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Effort to raise New Mexico's alcohol tax falls flat

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Effort to raise New Mexico's alcohol tax falls flat

Picture of Theodore Alcorn
Brewer Jeff Erway stands next to his signature beer, Elevated. La Cumbre Brewing Co. is one of New Mexico's largest craft beer c
Brewer Jeff Erway stands next to his signature beer, Elevated. La Cumbre Brewing Co. is one of New Mexico's largest craft beer companies. Erway lobbied against an effort to raise alcohol taxes a few years ago, saying making alcohol more expensive would never help the most desperate alcoholics.
Marjorie Childress/For New Mexico In Depth
Santa Fe New Mexican
Saturday, August 13, 2022

Drinking kills people in New Mexico at a higher rate than any other state, including those that consume less alcohol and where fewer people drink. Plain and simple, alcohol is more dangerous here than elsewhere, so the state needs stronger safeguards, experts say.

The most-touted approach for reducing alcohol’s harms, according to decades of scientific research, is to raise the price of alcohol through taxes. It’s an approach New Mexico has ignored. A generation ago, the Legislature set alcohol taxes at a few pennies per drink and hasn’t changed them, even as inflation has pushed alcohol prices higher and driven down the effective tax rate to a 30-year low.

In 2017, a coalition of New Mexicans lobbied for a quarter-a-drink tax increase they believed would prevent thousands of people from developing alcohol disorders and save 52 lives a year.

The research, they said, was clear. What they didn’t count on was the buzzsaw of New Mexican politics.

Organized opposition

The businesses that profit by selling alcohol are numerous and diverse.

Observers disagree about how much influence they wield in the state Legislature, but the advocates certainly felt overmatched.

Shelley Mann-Lev, who helped lead the campaign for a tax increase, recalled Roundhouse meeting rooms crowded with opponents.

“I’m literally talking about 20 men in suits, very expensively dressed, there all the time,” she said.

Lawmakers felt the pressure too, said Sen. Gerald Ortiz y Pino, D-Albuquerque. Most communities around the state have businesses that sell alcohol.

“It’s not like we’re dealing with something that only benefits one county,” Ortiz y Pino said.

And those who lobby on alcohol stick together, said Rep. Antonio Maestas, a Democrat on Albuquerque’s west side, “so they’re very successful at killing bills.”

Others said the alcohol industry is more organized than omnipotent, lacking the sway of oil and gas, attorneys and hospitals. “They don’t have an overbearing influence,” said Charlie Marquez, a longtime lobbyist who for decades has represented the state’s green chile growers among other clients.

One of the most knowledgeable opponents of the tax increase was Maurice Bonal. His grandmother had opened a bar and restaurant in Santa Fe and he’d grown up around the alcohol industry, later becoming the state’s leading broker of liquor licenses. He estimated he’d owned nine businesses with alcohol licenses and has worked with more than two-thirds of the other licensees around the state.

Bonal also commanded a deep understanding of state government and was intimately familiar with the Legislature, where relationships matter.

“Since 1973, I have attended every session,” he said. “I’ve known all the leadership throughout the years, and then of course all the members.”

Bonal contracted a lobbyist to fight the tax increase, saying license holders strongly opposed it. A quarter-per-drink increase wouldn’t reduce excessive consumption, he said. “You could double [the price] and all that would happen is the black market would kick in.”

Another opponent of the tax increase, Ruben Baca, had gotten familiar with the Legislature through his wife, Patricia Baca, a state representative from Albuquerque from 1985-94. He’d lobbied for a racetrack and a for-profit college but his main clientele was gas stations, who he represented as the executive director of the Petroleum Marketers Association.

Baca called the proposed tax increase a “boondoggle” and recalled showing lawmakers maps of New Mexico’s neighboring states that taxed alcohol even less.

“I talk to the people who vote,” he said, adding the advocates weren’t as focused on that strategy. “The nonprofits and these other people that are just activists, they don’t mean anything.”

