The Friday revelation that members of the New Mexico state legislature were pursuing an increase in excise taxes caught many of us by surprise. Senate Bill 314, an updated version of the same legislation proposed by the neo-prohibitionist group Alcohol Taxes Save Lives and Money, was dropped on an unsuspecting public by State Senator Cisco McSorley, a Democrat whose district includes Nob Hill.
McSorley invited the the public to a town hall meeting at Nob Hill church on Sunday afternoon, prior to the Super Bowl, to discuss all the items he and Democrats from the House of Representatives are dealing with during the current 60-day session. A crowd estimated at 300 people, many of them wearing New Mexico Brewers Guild shirts reading “Support Local Beer,” showed up.
It was contentious from the get-go. As McSorley began speaking of how SB314 would not harm local breweries, La Cumbre owner Jeff Erway yelled “Liar!” prompting a hostile response from the senator, who threatened to have him thrown out if Jeff interrupted again.
“Excuse me! EXCUSE ME, SIR! If you do not shut up, you’re going to have to leave!” McSorley retorted. “You’re allowed to ask questions, but you have to be polite! Do you understand? Do you understand?”
There was no security present, so one had to wonder if McSorley expected his mostly elderly supporters to help, or if he actually expected the police to show up if called. Things calmed down from there as he got on with the rest of the SB314 portion of his speech.
“The point is, it’s $800 million that it costs the state in DWIs, judges, prison, jail, all those things, plus it goes onto your insurance,” he said, clearly stating his case that an increased excise tax is to pay for the state’s DWI problem, as well as making it personal by bringing up people’s own insurance premiums.
“At any rate, I’ve excluded the local breweries from this tax,” he said, to a smattering of applause. “OK? Because, I want them to develop, I want them to have jobs, I want those jobs developed.”
For those who need a refresher course on just what SB314 is and what it will do to our breweries, see the graphic created by the Brewers Guild above. Or, just take these as the key points of the bill as relating to our craft breweries in New Mexico:
(UPDATE: After consulting with several sources, we have come to the conclusion that the mentions of 8 cents per gallon for breweries under 10,000 barrels of production and 28 cents for breweries between 10,000 and 15,000 are the existing excise tax rates, which will not go up under SB314. Translating government legalese to English is hard, people.)
- Breweries above 15,000 barrels of production per year are subject to a whopping increase of their excise tax from 41 cents to $3.08 per gallon. Santa Fe and Marble would both be hammered by this, as would other breweries looking to surpass it like La Cumbre and, down the line, Bosque.
- All of these tax increases would then go up even higher, as tied to the federal inflation rate, every four years.
- The excise tax on cider would also go to $3.08 per gallon, which would all but wipe out the cider industry in this state, including for breweries that produce cider such as Tractor, Boxing Bear, and Red Door.
After going over multiple other bills, a mix of those McSorley thinks will never get by Governor Martinez (whose name was booed every time he said it) and those he said he hopes will get passed. Eventually, after the state reps had their chances to speak, McSorley got back to SB314.
Jeff and an unidentified craft beer supporter were both able to ask more questions. McSorley answered both, though clearly to neither man’s satisfaction, dodging definitive answers in a classic political style.
“All I know is that the industry has been growing,” he told Jeff. “Go to page two of the bill, you will see that you’re excluded, you won’t be touched. I’m thinking about changing the amounts because Santa Fe Brewing is right at the top there, so I’m thinking about making it a little bit bigger for Santa Fe Brewery (sic). … I’m looking at other states who have done this, and we’re looking to see how they’re doing it, and if we can figure out a way, we’ll do it. Is that fair?”
McSorley saying he may raise the number “a little bit” for SFBC will not cut it. SFBC is planning to reach 50,000 barrels in the next couple years with a final goal of 200,000 barrels, 10 times its current output. Raising those numbers “a little bit” will not nearly be enough. It still goes back to the Guild saying this bill will discourage growth by local breweries, and basically stop them where they are now.
When Jeff challenged McSorley’s answer, he snapped back (again) and repeated his claim that the bill would not harm breweries one bit.
“The local breweries are being left alone, except I might raise the limit (of barrel production) on what is the definition of a local brewery,” McSorley said.
