by Mike McInally, Oregon Capital Chronicle
December 16, 2024
Editor’s note: The Capital Chronicle has launched a $10,000 end-of-year fundraising campaign to help us continue our first-class coverage next year. A lot is at stake, and there’s a long legislative session in 2025. We’re completely dependent on donor dollars, which are tax deductible. Please contribute to us if you can.
A legislative task force studying the public health impacts of alcohol abuse and whether to raise alcohol taxes for addiction treatment has ended its work without endorsing any specific recommendations.
“I made a conscious choice not to force the committee to come to consensus on anything or give a full recommendation,” said Rep. Tawna Sanchez, D-Portland, the task force chair.
Sanchez told the House Committee on Behavioral Health and Health Care about the task force’s work during a committee meeting last week. She said it was important to her that the final report reflect the voices of all of its 20 members, which included representatives of the wine, cider and beer industries in Oregon, along with addiction treatment professionals, state agency officials, community advocates and a member of one of the state’s nine federally recognized Native American tribes.
The task force was created to consider recommendations on raising alcohol taxes, a contentious issue in Oregon, with strong pushback from the industry. Advocates against addiction want Oregon to raise alcohol taxes, saying it would reduce consumption, but industry experts dispute that.
Sanchez told the committee that she didn’t want to force the task force to have “that really hard conversation” about raising taxes on beer, wine and cider. Instead, she said, she wanted to set the table for legislators to talk about the issue.
“It’s also really important to me that people recognize that my intention has never been to damage the industry,” she added. “My issue is to make sure that we have the resources that we need to support prevention, intervention and recovery services for youth. That was the focus, because what we have right now is a crisis in youth addiction that we don’t actually have the resources to manage at this point.”
Sanchez said she wanted to let the Legislature consider various options — not have the task force decide what to do.
““I want us to be able to have that conversation together, figure out what might work, what maybe wouldn’t work,” Sanchez said. The final report includes nine separate sets of recommendations from the task force members, although the report does not specify which members wrote which ones.
Working with staff members from the Oregon Liquor and Cannabis Commission, Sanchez summarized what she said were the three top suggestions:
Reallocate current resources for treatment and prevention. Several task force members suggested that before considering new taxes on alcohol, the state should examine how current revenue from alcohol sales is being distributed toward addiction services. Re-allocating some of that revenue toward addiction services “could make significant progress in addressing the addiction crisis without putting financial strain on small businesses,” the report says.Launch additional studies and work toward better data collection and monitoring of alcohol addition, prevention, treatment and recovery. Consider the benefits and drawbacks of imposing wine, beer and cider taxes. Sanchez wrote in the report that the current “low taxes do not reflect the true cost of alcohol-related harms, which include health care and social services.” But some task force members questioned whether higher taxes would curb alcohol use and argued that increased taxes could cripple the wine and beer industry in Oregon.
The task force was mandated by House Bill 3610, passed by the 2023 Legislature to focus on alcohol abuse, prevention and treatment of addiction and the cost of addiction in Oregon. The task force also was asked to assess the benefits and drawbacks of increasing taxes on malt beverages, wine and cider.
The bill followed a pair of failed efforts by Sanchez, a longtime advocate of increased taxes on alcohol to help pay for addiction programs and to increase taxes on beer, wine and cider.
A 2021 ECOnorthwest study commissioned by the health authority concluded that alcohol abuse costs the state nearly $5 billion a year in lost wages and productivity, health care expenses, social service costs, traffic accidents and other expenses, something the industry disputes. In response, the health authority has run an alcohol awareness campaign, “Rethink the Drink,” over the past three years to combat excessive drinking.
Though excessive drinking costs the state, taxes on beer, wine and cider generate about $20 million a year, and that money is funneled to cities and counties. By contrast, taxes and fees on distilled spirits – sold in Oregon at state-run liquor stores – raised about $625 million from 2021 to 2023. Alcohol sales are the state’s third-largest source of revenue. A statement from the Oregon Beverage Alliance, which represents breweries, cideries and winemakers in the state, said that just 3% of alcohol revenue goes to mental health and substance use disorders.
The state taxes beer and cider at a rate of $2.60 a barrel. Wine is taxed at 65 cents a gallon. The tax rates haven’t increased in more than four decades.
Sanchez told the committee that she was working on a new legislative proposal for the 2025 session but didn’t provide details at Wednesday’s hearing.
Aaron Sarnoff-Wood, a member of the task force and a co-founder of 2 Towns Ciderhouse in Corvallis, said in an interview he believes the “sole purpose” of the task force was to provide a recommendation in favor of tax increases. But he said it eventually became clear that proposals to raise tax rates would not be approved by a majority of the task force. None of the proposals was voted on by the task force.
Sarnoff-Wood and other representatives of alcohol producers also took exception with some of the data presented to the task force. Reports that the Oregon Health Authority had deliberately buried a study concluding that increased taxes didn’t have much impact on alcohol consumption were a particular sore point, Sarnoff-Wood said.
“The new director of the Oregon Health Authority (Dr. Sejal Hathi) came in to apologize to our task force, and of course, the apology is fine, but they continue to make the same claims after the apology,” Sarnoff-Wood said.
Later reporting on that study concluded that it had been based on flawed research that had been funded by the alcohol industry. Willamette Week reported that the original researcher still stands by his findings, but other experts have disputed his work.
Sarnoff-Wood also challenged reports that beer and wine consumption was increasing in Oregon.
“I’m seeing that my industry is struggling right now. And all the sales statistics … are showing retraction, not growth.”
A statement from the Oregon Beverage Alliance said that 87.5% of the public comments submitted to the task force opposed tax increases.
“Oregon’s breweries, wineries, cideries, distilleries, restaurants, bars and hospitality partners face major challenges doing business in this state,” the statement from the alliance said. “Between inflation, supply-chain issues, employee shortages, high business taxes, a pandemic and a downward trend of drinking, these local businesses need the support of lawmakers to survive.”
GET THE MORNING HEADLINES.
SUBSCRIBE
Oregon Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Oregon Capital Chronicle maintains editorial independence. Contact Editor Lynne Terry for questions: [email protected].