BOISE — A bill that would have resulted in the Idaho Wine Commission’s annual budget being cut by more than a third has failed.
The bill would have taken about $140,000 out of the IWC budget, which is currently $416,000.
That $140,000 total is about what the commission receives each year from an excise tax on strong beer — beer that is above 5 percent alcohol — that has gone to the IWC for more than three decades.
Since the money is not being used to promote beer, supporters of Senate Bill 1365 preferred that the money go to the state’s general fund.
But the bill was voted down 15-19 on the Senate floor March 4 after enough legislators agreed it’s not a good idea to take money from an agricultural commission and redirect it toward the general fund.
“I think it’s real risky to start a policy like this,” said Sen. Jim Patrick, a Republican rancher from Twin Falls.
When Idaho began allowing, and taxing, beer above 5 percent alcohol in 1988, the money was directed to the wine commission because there was no significant craft brewing industry in Idaho.
During public testimony on the bill in a Senate committee, the argument was made by the bill’s supporters that the money would do more for the general good of Idahoans in the general fund.
“The wine growers have been marketing wine with the money and the beer producers have not been getting anything out of that,” said Sen. Carl Crabtree, a Republican rancher from Grangeville who sponsored the bill on behalf of some members of the beer brewing industry. “So the thinking (of the beer brewing people) is, let’s move that to the general fund so others can benefit more than simply the wine commission.”
But during the senate committee meeting and a separate Food Producers of Idaho meeting, the counter-argument was made that it was a dangerous road to go down to take funds from a farm or ranch commission.
Few people disagreed that the money should be used to promote beer but since it is not — the bill’s supporters said the $140,000 amount is not enough to accomplish anything significant — most people felt it should not be taken from an existing agricultural commodity commission.
Idaho Beer Alliance Executive Director David Arkoosh said his group’s members oppose the legislation because it’s premature.
“It doesn’t offer a higher or better use for this money and it simply takes it away from the wine commission,” he said. “The net effect is defunding an agricultural commission without putting the money to any other use, which is a dangerous precedent to set.”
During the March 4 meeting of Food Producers of Idaho, which represents about 40 of the state’s main agricultural groups, opposition to the proposal was strong.
“I think it’s really, really unfortunate this money is leaving agriculture,” Rich Garber, director of governmental relations for the Idaho Grain Producers Association, said before the bill was defeated. “I can’t understand why they can’t find a place for it that will benefit agriculture.”
John Eaton, who represents the Idaho Association of Commerce and Industry’s potato committee at FPI, said the IWC has done a tremendous job promoting Idaho wine producers.
A recent economic impact study commissioned by the IWC showed the wine industry had a $210 million economic impact on the state in 2017.
“I don’t think just taking 40 percent of their budget is a good policy for the state,” Eaton said. “It’s not creating a solution that’s fair to the wine commission.”
“Certainly we don’t support this legislation,” said Idaho Sugarbeet Growers Association Executive Director Brad Griff, who made a successful motion during the FPI meeting to oppose the bill.
Brew pub owner Daniel Love, president of Idaho Brewers United, said the idea of what to do with the tax dollars from strong beer has been discussed for several years and numerous possibilities were investigated to try to find a way to use the funds to promote beer, including forming a beer commission.
Stakeholders also sat down with officials from the state’s tourism division and commerce and agriculture departments, as well as agricultural commissions representing hop and barley growers.
“They all told us steadfastly they … didn’t want to take us on because the dollars were not enough,” Love said. “We tried numerous times to find another home for it.”
The legislation would have phased out the beer tax money the wine commission receives over a two-year period.
During public testimony on the bill in the Senate, Roger Batt, who represents the wine commission at the legislature, said losing $140,000 would have a major impact on the IWC.
“We are going to see an impact to our commission, our marketing, and it’s going to be a significant one,” he said.
IWC Executive Director Moya Shatz-Dolsby said the different stakeholders will continue discussing the issue and her industry will formulate a plan this year to replace the beer tax money that seems destined to eventually be taken from the wine commission.
That could include asking for the wine commission to receive a larger share of the wine excise tax, which is 45 cents a gallon. The IWC currently gets 5 percent of the tax, which comes out to 2 cents a gallon.
The wine industry could also discuss the option of raising the voluntary assessment that Idaho wine grape growers currently pay to help fund the commission. The assessment is currently $7 per ton of grapes, which brings about $45,000 a year into the commission.
Now it’s back to the table for the beer brewing industry and other stakeholders to try to find a workable solution that legislators will approve.
The IBU and IBA, which represent the state’s beer brewers, disagreed on the proposed legislation, while no one, not even the wine commission, disagrees the money should be used to promote beer.
The problem is there is no agreement on how to accomplish the goal of using the money to promote beer while ensuring the wine commission’s budget remains whole.