The Consensus Revenue Estimating Group met April 20 and the report contained more bad news – forecasting $98.2 million reduced revenues for FY 16 and $100.8 million reduced revenues for FY 17.  The current fiscal year estimates reduced revenues of $87.5 million – and increased adjustments of $244.5 million, mostly from the passage of the rescission bill in February.  It is not clear where the $157 million difference will leave the overall budget for FY 15 – ending June 30.  But the mega-budget bill will require further adjustments unless significant tax policy bills are moved forward.

Even with the Governor’sAllotments last Fall, the rescission bill H Sub for SB 4) addressed a $300 million budget shortfall for fiscal year 2015 (ending in June) to prevent the state from defaulting on its financial obligations. The legislation included several transfers, cuts and delays in funding, including $158 million from the State Highway Trust Fund, $7.9 million in delayed payment to the Kansas Employment Retirement System and $7.1 million from the Job Creation Program Fund. The House of Representatives passed the bill by a vote of 88-34. The Senate passed the bill by a vote of 24-13 sending it to the Governor to sign into law on February 16.

Currently, Senate Sub for HB 2135 remains in conference committee – this is the 2015 Legislative Session’s Mega-Budget Bill.  Only the Senate has passed a mega-budget bill this session, which puts the House of Representatives in the uncomfortable position of having to either concur with the version as it emerges from conference, or send it back for more work.  There is no opportunity for floor amendments unless they move forward their own House bill.  The House and Senate Conference Committee ended its negotiations with a tentative agreement, but did not move it to the floor for concurrence – choosing instead to hold it over to the Veto Session.   It is likely that the late session budget adjustments that typically are passed in an Omnibus bill will simply be rolled into Senate Sub for HB 2135.  As it stands, the bill spent about $16 million more than the Governor’s proposed budget – ending up around $141 million below revenue estimates.

The Appropriations Committee will meet this week and Senate Ways and Means will meet next week to cover the discussion of omnibus items. State Budget Director Shawn Sullivan indicated today that the Governor will be meeting with his staff this week to make recommendations for revenue enhancements.  His policies for increasing tobacco and liquor taxes, as well as some income tax adjustments, have seen no action to date.  Both bills had public hearings during the regular session.

House Appropriations Committee -  Thursday April 23 beginning at 10:00 am and Friday April 24 beginning at 9 am in Room 112-N

Senate Ways and Means Committee  -Tuesday April 28 beginning at 3 pm in Room 548-S

County Option and Strong Beer

HB 2200 is hung up in the House for lack of votes.  But the Uncork lobbying corps is working to generate support for county option and/or strong beer.

Now is the time to talk to Senators AND Representatives about the county option.  The Legislature is approaching its First Adjournment deadline April 3, and action could happen any day.  A county option changes nothing about the Big Box Liquor issue.  While some legislators may feel relief that the issue could be determined on a local basis – liquor retailers need to be able to rely on a predictable and stable statewide regulatory system.  Statewide liquor regulation is complicated can be complicated today – and few local law enforcement officers truly know and understand the liquor laws regulating licensees.

Allowing Sunday sales or different hours of sales locally is manageable.  But this proposal will result in counties where no consumer or law enforcement officer can tell from the outside of a business whether or not it sells wine, beer and spirits; or strong beer; or cereal malt beverages.  The rules for the ages of the employees, legal hours of sale, and even the display of products will be different.  There is no reason to assume that all grocery and convenience stores will choose to sell strong beer instead of cereal malt beverage in a county that adopts the change.  We know that some stores have already encountered difficulty convincing the local police that the convenience store across the street is not supposed to sell CMB on Easter or before noon on Sunday.  Does your local sheriff know about this new proposal?

Every retailer in the state WILL be affected by a checkerboard market system that allows corporate chain liquor sales and strong beer sales on a county by county basis.  Product availability, pricing and delivery is currently affected by statewide demand – and that will continue regardless of what each county decides to do.

Ultimately, this is just another way to transfer the current retail liquor marketplace – an industry that encourages Kansas family owned small business success – to the corporate chains.  Local retailers and churches will have no way to combat the expensive Uncork PR machine when it comes to their county.  While the Uncork PR program is now focused on 165 state legislators, imagine the effect when it is pointed to three county commissioners.  Uncork will pay for dozens of petitioners to walk door to door and speak the same over-simplified and often untrue “monopoly” message to your neighbors.  Postcards and advertising will carry that message.

Read the articles about petitioners and problems with liquor laws made by local ordinance:

• Four Indicted in Petition Fraudhttp://www.topix.net/com/kr/2015/03/1503236B5CNF  
• 3 Indicted over Kroger Liquor Petition Signatures http://www.dispatch.com/content/stories/local/2015/01/24/3-indicted-over-petition-signatures.html
• Union - Delaware Counties Sheriff Investigating Kroger Petition Signatures  http://www.thisweeknews.com/content/stories/marysville/news/2014/10/10/union-delaware-counties-sheriff-investigating-kroger-petition-signatures.html

While Uncork wants to paint their proposal as limited and beneficial to liquor store owners, it is simply the same old market takeover.  The provision to “add value” to current licenses by requiring that Big Box Stores would have to purchase a current liquor license will not work as advertised.

