Dodging a bullet – for now

A $7 billion hole in the state budget, and some of the suggested ways to fill it for now include higher taxes on liquor and wine.

That’s what The Star-Ledger is saying today in a sourced story that headlines the solutions with another tax hike on people pulling down $250,000 a year or higher. (That was done by McGreevey about 5 or 6 years ago).

But what we care about is beer, and it looks like beer dodged a bullet for now. But bear in mind that these fixes are for the fiscal 2010 budget, which has to be in place on July 1st with spending and revenues evened out.

So, yeah, beer is safe. For now. But the Legislature won't push this through until June, so higher taxes on beer could still get tucked into that. Just have to wait and see.

And speaking of beer and tax revenue, we tried to find out just how much our microbrewers and brewpubs generate for state coffers via fees and taxes. If you recall, we filed inquiries under the state Open Public Records Act. It was a logical approach, and we asked about New Jersey wineries, too, to create a comparison.

However, we only got half an answer from the New Jersey Treasury, and that was for wineries, expressed as gallons produced for each year from 1996 to 2007, and a multiplier of 70 cents per gallon (yes, Treasury was making us do the math). So for example, in 2007 (a big year for Jersey winemakers) 204,290 gallons were made, multiplied by 70 cents per gallon (damn, that’s a steep tax, but as a finance mind we talked to over the weekend says, “Wine sells for more per bottle”). The math comes to $143,000 for '07, and that’s just a state alcoholic beverage tax tied to production. There’s still the sales taxes the wineries collect, which, alas, is a figure we don’t have.

Ditto for beer. Here’s why ...

• The Division of Taxation has informed this office that they do not differentiate New Jersey microbreweries and brewery/distributors from out-of-state breweries. Therefore, we have no records responsive to your request.

What the state is saying is, they don’t break down entities and revenues paid per entity for their internal reporting, meaning distributor Hunterdon Brewing – and all they beer they sell – gets lumped in with say, River Horse brewery for all the beer they make in Lambertville, which gets lumped in with the next brewer (say Cricket Hill), which gets lumped in with the next wholesaler, and so forth. (The alcoholic beverage tax for beer, according to Treasury, is 12 cents a gallon, or $3.72 a barrel – the 31-gallon unit breweries usually deal in).

Treasury didn’t say they couldn’t tease out the state’s craft brewers and brewpubs to provide a figure. They can and would for a processing fee – and here’s where things stall – of about $3,000, paid by the filer of the OPRA request (to wit, us). And that sum is just a guess on Treasury’s part. And here’s why: No one has ever asked for the information, so all of the computer scripts to capture the data would have to be written and run by the folks working at Treasury, in addition to doing their normal data processing jobs.

So (in Soup Nazi voice), no beer figures for us! However, Treasury did say about 20 million gallons of beer were produced or transacted wholesale in New Jersey in 2007, generating over $2.3 million in alcoholic beverage tax revenue alone. (Most of that figure, undoubtedly, comes via Budweiser in Newark). Again, this doesn’t include sales taxes on beer sold by packaged goods stores, or the mere two sixpacks or growlers breweries can sell per person per visit.

But all is not completely lost. According to figures that Jersey breweries reported to the Brewers Association, the Colorado-based national trade organization for craft brewing, Garden State microbrewers produced 26,376 barrels for 2007. That comes to just over $98,000 in alcoholic beverage tax revenue for the state.

A few caveats, though. Not all craft or pub brewers in the state belong to the Brewers Association (just like not all cranberry producers think the Ocean Spray cooperative is a swinging deal; the brewers have their reasons). Also, the figures from the Brewers Association exclude Pizzeria Uno (as do not publish), because they’re a restaurant corporation that gets kind of batty even if you just want to take a picture of inside their lone US brewpub (in Edison). Additionally, the figures include estimates from the smallest of the small brewers, i.e. companies that produce their beer under contract with other brewers, such as Boak Beverage in Pompton Lakes (20 barrels, by the way, was their estimate).

So, getting the figure from the New Jersey Treasury folks would have been far better, as far as firm, audited numbers go.

Nonetheless, beer means revenue for cash-strapped New Jersey. Of course it’s not going to wash away the red ink and make it so state employees aren’t going to get robbed of 12 days’ pay (furloughs). But Trenton should look at the long-range picture and support the industry, help grow it.

And that, as we’ve been arguing this year, means updating the stifling regulations for brewers, and, like the bullet dodged right now, hopefully skip raising the existing beer taxes.

Anger in Oregon; keep an eye on NJ

PubScout Kurt Epps points out this extortionate tax increase on brewers proposed by four Oregon state legislators.

The lawmakers want to tax Oregon brewers at about 50 bucks per barrel. It’s no secret that states are feeling mortally wounded by the recession. California’s treasury is practically collapsing under the weight of a $41 billion deficit and a Democrat-Republican tug of war that The Governator himself, Ah-nuld Schwarzenegger , is too weak to bust up.

Oregon has just about the lowest tax on beer going, making it a sunny place for brewers. In fact, it’s been three decades since there was increase in their malt beverage tax. Hence, those four lawmakers think they see some daylight here (and not surprising, brewers there say this will jack up the price of an Oregon pint by a third, from $4.50 to 6 bucks.)

But really the vile part of the lawmakers' selling point is they’re trying to wrap this proposal in some social do-goodism, bringing up alcoholism and substance abuse, and tabbing the tax to funding treatment programs.

That’s a load of shit for several reasons, one being the overall generalization and broad-brush blame saddled upon drinking beverages like beer, wine and spirits. (People in government and related agencies need to accept the idea that availability of the beverages is not the sole cause of alcoholism. It's way more complex and the social catalysts are myriad. And honestly, you want to hit a bigger health issue, try pounding on cigarettes.)

But anyway ... Think Jersey, drink Jersey. And Kurt highlighted this story for good reason: Don’t think the folks in Trenton are above trying something similar.

Here’s why: Four years ago, Dick Codey, as our acting governor, told a joint session of the Legislature during the budget address: Good news, we’re not broke; bad news, we’re heading there.

Not much has changed, except we have the current recession that has washed away revenues like sand on the beach in a nor’easter to stir in with our year-to-year budget deficits that have to be covered. That is to say, with the recession boogeyman, us and other cash-starved states are nearing desperation (Obama bailout notwithstanding). And that’s a recipe for Trenton to bump up so-called sin taxes, thinking that it’s a palatable tax affecting fewer people. (It actually works, politically speaking. For example, the per-pack state tax on cigarettes has jumped a number of times since 2005, and people still buy their smokes, even remaining brand-loyal to their Newports, and not opting for Basics etc.)

Governor Corzine is scheduled to pitch his 2010 fiscal year budget on March 10th. The budget proposal should be on the governor’s Web site that day, too, so it’s worth a look at the document to tease out the anticipated revenues and see if the malt beverage industry or taverns are taking a hit.

But remember, the budget in March ain’t the same budget on June 30th, the date by which it must be passed. The Legislature usually grabs this thing and monkeys with it, sometimes disasterously.

So from spring to summer, be alert.

NOTE: This is an election year in the Garden State, so Jersey brewers, the taxes and fees they pay and why our regulations need some changing will be a recurring topic.