New Mexico: Group calls for alcohol tax increase to help balance state budget

Source: The New Mexican

By Bruce Krasnow

September 6, 2016

A public policy group that looks at the social costs of excessive drinking is asking Gov. Susana Martinez and legislators to increase the alcohol tax by 25 cents a drink to sustain state services amid spending cuts.

Peter DeBenedittis of Alcohol Taxes Save Lives & Money said Tuesday the increase would raise $154 million a year – a fraction of what the state spends on police, courts, jails, emergency response and medical treatment in cases related to alcoholism.

The group says generating more revenue through the alcohol tax is more important than ever because the state closed the 2016 budget year with a deficit and has a projected deficit for 2017. Legislators peg the total shortage at $650 million, and DeBenedittis’ group says that means reduced spending on core services.

“Taxes haven’t gone up since 1993. That’s the last time we’ve raised alcohol taxes,” DeBenedittis said. In a letter to Martinez, his group argued that half the state’s residents don’t regularly drink, and “given our budget deficit, it makes sense to require the drinkers causing these problems to pay for a portion of them, rather than cutting the jobs and services provided to all New Mexicans.”

Martinez, who has said she will veto any tax increase, plans to call the Legislature into special session to balance the 2016 budget, which was overspent by $220 million. She has already ordered across-the-board spending cuts for the 2017 fiscal year to realign spending with new revenue estimates that are lower than when lawmakers approved the budget.

Michael Lonergan, a spokesman for the governor, did not reply Tuesday to a specific question about the alcohol tax.

DeBenedittis said it’s reasonable to look at the alcohol tax in light of these cuts. His group doesn’t have a preference on how the extra tax money would be spent, but it says any new revenue could help stabilize general operations, such as those involving Medicaid, corrections, public safety and health care.

In a poll of state residents conducted by Albuquerque-based Research & Polling, 76 percent support raising alcohol taxes. Martinez’s fellow Republicans back a tax increase on alcohol by a 2-to-1 margin. For Democrats it’s 5 to 1, and independents favor the increase by more than 6 to 1.

The survey also informed voters that the proposed 25-cent-per-drink alcohol tax would increase the cost for a six-pack of beer by $1.50, a bottle of wine by $1.25, and a fifth of liquor by $4, but that did not significantly change the results. The survey is available on the organization’s website, alcoholtaxessavelives.org.

With elections in November that will decide which party controls the New Mexico Legislature, the poll suggests that raising taxes on alcoholic drinks has broad public support, DeBenedittis said.

“We want to get this in front of the people for the elections,” he said. “Where do they stand on subsidizing excessive drinking? If the Democrats were smart, they’d make it an issue and steal back the House. If the Republicans were smart, they would get out in front of this.”

Republicans control the state House of Representatives 37-32 with one open seat that will go to a Democrat in the November election. Democrats are the majority party in the Senate, 24-17, with one open seat in a Republican-leaning district.

With the special session likely this month, other groups also are weighing in on policy positions.

The Greater Albuquerque Chamber of Commerce continues to oppose any efforts to scale back on economic development efforts, including a delay of promised tax cuts for corporations.

“As New Mexico builds momentum towards growing jobs and business development, tax increases must be avoided as these would be counterproductive to economic recovery,” according to a statement by Beverly Cruz, chief of business development for the Albuquerque chamber. “Tax increases are a short-term solution but with long-term adverse consequences.”

New Mexico Voices for Children, meanwhile, supports investing more dollars in schools and public improvements.

“For New Mexico’s communities to thrive, we need the resources for good schools, roads and other infrastructure, and safe neighborhoods,” said James Jimenez, Voices for Children’s executive director and a former state budget director. “Years of tax cuts that mostly benefit the wealthiest have taken away our ability to make the investments needed for broad prosperity. Some of those tax cuts also took place in closed-door rushed fashion.”