The founder of La Cumbre Brewing Co., Jeff Erway also lobbied against the bill. He said a tax increase might curb drinking and prevent some chronic illness but making alcohol more expensive would never help the most desperate alcoholics.

“You are going to take food out of the mouths of children,” he said. “You are not going to tax their parents into making a better life choice.”

“Alcohol is the drug of choice of the people who write the laws,” said David Jernigan, a professor at Boston University School of Public Health.

In New Mexico, legislators misuse alcohol just like the people they represent.

Allegations of sexual impropriety against Sen. Daniel Ivey Soto, D-Albuquerque, earlier this year occurred in the context of drinking. And every few years a lawmaker is arrested for intoxicated driving, making headlines. That includes includes:

• Democratic Rep. Georgene Louis this year;

• Then-Democratic Sen. Richard Martinez, who served five days in jail for a DWI in 2019;

• Then-Republican Rep. Monica Youngblood, who was convicted of DWI in 2018;

• Then-Republican Rep. Joe Thompson, arrested in 2004;

• Then-Sen. Phil Griego, twice convicted in 2000 and 2001; and

• President Pro Tem Mimi Stewart, convicted for intoxicated driving after a lobbying event in 1999.

Working against the advocates, too, was alcohol’s often-hidden role in lawmaking. During each legislative session, lobbyists wine and dine New Mexico’s unpaid lawmakers at renowned watering holes such as Santa Fe’s Bull Ring and Rio Chama steakhouses.

The pervasiveness of alcohol in lawmaking makes reform difficult, Maestas said.

“Every restaurant we go to, there’s the liquor license guy,” he said. “You’re choosing good public policy over people you know, and that’s a tough vote.”


A forgone conclusion

By the time the 2017 legislative session began, opponents of the tax increase were fired up. The first hint came Feb. 5, Super Bowl Sunday, when one of the bill’s sponsors, Sen. Cisco McSorely, D-Albuquerque, held a town hall for constituents in Nob Hill’s Immanuel Presbyterian Church.

Erway was among the crowd of 300, many wearing New Mexico Brewers Guild shirts, according to a blog post by attendee Chris Jackson, who published under the byline Stoutmeister. The mood was contentious. When McSorely tried to correct the misconception that the bill would impose a tax on small breweries, which it in fact exempted, Erway shouted, “Liar!” and was nearly ejected.

On Feb. 20, the bill was heard by the Senate Corporations and Transportation Committee at the end of a long hearing. As McSorely prepared to present the bill to his colleagues, one joked, “I’d hoped he’d gone to bed,” to laughter.

“Did you bring beer before it’s taxed?” another asked.

McSorely made opening remarks and introduced Peter DeBenedittis, the former media-literacy instructor and motivational speaker who was the face of the campaign. His testimony brimmed with facts and figures about how hiking the tax on alcohol would raise revenue and reduce public expenditures but wearied some.

Committee Chairman Clemente Sanchez, a Democrat, interrupted, “You’re not gonna go through every one of these slides, are you?”

DeBenedittis concluded by thanking the committee “for hearing how this bill creates jobs and grows New Mexico’s economy.”

Then opponents spoke. Jeff Lewis, executive director of the New Mexico Brewers Guild, acknowledged the bill would exempt craft brewers but signaled unity with the rest of the industry. “We’re part of an ecosystem that includes restaurateurs, hoteliers, our partners in the distribution business, the grocers,” he said, “and for that reason, we can’t support it.”

Asked if the industry would be open to negotiating a smaller increase, Jimmy Bates, the head of Premier Distributing, rejected compromise. “Any tax increase, Mr. chairman, we’d be opposed.”

And Nancy King, a lobbyist for Anheuser-Busch, noted raising the tax by a quarter per drink would amount to “a 589 percent increase,” although the jump seemed dramatic only because the existing rate was so low. Later that fall, as legislators approached reelection, Anheuser-Busch would shower them with $30,000 in political contributions.

