Oregon Governor Tina Kotek has asked the Oregon Liquor and Cannabis Commission to suspend consideration of a 50-cent surcharge on liquor sales.
The commission was scheduled to vote on the fee increase next week.
The proposed increase was part of a broader policy shift the advocacy group Oregon Recovers is trying to pitch to state lawmakers: Use the price of alcohol as a lever to nudge people to drink less.
It’s an argument based in part on the significant public health cost of alcohol in Oregon and in part on a scientific re-evaluation of alcohol that is finding even moderate drinking can have harmful health effects over time. Alcohol is a leading cause of preventable death in Oregon, and the state’s alcohol-induced death rate is significantly above the national average.
The governor’s decision means that, at least for the foreseeable future, Oregon is not increasing the price of liquor. A separate proposal to raise taxes on beer and wine never made it off the ground in the legislative session.
Kotek, who has made the state’s inadequate mental illness and addiction treatment system a major priority, proposed increasing the liquor fee when she released her budget recommendation earlier this year. She proposed directing the revenue from the fee to support mental health and addiction services.
In a letter to the commissioners sent on June 7, Kotek said better than expected state revenue forecasts will allow her to fund those essential services without needing the surcharge.
And due to the ongoing walkout by Republican state senators, the governor has little ability to guarantee that a fee increase would be used to address her priorities.
“Without further specific action by the legislature this session, any surcharge approved by the Commission would go into the General Fund with no designated purpose, undermining the purpose of the recommendation,” Kotek wrote.
Kotek was also facing another problem: She likely did not have enough votes on the OLCC commission to pass the proposal, which faced stiff opposition from Oregon’s restaurant and hospitality industry. Restaurants have been hit hard by the pandemic and inflation, with many Portland institutions closing for good.
The OLCC is currently a six-person commission — one commissioner short, after Kotek asked the chair to step down as part of the scandal over agency staff diverting expensive bourbon.
“You were going to probably end up with a three to three split,” said Mike Marshall, director of Oregon Recovers. “Until the governor can appoint her own person to that 7th position, it didn’t necessarily make sense to move this conversation forward.”
Two commissioners had voiced skepticism toward the proposal during public hearings held over the past two months.
Commissioner Kiauna Floyd said she believed the proposed fee increase would lead to job losses at the Portland restaurant she owns. Commissioner Jennifer Currin, a Pendleton attorney, had questioned the strength of the evidence behind raising fees on alcohol as a strategy to curb excessive drinking.
In recent weeks, Oregon Recovers had sought to have Commissioner Floyd, the restaurant and alcohol industry’s official representative on the commission, disqualified from the vote — a tactic that may have backfired, given the governor’s decision to withdraw her proposal entirely.
“The public hearings really laid bare the fact that the current commissioners don’t understand their responsibility,” said Marshall. “Too many of them view their role as promoting Oregon’s boutique alcohol industry, when in fact their legislative charge is to protect consumers in Oregon.”
OLCC spokesman Bryant Haley said the agency is charged, in the state’s liquor control act, with balancing the needs of public health and the needs of the industry.
“The statute, which is the basis of the OLCC’s existence, speaks to its role supporting public health — and supporting business,” Haley said.
The commission, he said, values the public testimony it heard from all sides of the debate, including Oregon Recovers.