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Under the influence: The role of the alcohol industry in New York State politics

The health and social costs of alcohol use

In New York, as in the nation, alcohol causes more health, social and legal problems than any other drug.  More people with alcohol problems enter state-funded drug treatment programs and jails than do users of illicit drugs. Drunk driving is an important cause of motor vehicle accidents and deaths and alcohol problems contribute to domestic violence, child abuse and neglect, family breakup, reduced workplace productivity and unemployment.  Estimates suggest that underage drinking in New York State cost $3.2 billion in 2005.¹  In New York City, 1,408 deaths were attributed to alcohol-related causes in 2006.²  Nationally, about 5,000 people under the age of 21 die as a result of drinking each year.³

Although many people can drink alcohol without problems and some evidence suggests that moderate drinking may benefit some people, it is clear that alcohol contributes to serious health, social and economic problems and that good public policy should seek to reduce these problems without unnecessarily infringing on individuals rights. 

Source:  New York City Department of Health and Mental Hygiene, 2009 ³

To consider appropriate marketing, tax and regulatory policies to reduce the harm from alcohol, elected officials should be able to consider the evidence for and against such proposal objectively and select those policies that offer maximum benefits and minimum cost.   Unfortunately, however, whenever the alcohol industry perceives its business interests to be at risk, it engages in binge lobbying, pouring in campaign contributions and lobbyists to persuade legislators to back its causes.

Role of the alcohol industry

In New York, as elsewhere, many political leaders accept campaign contributions from the alcohol industry, raising doubts as to whether they can make objective decisions on alcohol policies.  In this report, Corporations and Health Watch examines the influence of the alcohol industry on New York State politics. 

This year, the New York State legislature considered at least ten bills to change alcohol taxes, advertising or the rules for selling alcohol beverages to young people. As legislators consider new policies to reduce alcohol-related health and social problems, voters need to know whether they can count on their representatives to make the choices that will best protect New Yorkers.

Unfortunately, evidence suggests that some legislators may be swayed by alcohol industry contributions.   Between 2001 and 2007, New York state lawmakers ranked 7th among states receiving the most campaign contribution funds from the alcohol lobby, accepting $3,267,254 in that period. ⁴ According to the National Institute on Money in State Politics, the alcohol industry gave close to $35 million dollars to state lawmakers and contributed more than $62 million to state-level political campaigns in all 50 of the United States over those eight years4.  As shown below, top contributors were the largest alcohol producers and trade associations in the nation. 

 

TOP 10 ALCOHOL CONTRIBUTORS, UNITED STATES, 2001–2007 C O N T R I B U T O R  T O T A L Anheuser-Busch* $9,968,078 Associated Beer Distributors of Illinois $2,481,301 Diageo† $2,181,562 SABMiller‡ $1,981,739 E & J Gallo Winery $1,703,858 California Beer & Beverage Distributors $1,515,561 Michigan Beer & Wine Wholesalers Association $1,456,331 Distilled Spirits Council of the United States $1,374,194 Wine Institute California $1,372,911 Southern Wine & Spirits of America $1,314,364 TOTAL $25,349,899

Source: Liquid Assets⁴
Notes:
* Anheuser-Busch figures include contributions from divisions of the Anheuser-Busch company, such as Anheuser-Busch Recycling Corp., Anheuser-Busch Packaging Group, Busch Entertainment Corp., Busch Properties and others. Anheuser-Busch figures also include contributions from beer distributors that carry Anheuser-Busch products exclusively, and political action committees specifically representing Anheuser-Busch wholesalers.
† Diageo figures include contributions from Diageo, Diageo North America, Diageo Americas, Diageo Chateau & Estate Wines, and Diageo-Guinness USA.
‡ SABMiller figures include contributions made from the Miller Brewing Company before it was purchased by South African Breweries in July of 2002.

 

The alcohol industry at the federal level

The alcohol industry also operates at the federal level. In May, Senator Max Baucus, chairman of the Senate Finance Committee, said that proposed legislation to raise taxes on alcohol and carbonated beverages “are on life support,” during an interview on CNBC.⁵  Baucus was referring to proposed legislation that could increase taxes on alcohol and non-diet soft drinks as a means of raising an estimated $1.5 trillion over the next decade for the ailing health care system. In 2008, the alcohol industry ranked 38th in terms of total contributions to political candidates at the federal level, with a total of $6,806,440 contributed by individuals and $6,896,513 by Political Action Campaigns (PACs). Contributions to political parties were similar, with a slightly higher percentage (52%) going to Democrats, who received $7,073,492, while Republicans took in $6,619,251.⁵ On the Republican side, in 2008 Arizona Senator and former Republican Presidential candidate John McCain, whose wife’s family heads Hensley & Company, a top Anheuser-Busch distributor, received $152,725 in campaign contributions from the industry.  However, 2008 Presidential election New York Presidential primary candidates Hillary Clinton received $210,750 and Republican Rudolph Giuliani pulled in $186,725 from alcohol industry contributors. 