Whether he has decided to ignore the Brewers Association guidelines of what constitutes a craft brewery or is simply unaware, well, that is a question for another time.
A soft-spoken person asked the next question, which gave McSorley a chance to show off his tactical plan of attack against his critics and to drum up public support for the bill. The mostly older, mostly Democratic audience laughed and applauded.
“This question was: How do we make sure it’s fair to everybody? Good question,” he said. “I’ll tell you this, you all know that 80 percent of the alcohol is drunk by 20 percent of the drinkers in this country. It’s mostly the cheap alcohol that they’re drinking, and especially young people. We also know, from national surveys and from state (surveys), that young people are very sensitive to cost. So, the more it costs, the less they drink, it’s true. Instead of buying a 12-pack, they buy a six-pack on Friday night with their fake IDs.”
McSorley has made it clear that he believes, or at least publicly states, that the DWI problem is caused by young people with fake IDs. This makes it an old versus young issue, and since the majority of people who vote tend to be older, it again shows off his strategy. He is making it a moral issue, a fiscal issue with education at the center, and now a sort of it-will-stop-bad-young-people issue.
A final supporter challenged McSorley to the wording of his bill, but McSorley dodged the question and repeatedly told the supporter to just read it.
After the town hall concluded, Jeff and McSorley continued their dialogue, in a much calmer and more peaceful tone.
Other people in the crowd approached the clusters of craft beer supporters, including myself and members of the Tractor Brewing staff. One woman, who identified herself only as a teacher with Albuquerque Public Schools, lambasted us for “trying to dominate the discussion.” She said schools are in desperate need of money, and this tax will pay for those needs. She also claimed that teachers make up the majority of craft beer drinkers (really? Wow) and that if the breweries and their supporters do not back off, teachers will en masse boycott breweries.
While what she said might sound silly, do not be surprised if this becomes a new tactic in the supporters of the bill. The number of New Mexicans who want to ban alcohol, even as a means of fighting our DWI problem, are still small. Most are smart enough to realize that prohibition never works. But, switching tactics and making big, bad alcohol the enemy, and poor, suffering teachers and children the victims here, is unfortunately a brilliant strategy. McSorley hinted in his comments that he plans to see the tax money go to schools, and expect him to push that agenda forward.
Save the children at the expense of business. A dirty, underhanded tactic? You betcha, but this is politics, and we cannot be surprised that they would stoop this low.
Throwing more money at the DWI problem will not make it go away. Putting repeat offenders behind bars for good, improving treatment programs for first- and second-time offenders, and improving public transportation throughout the metro area (not just along Central) are all ways to combat what is a real problem. Blaming breweries for the problem and taking away money and jobs is not the answer.
The good news, according to the Guild, is that five of the nine committee members who will hear SB314 have been allies of our craft beer industry in the past. If they hold fast against people trying to moralize a tax increase, SB314 will die before it ever reaches the senate floor. Once there, it remains to be seen which way the political winds are blowing. By all accounts, the Governor will veto any tax increase that Democrats put on her desk.
This cannot come down to an alcohol versus kids debate. The breweries, as well as our state’s wineries, cideries, and distilleries, will lose that fight. It has to be a debate about jobs. If SB314 passes, it will stop brewery growth, and job growth, dead in its tracks. It would only offer a short-term revenue boost to the state, because some larger breweries would move away, while smaller ones would simply close up shop. There are nearly 70 craft breweries operational in New Mexico, employing hundreds of locals, and supporting numerous other local businesses and charities. They are generating revenue into the hundreds of millions.
For a one-year tax boost, would this state really wipe out one of its only growing industries? One that is locally owned and now becoming a part of the tourism this state desperately needs, it should be added. Somehow we hope, no, we believe cooler heads will prevail and SB314 will never come to pass.
In two years, though, Martinez will be gone, Democrats will still control the legislature and likely have one of their own in the governor’s office. If New Mexico has not solved its financial woes by then, all bets are off for every industry in this state.
We will keep everyone as updated as possible, starting with the date the committee hearing will be held. We also hope to sit down with Jeff and other key brewery and Guild personnel in the near future so that we may understand this situation even better than we do now.
