The House Tax Policy took testimony on HB 5059, legislation to allow local units of government to ask the voters of the community to assess a per-glass excise tax on alcohol. This legislation was requested by the City of Royal Oak and was sponsored by Rep. Marie Donigan. Rep. Donigan said that Royal Oak, like other communities, are losing money because of revenue sharing cuts and need alternative ways to provide public safety.
The City Manager testified that they would ask the voters for a 10 cent per-glass tax. They stressed that this is a local option and that the voters would decide. Three firefighters also testified. They stressed that they provide significant fire and police service for people who do not live in Royal Oak. They said that the people pay the taxes, but the visitors who come to Royal Oak bars are the ones that are seeing the benefits. Several questions were asked.
Rep. Kandrevas asked about the nexus from liquor taxes to public safety (and why not clothing or other retail). The firefighters said that drinking leads to fights and drunk driving and other emergency services that are needed.
Questions were also asked about if this would push people away from any community that passes a tax like this. The City Manager said that he didn’t think that a dime would scare anyone away. He also said that there is approximately 12 million drinks served in Royal Oak per year, and that this would bring in $1.2 million if passed. That would be about 1/5 of the city budget deficit, and would be a big part in helping them solve their deficit.
Several committee legislators seemed skeptical about the proposal. This legislation still needs work for the details and is expected to receive another hearing soon. The League supported the bill as a local option available to communities, but time ran out on testimony.
Andy Schor is the Assistant Director of State Affairs for the Michigan Municipal League. Contact him at (517) 908-0300 or by email.
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