Missoula), would eliminate the "preference" for some applicants who had applied previously. It passed the House and was transmitted to the Senate Jan. 22 where it was assigned to Business, Labor and Economic Affairs.
The committee conducted its first hearing March 4 and voted its support 11-0 on March 19. The Montana Tavern Association supports the bill.
Some small business owners were watching Rep. Bob Lake's (R-Hamilton) HB240 which would raise the business equipment tax exemption from $20,000 to $100,000. A fiscal note estimated the measure would save the taxpayer—but cost the general fund—over $40 million annually. The bill failed on a 10-10 party-line vote in the Taxation Committee Feb. 12. It remains bottled up in committee but can be revived. Several other similar bills are wending their way through the process.
A tricky bill to clarify laws related to liquor license security interests, Rep. Walter McNutt's (R-Sidney) HB94, passed the House 99-1 and has been referred to Senate Business Labor and Economic Affairs where it had its first hearing March 4. The measure had seen the Department of Revenue, which opposed it, and banking interests wrangling over specifics.
The committee took executive action March 6 and endorsed the bill 7-4. It had its third reading before the full Senate March 11 and passed 47-2. It has been transmitted to the Governor for his signature or veto.
HB400 would allow beer alcohol content levels to be raised from the current 7 percent by volume to 14 percent. MTA does not oppose the bill. It is sponsored by Deb Kottel (D-Great Falls). It was referred to House Business and Labor and received a 14-4 do-pass Feb. 10, then an 80-20 pass from the full House on final reading Feb. 13.
It was then transmitted to the Senate and assigned to Business, Labor and Economic Affairs where it was heard March 19 and received an 8-2 approval the same day. It awaits full Senate action.
LC2201 by Sen. Sharon Stewart-Peregoy (D-Crow Agency) would allow the Department of Justice to enter into gaming compact negotiations with tribes, and would allow tribes to run any Class III gaming. A bill draft was delivered to the sponsor Jan. 29 but the measure has not yet been introduced.
On the Senate side, a new bill popped up on the radar just before the transmittal deadline, SB493 by Cliff Larson (D-Missoula), which called for allocating 15 percent of any growth in gaming tax collections to the Board of Horse Racing, presumably to provide more money for higher purses and more track dates. An attached fiscal note indicated the measure could cost the General Fund more than $2 million for the biennium.
The bill was introduced Feb. 18 in Senate Business, Labor and Economic Affairs and passed on a 7-4 vote Feb. 20. Feb. 25 it passed the full Senate 28-21 and was sent to Senate Finance and Claims where a hearing scheduled for March 10 was cancelled when the bill's sponsor requested the bill not be heard. Apparently Sen. Larson is now hopeful that federal economic stimulus money, $300,000 in each year of the biennium, can be steered to the race horse business.
A gambling "clean-up" bill, SB86 by Joe Tropila (D-Great Falls, passed the Senate 46-2 Jan. 21 and was referred to House Business and Labor where it had its first hearing March 19. No vote had been taken as of Times deadline.
Gaming business representatives weren't anticipating trouble for the bill since it had been fully vetted by the Gaming Advisory Council, a body comprised of legislators, local government representatives, business owners and members of the public.
SB398 by Ryan Zinke (R-Whitefish), introduced Feb. 7, would cap the amount employers would pay in workers compensation and unemployment insurance for tipped workers at double the minimum wage. Press reports indicated the Montana Restaurant Association had agreed to support the bill in lieu of bringing any other minimum wage or tip credit legislation until at least the 2015 session.
The bill was referred to Senate Business, Labor and Economic Affairs Feb. 7 and had its first hearing Feb. 18. The committee gave it a 10-1 do-pass on Feb. 20. The full Senate passed it Feb. 25 on a 39-11 vote. It was then sent to the House and assigned to Business and Labor where it had its first hearing March 19. No vote had been taken at Times deadline.
Still waiting in the wings is Sen. Christine Kaufmann's (D-Helena) LC1309 to increase video gambling taxes. The bill draft has been on hold since Dec. 15 but one industry observer said it was possible Sen. Kaufmann was "holding the bill until the right time."
According to GIA Executive Director Neil Peterson, "The focus of the Legislature has switched to the budget with HB2" (the main budget bill) that was passed by the House 65-35 March 17 and sent to Senate Finance and Claims where hearings would begin March 25.
"In addition," Peterson said, "mitigating the impacts of property reappraisal is also moving forward as well as allocating funds from the Federal Stimulus Package."
MTA Government Affairs Counsel Mark Staples said, "So far so good, but it is a long way from over."
Source: The Montana Tavern Times, April 2009, published monthly by Continental Communications, 125 W Granite, Suite 102, Butte MT. 59701