In the meantime, just keep supporting your favorite breweries in any way you can. Hopefully this storm will pass soon and we can just get back to arguing about who has the best IPA and nicest patio and so on.
11 Comments Add yours
Thanks for sharing this important info.
Thanks for the information, I own The Brew House aka The Grant Brewing Co in Chama NM. We are small cidery, and currently setting up a 3bbl system.SB314 will probably cause me to close if it passes.I work with local farmers for apple’s and hops,this will hurt them as well. Support your local breweries and farmer’s,and say NO to SB314.
Just contacted my senator (Candelaria) and voiced my opposition.
Great write up as usual. I would only add that the first 40 minutes were spent whining about the state budget to justify the new tax. Whenever a new tax cannot be rationalized, proponents always fall back on the ‘it’s for the children’ defense which wins every time. How can that be challenged without appearing like you don’t care about children?
The craft brewery brewing industry is the only private sector segment in New Mexico that is growing. Mcsorley & co see an opportunity to stick their fingers into it, to confiscate money from craft beer drinkers to spend on their own pet projects. This has the real potential of shutting down legitimate businesses who have been creating jobs and paying their share of taxes.
Lastly, it doesn’t take a lot of guts to load up a room with 290 supporters who applaud your every comment, and then answer questions from two or three people who are outnumbered 100-1. Mcsorley ought to meet with Members of the NM brewers guild, local wineries, local distilleries, and local distributors to answer questions about very real concerns, without hundreds of supporters tagging along.
Fair is fair.
Agreed on all accounts. He is a pure politician, which are the worst kind.
Having the town hall on Super Bowl Sunday, I think he was legitimately surprised there was any opposition there at all. That was a strategic move on his part.
I have a child. His school is being seriously impacted by the state budget cuts. It sucks. But there’s no way anyone can convince me that killing an growing industry – one of the few NM has – is good because it’s “for the children.” BS. Politicians who use that argument need to be called on it.
I’ve listened to a *lot* of hot air over the past few years about how New Mexico loves entrepreneurs, New Mexico needs to diversify its economy and so we need to encourage entrepreneurship, Albuquerque wants to be the most entrepreneurial city in the United States, etc. etc. etc.
Well, now it’s time for all those pro-entrepreneurship politicians to put up or shut up. This bill is about nothing more, and nothing less, than hampering entrepreneurship in New Mexico. And the craziest thing is, as written, the bill would hurt the breweries that are the most successful! Ludicrous. As a lifelong New Mexican, sometimes I think there is absolutely something to the “crabs in a barrel” theory. No one is allowed to be successful without paying for it somehow.
Anyone opposing the bill – please contact your senators NOW, along with the senators on the Corporations and Transportation committee, which can kill the bill before it goes to a floor vote.
Of concern is the rewording in the law of the paragraph that applies to NM brewers.
Click to access SB0314.pdf
It keeps the rate of $0.08 per barrel for production less than 10,000 barrels. For production of 10,000 to 15,000 barrels, by deleting the word “over”, it appears that it will apply the $0.28 per barrel to the entire production, not the incremental amount over 10,000 barrels. So the existing tax on 10,000 barrels of $24,800 will jump to $86,800.
A NM brewer striving to reach 20,000 barrels production will see this increase in NM liquor excise tax:
10,000 bbl × 31 gal/bbl × $0.08/gal = $24,800
5,000 bbl × 31 gal/bbl × $0.28/gal = $43,400
5,000 bbl × 31 gal/bbl × $0.41/gal = $63,550
Total = $131,750
10,000 bbl × 31 gal/bbl × $0.28/gal = $86,800
5,000 bbl × 31 gal/bbl × $0.28/gal = $43,400
5,000 bbl × 31 gal/bbl × $3.08/gal = $477,400
Total = $607,600
Sitting in the crosshairs are:
Santa Fe Brewing Co.: 17,930 bbl (2015)
Marble Brewery: 14,800 bbl (2015)
La Cumbre Brewing Co.: 10,800 bbl (2015)
Sierra Blanca BrewingCo.: 8,700 bbl (2015)
Bosque Brewing Co.: 4,000 bbl (2015)