The alcohol industry notched a victory Saturday as the Legislature approved an alcohol tax hike of less than a penny-a-drink on beer and hardly more than that for liquor and wine, a fraction of the 18- to 20-cents public health advocates pushed for in this year’s session.
Lawmakers also rejected a $5 million request from the Department of Health for a new Office of Alcohol Prevention, despite the state’s historic budget surplus. A DOH spokesperson said its epidemiology division would create a smaller version of the office anyway, using an additional $2 million lawmakers added to the agency’s budget.
Public health experts say the tax increase is so small that it’s unlikely to have any effect on excess drinking, let alone tackle New Mexico’s worst–in-the-nation rate of alcohol-related deaths.
The chair of the House tax committee, Rep. Derrick Lente, D-Sandia Pueblo, who had rejected a compromise 5¢-per-drink proposal passed by his counterparts in the Senate, acknowledged the final increase was minor on the floor of the House of Representatives on Saturday morning.
“If we want to call it minimal, we can call it minimal,” he said. “But…we are getting the ball rolling in the right way.”
Some supporters of higher liquor taxes saw the measure as a glass-half-full, noting it was the first time the state had increased alcohol taxes in 30 years. “I look at this as a first step, not the end,” said Sen. Majority Leader Peter Wirth, D-Santa Fe, during a committee hearing Friday in which he and other Senate negotiators capitulated to the House’s much smaller alcohol tax hike. (Microbreweries and small wineries and distilleries are entirely exempt from the increase.)
Others eviscerated the tiny change in rates.
“How many more people have to die,“ asked Sen. Shannon Pinto, D-Tohatchi, who co-sponsored the bill that called for a flat 25-cent tax on all drinks. “We’re losing kids at 21, at 23, because of cirrhosis of the liver,” she said in an interview, castigating her colleagues for taking incremental steps.
Cirrhosis of the liver is the fourth-leading cause of death among New Mexicans aged 25 to 34, and second-leading for those aged 35 to 44, according to state health data. One in three deaths of New Mexico residents aged 20 to 34 are alcohol-related, according to the Centers for Disease Control and Prevention, the highest share of any state.
A much larger tax was needed, Pinto said, and it would have generated tens of millions of dollars more to fund programs to help people reduce their drinking.
Sen. Antoinette Sedillo Lopez, D-Albuquerque, another co-sponsor, said she was disappointed her colleagues had raised the tax “so little” amid “incredible social, physical, and economic harms” attributable to excess drinking. More than 2,200 New Mexicans died of alcohol-related causes in 2021, according to estimates from the Department of Health, capping a decade in which such fatalities nearly doubled.
Shelley Mann-Lev, the volunteer leader of advocates supporting this year’s measure and a similar bill in 2017, called what lawmakers did “negligible” and refused to describe this year’s outcome as a tax increase.
Because New Mexico’s alcohol taxes do not currently adjust for inflation, this year’s change in tax rates barely returns the state to the real tax rates on beer and wine as of 2017, and liquor as of 2019. At today’s level of inflation, the hike will be nearly erased by the state’s next 60-day session. The advocates had sought to make automatic adjustments for inflation going forward, another element of their bill that was killed.
Still, Mann-Lev said she hoped the energy during the legislative session would help grow a statewide coalition of people working together to push for changes next year.
In other places that have boosted taxes to raise the price of alcohol, study after study has shown they reduce excessive consumption and with it injuries and illness due to drinking.
New Mexico’s deepening public health crisis emboldened Mann-Lev and others to seek the tax increase this year amid signs of an altered legislative landscape. In contrast to the campaign six years ago, which saw a similar tax proposal die in its first committee, this year’s proposal made it through multiple legislative committees.
In the final full day of the session, six lawmakers from the House and Senate negotiated between an already much reduced 5-cent hike senators had passed and the minuscule tax increase sought by the House. They wound up agreeing to rates for liquor and wine that were even lower than those passed by the House.
Ultimately, the campaign didn’t survive a coordinated attack from businesses that profit from alcohol sales and their experienced lobbyists, who repeated arguments they made in 2017 that a tax increase would hurt businesses and cast doubt on the science that it would curb alcohol-related harms.
The alcohol industry — and in particular the world’s largest beer producer, Anheuser-Busch — has showered nearly three-quarters of a million dollars on New Mexico’s elected officials over the past decade. More than 200 candidates accepted the cash over that time, with two of every three dollars going to governors and a subset of lawmakers chairing specific legislative committees that decide the fate of bills affecting the industry.
In addition, many of the industry’s high-octane lobbyists are themselves former state lawmakers, government officials, or legislative staffers who have known sitting legislators for years or even decades.
In legislative hearings, industry representatives opposing the tax increase repeatedly praised a different proposal to redirect all alcohol tax revenues to treatment and prevention. Currently, about half those revenues go into the state’s general fund.
That measure wound up in the omnibus tax bill. Because of the enormous scale of the alcohol business, even the penny-per-drink tax increase passed by lawmakers is projected to generate $10 million a year, about $35 million less than the 5-cent tax hike the Senate had supported. The new tax rates will take effect in January 2024.
Ted Alcorn contributed to this report.