Governments dip deeper into alcohol tax well

For small towns, chance of a big windfall
Washington County in the Florida Panhandle is moist, allowing sales of beer and wine but not liquor. As a result, businesses prefer to locate in surrounding counties “simply because they allow the sale of liquor and alcohol,” said Sheran Whitaker, chairwoman of Citizens for Economic Opportunity, which is seeking a referendum to turn the county wet.

The Rev. Alcus Brock, director of missions for the West Florida Baptist Association, has led a fierce fight against the proposal.

“We feel like, as responsible citizens of the community, that it is our responsibility and that we would be remiss if we did not try to educate the people on the ills of alcohol and some of the things that it would bring to our community,” said Brock, who heads Citizens for Positive Development, which was formed to oppose the effort.

For guidance, voters could look to places like Rockwood, Tenn., a town of 5,700 that opened its first liquor stores this month.

“We’re projecting around $80,000 a year to our budget, and that’s a whole lot for a small community like Rockwood,” said City Council member James L. Watts, who was mayor when the measure was passed by voters late last year.

Mark Green, a lifelong resident of Rockwood, which is in eastern Tennessee between Nashville and Chattanooga, said he had “mixed emotions.”

“I’m a Sunday school teacher, and I’m against drinking,” Green said. But at the same time, “We have felt the effects of the economy. A lot of people have been let go from industry in Rockwood, including myself, and it has hurt Rockwood.”

That’s the debate taking place in numerous communities, like Trigg County, Ky., which will decide whether to go wet in a referendum this week. The county executive, Stan Humphries, said the issue was so divisive that he simply wants the vote to be over.

Voters are similarly divided in Winona, Texas — so much so that when alcohol sales went on the ballot in May, the vote was a 94-94 tie. A revote will take place Nov. 3.

States look at raising current taxes
Raising taxes on alcohol also is an inviting option for lawmakers looking to close budget deficits or fund new programs. Some proponents of revising the health care, for example, have sought to hike federal alcohol taxes — currently 21 cents on a bottle of wine, 33 cents on a six-pack of beer and $2.14 on a fifth of hard liquor — to help expand the system.

In many areas, though, the push is on to increase tax revenue by increasing alcohol sales. The prime targets are Sunday sales and sales in grocery and convenience stores.

In Kentucky, retailers are lobbying the Legislature to allow grocery and convenience stores to sell wine alongside beer, which they can already stock. The proposal died in committee last year, but it’s expected to come up again this session.

“It’s a win for the consumer, it’s a win for the state, it’s a win for Kentucky’s winery industry, it’s a win for Kentucky’s vineyards,” said Luke B. Schmidt of the Food With Wine Coalition, which claims the expanded sales would generate an additional $30.1 million in tax revenue over two years.

In Indiana, a commission appointed by the Legislature began taking public testimony this month on whether to allow liquor sales on Sunday, which proponents claim would generate an extra $9 million a year in taxes.

The Elkhart Project Indiana is among the states considering liberalizing its laws to allow Sunday alcohol sales. In Elkhart, where msnbc.com is reporting on one of the cities hardest-hit by the economic recession, retailers say grocery and chain stores would benefit, but liquor stores wouldn’t because of adding costs to open an extra day. Marshall King of The Elkhart Truth reports on the local reaction in the Elkhart Project blog.

In addition to religious leaders, the opposition includes operators of liquor stores, who say they would have to add staff, increasing their expenses. Jerry Corliss, who owns six Chalet Party Shoppes around Elkhart County, Ind., said it would cost him $75,000 in labor to open on Sundays just so he could spread six days’ worth of sales over seven days.

Arrests for operating a vehicle while intoxicated would also rise, Corliss predicted.

Ray Cox, owner of Elite Beverage Liquor in Indianapolis, said he feared that Sunday sales would price package stores like his out of business.

By forcing small merchants to compete on Sundays, “This is really Hoosier small businesspeople versus the giant Wal-Marts, Meijers and Krogers of the world that want to put us out of business,” Cox said.

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