The beer industry is showing an unusual level of interest in California's ballot, throwing their financial resources into separate debates over raising fees on businesses, ending the state's perpetual budget gridlock and, to a much smaller extent, legally growing marijuana.
Already, beer interests have donated $714,250 to support Proposition 26, which would make it harder to raise government fees … on the beer industry. The money is going into a joint campaign committee that also opposes Proposition 25, which would reduce the Legislature's voting threshold on the state budget to a simple majority.
But their central interest is Proposition 26, which would raise the voting threshold on increasing fees to two-thirds of the Legislature, giving Republicans greater control over the debate and, more likely than not, blocking any fee increases.
"Collectively as an industry, we're more interested in Proposition 26," said Tom McCormick with the California Small Brewers Association.
The largest contributor to the Stop Hidden Taxes coalition has been the California Business Political Action Committee, sponsored by the California Chamber of Commerce, which has given $1.42 million. But the beer industry appears to be one of the single largest special-interest donor to the two campaigns.
The beer industry already has waded into the controversy over legalizing marijuana production under Proposition 19. The California Beer and Beverage Distributors group has donated $10,000 to Public Safety First, which opposes the measure to allow small marijuana gardens on private property. As Ryan Grim at the Huffington Post noted:
The alcohol industry has long seen illicit drugs as a threat to sales, as consumers may substitute pot for booze. A night spent on the couch smoking marijuana and watching television is a night not spent at the bar.
The industry seems far more focused down the ballot, however: defeating Proposition 25 and supporting Proposition 26.
Beer company donors to Stop Hidden Taxes include MillerCoors LLC, Anheuser-Busch Companies Inc., Brown-Forman Corporation, Crown Imports LLC, and the Distilled Spirits Council. Lost Coast Brewery contributed the least amount at $500, while Anheuser-Busch gave $125,000, the biggest single contribution from a beer company to the opposing campaign.
Other donations came from companies like Safeway Inc., Farmers Insurance Group, the Wine Institute, and energy companies Aera Energy LLC, ConocoPhillips Co. and Chevron Corp. Companies other than beer interests have donated $3.9 million to the effort.
“We’re a large group of taxpayers, small and large businesses who are united in opposition to a simple majority for the budget," said Beth Miller, a spokeswoman for the Stop Hidden Taxes Committee.
Small craft breweries, such as Sierra Nevada Brewing Co., have contributed smaller donations ranging from $500 to $5,000. McCormick of the California Small Brewers Association said about those contributions:
Craft breweries are socially minded, environmentally minded, hire locals. … Craft breweries are what the business community should look like. We don’t feel like we should be targeted with excise fees and taxes.
McCormick said the Legislature tends to target the alcohol industry with excise taxes. According to the Beer Institute, which represents the industry before Congress, taxes on the costs of production, distribution and retailing account for 40 percent of the retail price of beer in the United States.
“If taxes are raised on alcohol, it impacts our industry … we lose jobs and sales," said Rhonda Stevenson, director of marketing and public affairs at California Beer and Beverage Distributors. “If the proposition fails, we can continue to provide good-paying, quality jobs for employees and sales.”
For the most part, the Legislature has been able to raise fees on specific industries without a full two-thirds vote from lawmakers. Business interests are afraid that these new fees will be imbedded in the state budget and approved quickly, without Republican opposition, with simple majority vote. Anti-tax activist Joel Fox, writing in Fox & Hounds Daily, wrote recently:
One of the concerns of the business community and taxpayers is that the legislature is calling taxes “fees” to get around the constitutional two-thirds vote requirement to pass a tax.
Fox pointed to a bill in the Legislature this year, AB 1694, which would have imposed "an additional alcohol 'fee' on wholesalers, for alcoholic beverages delivered to retailers, at a rate of 5 cents for each 1.5 ounces of distilled spirits, 12 ounces of beer or 5 ounces of wine." The measure died before the session ended, however.
Under Proposition 25, the voting requirement to pass a budget is lowered from two-thirds to a simple majority – except when it comes to raising taxes. The language of the initiative states: “This measure will not change Proposition 13’s property tax limitations in any way. This measure will not change the two-thirds vote requirement for the Legislature to raise taxes.”
Groups supporting the proposition include the American Federation of Teachers, the AFL-CIO, the California Nurses Association, the California Professional Firefighters Ballot Issues Committee, and the California School Employees Association. The total campaign contributions given to the Yes on 25 campaign is $6.8 million so far.
Carroll Wills, communications director of the California Professional Firefighters, said his members have families and lives, and the uncertainty of the budget hurts people “on a human level.” He added:
Rather than trying to add knots, we should be untying knots and make it easier and possible for elected officials to do their job. Proposition 25 will ease the knots.
The public appears mostly behind the measure.
According to a Field Poll released July 9, a majority of voters (65% to 20%) favored Proposition 25. “The survey finds that majorities of Democrats, Republicans, non-partisans, conservatives, middle-of-the-roaders and liberals are currently supporting Proposition 25,” according to the Field Poll, which did not gauge voter reaction to Proposition 26 in that survey.
The United Educators of San Francisco, a part of the American Federation of Teachers, believes Proposition 25 makes sense and will help schools. Matthew Hardy, communications director of the group, said: “If it passes we’ll see some honest budgeting.”