Update, April 24
According to the Associated Press, House Democrats have dropped the beer tax expansion.
AP reports, "Democratic Rep. Reuven Carlyle, one of the chamber’s budget writers, said the tax might have been subjected to a ballot challenge from large beer companies. He said it could have created problems for the larger goal of increasing education funding."
The tax extension would have raised a projected $60 million over two years.
Original, April 18
Several small breweries in Ballard are shifting their feet nervously as the Washington State Legislature considers a beer tax that could sky rocket the cost of running business for them.
"The increased excise taxes which are being proposed would mean an even greater challenge for us not just to grow, but just to keep the doors open," said Amy Besunder, co-owner of Populuxe Brewing.
The tax in question would be an extension and expansion of a new excise tax on breweries made in 2010. That tax, which only affects breweries that produce more than 60,000 barrels per year (just Red Hook brewery), put on an extra 50 cents per gallon. Effectively, it increased the price for Red Hook from $8 per barrel to about $24 per barrel.
Meant to be temporary, the tax is supposed to sunset in July of this year, but Inslee's budget proposal would keep it going. His proposal would also include getting rid of the exemption on smaller breweries, meaning it would affect anyone and everyone in Washington.
It would include all of the new breweries that have sprouted up in Ballard in recent years, even those as small as Populuxe, a nano-brewery which produces roughly nine barrels a month.
The tax right now is just $5 per barrel for smaller breweries, but Inslee's tax would increase it to $20 per barrel, sources say.
In addition, a separate but similar budget proposal in the state house of representatives would have the tax doubled for small breweries, while at the same time giving a small tax break to bigger corporations.
In an interview with the Ballard News-Tribune, Ryan Hilliard of Hilliard's Beer was noticeably upset by both of the proposals.
"That kind of math baffles me," he said. "It just baffles me how they want to stifle our industry."
He explained that Hilliard's Beer paid $7,500 in excise taxes last year. If the House's beer tax expansion were to go through, he would end up paying $15,000, if production were to stay the same. But, he said, production has been increasing and they could be paying as much as an extra $10,000 in excise taxes. Under the Governor's proposal, they would be paying even more.
"At this point in this year, we're not cashful positive. If those taxes go through, I don't know if we can keep everyone," Hilliard said.
He added that he would like to employ more people but wasn't sure if he could with the new taxes. Currently, he employs six full-time employees.
According to a report on the Beer Institute, "from grains to glass," beer adds $4.3 billion to the state economy. Washington is home to 300 brewers and beer distributors and accounts for more than 42,000 jobs, including growing grains and hops, brewing, bottling, distribution and importing.
Ballard in particular as of late has been experiencing a kind of brewery boom (we went in-depth on this in our article, "In Ballard, brewery boom keeps booming"), where small brewers are transforming the empty parts of industrial Ballard into a beer destination.
"Like so many of our comrades in beer, Populuxe opened in a small industrial space that sat empty for years," Besunder said. "In opening, we've provided income to our landlords, local jobs, and foot traffic to underused areas, but also places where families and friends can gather."
But, if the tax expansion were to go through, Hilliard is concerned not just about his own brewery's growth, but small brewery growth in general.
"As a result I don't think small breweries are going to be expanding as fast, growing as much, giving as many new jobs," he said.
As it is, Hilliard said, small breweries don't make that much money, and the money they do make they put into growing their business.
"I'm not aware of any small breweries around here driving fancy new cars or having fabulous mansions on the waterfront," Hilliard said. "Given the choice we'd put it in new equipment, make more beer."
He added, "I don't understand where it makes good sense to raise taxes on industries that are growing and providing new jobs, especially in a down economy."
Tomorrow, brewery owners, including some from Ballard, will be going down to Olympia to testify in front of the Legislature.
Then, at 12 p.m., opponents of the beer tax proposal will be holding a rally until about 2 p.m.
On the rally, organizers say:
"Bring signs, mash paddles, bullhorns, a good attitude and dress for the weather. Please arrange carpools as parking at the capitol campus requires payment. We plan to leave the steps exactly as we found them so please be respectful and do not litter.
If you choose to enter the Capitol: No bullhorns or noisemakers. No signs on sticks or posts. No more than 25 people."
You can find more info on the event at https://www.facebook.com/events/520469434675906/
In addition, people can reach out to their state representatives with comments and concerns. Ballard is represented by the 36th District:
Representative Gael Tarleton
(36th Legislative District)
gail.tarleton@leg.wa.gov
And copy her Legislative Assistant, Michelle Nance
michelle.nance@leg.wa.gov
Representative Reuven Carlyle
(36th Legislative District and House Budget Committee Chair)
reuven.carlyle@leg.wa.gov
And copy his Legislative Assistant, Joseph Peha
joseph.peha@leg.wa.gov
Senator Jeanne Kohl-Welles
(36th Legislative District)
jeanne.kohl-welles@leg.wa.gov
And copy her Legislative Assistant Adam Cooper
adam.cooper@leg.wa.gov
Zachariah Bryan can be reached at zachb@robinsonnews.com
Follow Ballard News-Tribune on Facebook at www.facebook.com/ballardnewstrib
And Twitter at http://twitter.com/ballardnewstrib