Political party committees also received support from the alcohol lobby, taking in $13.8 million dollars; other types of recipients were ballot measures, Governors and Lieutenant Governors and other statewide candidates. The Democratic Assembly Campaign Committee of New York and the Senate Republican Campaign Committee of New York accepted respectively contributions worth $450,693 and $420,592 in alcohol lobby funds during the 2001-2007 period, making these two groups among the top 10 recipients in the country. Contributions to both parties show that the alcohol industry wants influence on both sides of the aisle, a sensible strategy in Albany in the last decade as each party controlled one legislative house.     As for alcohol industry contributions to individual political candidates, New York’s former Governor George Pataki made the top ten recipients list, taking in $224,253 in alcohol lobby funds over this time period.

New York Policy Agenda

Like other industries, the alcohol lobby contributes to the electoral process to advance its political agenda. In New York, one priority has been to maintain the state’s relatively low taxes on alcohol.   Some evidence suggests that higher alcohol taxes are effective in discouraging youth drinking.⁷ A recent research review concluded that raising alcohol taxes cuts alcohol consumption and is among the most effective way to reduce alcohol-related disease mortality.⁸ Like many states, New York, severely affected by the economic downturn, has looked to increase revenue and decrease budget gaps by increasing taxes on alcohol.  This economic meltdown may help to reduce the alcohol industry’s influence as legislators desperately seek new revenue sources. This spring, for example, New York State passed two new taxes on wine and beer.  The first is an excise tax increase from $.11 to $.14 per gallon for beer and $.1893 to $.30 per gallon for wine, a 58% increase.  Even with these increases, New York State remains well below the national median of $.185 and $.67 per gallon for beer and wine respectively.  This increase moves New York State from 10th to 15th in the ranking  of states with the lowest taxes on beer (although NYC adds another $.12 per gallon tax on top of that), and from 2nd to 5th lowest in terms of wine taxes.⁹  In addition, a one-time “floor tax” was imposed for any seller of beer or wine, requiring wholesalers and retailers to pay a one-time tax on any inventory in house on May 1st.^10, 11

The beer industry in New York has also seen recent increases in fees paid by distributors.  Handling fees paid by beer distributors rose from $.02 to $.035 per bottle.  In addition, 80% of the unredeemed bottle deposits formerly kept by distributors is now claimed by New York State, with the remaining 20% going to bottlers in a deal brokered by lobbyists for Coca Cola.12 These changes along with a new requirement that all beer cans and bottles have a NY-specific Uniform Product Code caused one brewery, Yuengling & Son, to threaten to leave the state.

In April, wine store owners in New York defeated a budget bill supported by Governor David Paterson and the grocery store lobby that would allow wine to be sold in supermarkets and other retail outlets including bodegas and gas stations in an attempt to increase tax revenues through increased wine sales. Of interest, in this case the special interest of wine store owners perhaps coincided with the broader public health interest of reducing the availability of alcohol products, a change associated in some studies with reduced alcohol problems.¹³

This year, New York State Assemblyman Felix Ortiz proposed a bill to increase taxes on all types of alcohol, with a proportion of the proceeds dedicated to funding the drug and alcohol treatment and education programs that have been cut in the latest state budget passed in April. Despite recent tax increases, however, inflation-adjusted alcohol taxes in New York remain close to half of what they were in 1990.¹⁴  Thus, despite recent modest advances, New York remains one of the friendliest states for the alcohol industry.

Window of opportunity?

New York’s alcohol policy sits at the intersection of three major state crises.  First, the state is facing a large and growing budget shortfall, requiring the identification of new streams of revenue.  Second, the state’s rising health care costs are exacerbating the budget crisis, claiming an ever-growing share of state revenues.  Finding new ways to reduce health care costs by preventing illness is an urgent priority.  Finally, as Democrats and Republicans battle for control of New York State’s Senate, lobbyists and special interests exert a growing influence in this power vacuum, threatening to further distort and corrupt public interest.  Does this   confluence of trends present a window of opportunity for good government, public health and alcohol control advocates to propose policies that can bring in new state revenues from alcohol taxes, reduce health care costs by using state policy to prevent alcohol-related health problems and clip the wings of special interests that seek to benefit at the expense of public health? Stay tuned.

 

References

 

Photo Credits:
1. lauramary