Democratic Sen. Michael Padilla, whose Albuquerque district includes another major distributor, Admiral Beverage Corp., said he saw the tax as both too high and too low. “Even though it’s excessive, I just don’t think it’s going to really change behavior.”

By a vote of 5-4, the committee tabled the measure. That proved to be the high water mark of the campaign.

“All the doors I had opened in the Senate closed shut,” said DeBenedittis. He went on to pursue a quixotic run for governor, dropping out in the spring of 2018 when Michelle Lujan Grisham was effectively coronated the Democratic candidate. Premier Distributing, Admiral Beverage Corp. and another distributor Southern Wine & Spirits of New Mexico each contributed the maximum to her campaign committee.

Mann-Lev stepped down from the Santa Fe Prevention Alliance and her successor took the organization in a different direction. Without leadership, the other volunteers lost steam. “It just seemed like we were screaming into the wind,” said Mata.

The bill’s sponsor in the House, Rep. Joanne Ferrary, D-Doña Ana, wished the campaign had held together.

“It takes many years of effort to educate legislators,” she said. “We should have kept trying.”

What it would take

Any effort to raise New Mexico’s alcohol taxes today would encounter different challenges.

A wave of state senators who took office in 2021 shifted the balance of power in the chamber leftward. And Lujan Grisham made her early career heading the state health department and has taken aggressive measures against another public health threat, COVID-19.

But on alcohol, she has not followed the advice of her scientific advisers, according to former Health Department staff members. Michael Landen, the state epidemiologist from 2012-20, said when he sought permission from her staff to talk with legislators about reducing alcohol-related deaths by increasing alcohol taxes, they rebuffed him.

“We’d have to get a go-ahead to do something like that,” he said. “We did not get a go-ahead.”

Asked to comment, the governor’s office wrote in a statement that Lujan Grisham “fully recognizes the scourge of alcohol and substance abuse in New Mexico and will continue to take every evidence-based action to combat this epidemic.”

Those concerned about the state’s over-reliance on oil and gas revenue repeatedly call for diversifying the tax base, and recently, the Senate’s interim Revenue Stabilization and Tax committee held public hearings about alternative sources of revenue.

The committee’s chairman, Sen. Benny Shendo, D-Jemez Pueblo, said raising alcohol taxes is among the options under consideration.

“I think everything should be fair game,” he said.

On the other hand, oil and gas production has pushed the state budget into surplus, relieving the urgency for finding revenue that animated the 2017 session. And in an election year, no one sees political advantage in supporting a tax hike.

But not acting allows inflation to eat away at the value of the tax. The present historically high inflation rate will effectively grant alcohol the biggest tax cut in 40 years.

Meanwhile, alcohol’s harms are growing and with them the need for remedies: Since 2017, alcohol has killed at least 8,000 New Mexicans.

Ferrary argued public health should trump political considerations. “If we can’t be elected on the things that need to be done to help our citizens, it basically isn’t worth it,” she said.

Outgoing House Speaker Brian Egolf sees the issue differently than he did in 2009, when as a freshman he blamed the demise of his dime-a-drink tax increase on special interests. He no longer thinks the alcohol industry has an undue influence. Instead, he attributed the failure to pass a tax increase to the absence of a truly sustained, strategic effort by supporters.

“Quite often there are advocates — and pick the area, it really makes no difference — who have an idea. They have a study or they have data that shows that their ideas are going to make a positive impact,” he said. “They find a member to file a bill on their behalf, “and are outraged or devastated or something in between when it doesn’t pass. And the reality is: Passing a bill on any topic that generates any controversy or disagreement is hard.”

Raising alcohol taxes “could absolutely be done,” Egolf said. “It’s just a question of who is going to step in and put forward the effort to turn an idea into a law.”

This reporting was made possible by support from the USC Annenberg Center for Health Journalism, the McCune Charitable Foundation, the Con Alma Health Foundation, and a fellowship from the Association of Health Care Journalists supported by The Commonwealth Fund.

[This article was originally published by Santa Fe New Mexican.]

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