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Task force bill links wine, beer revenue to behavioral health spending

Bill seeks to spark conversation on alcohol’s toll on Oregon – and a possible tax hike
April 27, 2023

Oregon beer, cider and wine industries have signaled to lawmakers that the state needs to take a hard look at how it funds addiction recovery services before it raises taxes on their industries. 

Oregon’s comparatively low taxes on beer, wine and cider have long been an issue for advocates who say cheap alcoholic beverages are fueling addiction and other social harms. Advocates’ hopes of raising the price of alcoholic beverages were again dashed when opposition from the Oregon Beverage Alliance — a coalition of brewers, winemakers, cidermakers and others —  caused an alcohol tax hike bill to die in committee. 

With the most recent tax hike effort dead, they’re now turning their attention to House Bill 3610. The bill was introduced earlier this month in the House Rules Committee, which isn’t subject to the same deadlines as other committees. 

The bill would set up the Task Force on Alcohol Pricing and Addiction Services, a 17-member panel composed of representatives from the alcoholic beverage industry, addiction advocacy groups, hospitals, local governments, hospitals, treatment providers and others. The task force would be charged with reporting back to the Legislature next year on how the state is spending money on treatment and prevention, the cost of alcohol addiction, and how additional taxes on the industry would play out. 

“This shouldn’t just be an up or down question on a tax,” Danelle Romain, executive director of the Oregon Beer & Wine Distributors Association, told The Lund Report. “It should be a much broader conversation.”

Representatives from the beer, wine and cider industries told lawmakers during a hearing last week that Oregon spends more than other states on behavioral health and just a sliver of revenue generated by their industry goes toward treatment services.  

Oregon already has one of the highest tax rates for distilled spirits. But the state’s celebrated beer, and wine industries have managed to stave off increases. As a result, Oregon has the lowest tax rates for beer and wine in the country. 

Addiction recovery advocates say there’s a disconnect between those low tax rates and Oregon’s high rate of addiction. Just over 12% of Oregonians age 12 and up have an alcohol use disorder, the fifth highest of any state, according to federal numbers. Alcohol use kills over 2,000 Oregonians annually, according to the Oregon Health Authority. That’s more than all the deaths from meth, heroin, fentanyl and cocaine in Oregon last year combined. 

“We’re sort of captured by Oregon’s boutique alcohol industry at a moment in time when we should be captured by the public health community trying to improve health outcomes for working families,” Mike Marshall, executive director of Oregon Recovers, told The Lund Report. 

While Oregon’s Democratic-led Legislature has rebuffed previous efforts to raise taxes on beer, wine and cider, Marshall said political winds are shifting as lawmakers conclude that the state can not deal with its addiction crisis without raising the price of alcohol. 

Democratic Reps. Rob Nosse and Tawna Sanchez, who has previously attempted to increase the tax on alcohol, are sponsoring the bill. Sanchez told the House Rules Committee last week that she hopes her bill will spark a conversation on the toll alcohol is taking on Oregon and how to address it.

State government spending related to substance use disorders quadrupled between 2005 and 2017 to account for nearly 17% of the state budget, according to the Oregon Alcohol and Drug Policy Commission’s statewide plan

But less than 1% of those funds were used to prevent, treat or help people recover from substance misuse, according to the plan. Instead most of the money went toward addressing health and social problems alcohol use caused. 

Representatives from Oregon’s beer, wine and cider industries told lawmakers during a hearing last week that the state has poured money into its behavioral health system. 

They also pointed out that taxes collected by the Oregon Liquor and Cannabis Commission on liquor, beer, wine and cider is the third largest source of revenue in the state. Taxes collected by the commission during the current two-year budget cycle accounted for $629 million that were distributed to the state’s general fund, as well as cities and counties. 

But just 3% of revenue collected by the OLCC goes toward mental health programs, with 57% going to the state’s general fund — which is money that can be used for any purpose. 

“We feel deeply that a deep dive into the current allocations is greatly needed,” Christina LaRue, executive director of the Oregon Brewers Guild, told the House Rules Committee last week. “With almost 60% of the total revenue being allocated to the general fund, we feel strongly that there’s an opportunity for reallocation of those funds before turning the conversation to increase in taxes on our small businesses.”

Romain said raising taxes on alcohol isn’t a sure-fire way to reduce alcohol abuse. She pointed to how Washington saw higher alcohol prices after privatizing its sales but the state still has the highest percentage of alcohol use disorders in the country. However, Washington did see its per capita consumption rate of alcoholic beverages decrease slightly, according to National Institute on Alcohol Abuse and Alcoholism numbers. 

David Jernigan, a professor at Boston University School of Public Health, told the committee that research shows that pricing and taxing of alcohol along with other policies can reduce binge drinking, underage use, mortality for liver cirrhosis and fatalities from drunk driving. 

Scotland saw a 13% drop in alcohol-related deaths after the government increased prices of alcoholic drinks, according to a recent study published in The Lancet. 

Marshall said alcohol has no redeeming benefit and takes a serious toll on the health of Oregonians and the economy while also contributing to homelessness, incarceration and other social ills. More expensive alcohol will lead to less use, he said. 

“Everybody understands that we put tax on cigarettes and tobacco products, because when you make it more expensive, people smoke less and less kids smoke,” Tony Morse, Oregon Recovers policy and advocacy director, told The Lund Report. “The same logic applies to alcohol.”

You can reach Jake at [email protected] or via Twitter @jakethomas2009.