First, the current market supports 749 liquor licenses because it includes the sale of strong beer, wine and spirits.  Strong beer sales make up the majority of most store sales (some even as high as 80%), provide customer traffic for sales of other products, and represent growing craft beer demand.

This is proven by the fact that the number of liquor stores in Kansas has remained very stable over the past decade. 

SB 298 and HB 2200 allow strong beer to be sold by grocery and convenience stores with no limitations.  The Division of ABC estimates there are 1775 eligible businesses that might begin selling strong beer if the bill is passed.  At this point, the Kansas customer base will no longer support the existence of 749 liquor stores.  A significant number of stores will fail and their licenses return to the State – there will be no bidding war to inflate the value of surviving licenses.

Second, there are two economic studies – Colorado and DISCUS - indicating that strong beer sales alone (without the big box liquor sales) will result in closure of locally owned retail liquor stores.  I was very surprised to hear one House member state in committee debate that he had never seen anything that showed that strong beer sales would change liquor store sales.  He argued that most beer buyers don’t want to stand in a grocery store line.  It is a surprising assertion, when one considers that virtually every consumer spends some time in a grocery store or gas station during each week.  Why wouldn’t they buy their beer while they are there?

Review the studies:

• Colorado LBA Summit Study 3.2 Beer Impact Update 2011 
• Colorado Economic Impact Study of Replacing 3.2 Beer Sales with Strong Beer Sales 2009
• DISCUS Analysis: Full Strength Beer Sales Impact on the Spirits Industry 2008

Of course, there is also the Dr. Art Hall study commissioned by the Big Box Stores that predicted around 50% of stores would close once beer, wine and spirits were sold by grocery and convenience stores.

Other evidence supporting fewer alcohol outlets per population density:

• Potential Health Effects of Expanding Liquor Sales to Grocery and Convenience Stores – Kansas Health Institute
• Regulating Alcohol Outlet Density: An Action Guide
• Robert Wood Johnson Study 2003: A Case for Regulation: Less Access to Alcohol, Fewer Traffic Deaths

When we talk about limiting the density of alcohol outlets, that discussion needs to include liquor stores, grocery and convenience stores, bars, restaurants, microbreweries and any other retail liquor business, because that is what the studies have measured.

Senate Hearing next Tuesday, March 31 Provides New Opportunity for Retailers

Show Up to Topeka Tuesday, March 31!

The public hearing on SB 298 will begin at 10:30 a.m. in Room 346-S (the old supreme court room) with proponents speaking first.  The Committee will break for lunch, then return to hear the balance of the testimony.  It could extend up to 2:00 p.m.   Coffee and donuts will be provided outside the hearing room beginning at 8:00 a.m. Tuesday.

The Senate Hearing next Tuesday on new Big Box Liquor Bill SB 298 provides a late session opportunity for retailers to make a big impression on Kansas senators.  There has been no action in the Senate on any Uncork bills since 2011, when SB 54 was passed out of committee and then sat on general orders for the rest of the session – unable to garner enough support from the full Senate for a vote.

While KABR has urged members to talk to Representative and Senators each year about the Big Box Liquor issue, many retailers have put most of their focus on the House of Representatives – where the action was.   Meanwhile, Uncork has hired even more lobbyists to spread their message in the Capitol.

SB 298 is similar to HB 2200 as it came out of the House Commerce Committee.  However, the bill includes a county option for corporate chain liquor sales – either by county commission resolution or by petition and election.  It also seems to forego the three year delay for big box and grocery stores where a local election adopts corporate chain sales.

Read SB 298 here. 

Contact Information for Senators Linked Here. Action Items:    (scroll to bottom of this message for more tools) 1.        RSVP – Show Up on Tuesday for the Senate Hearing on SB 298 -   We must make an impression!   RSVP Here. 2.        Send your written testimony to Amy at KABR email by midnight Sunday night.  We need updated testimony from you, your accountant, lawyer, friends, pastor, mayor, sheriff. 3.        Contact your Senator and Representative – Set up a meeting on Tuesday for before or after the hearing.  The hearing is expected to run 10:30 to 12 noon (but you could leave a few minutes early to meet your legislator for lunch) then resume at 1:00 p.m. or so.  Meet in their office, meet for lunch, meet for dinner or a drink.  You must let your senator and representative know that you will be in Topeka and set up a time to talk to them while you are there.  Either or both of them may end up voting on Big Box Liquor before this session ends.  Could be next week, could be during veto session when they come back to Topeka April 29. 4.        Generate phone calls and emails to Senators and Representatives to oppose Big Box legislation.  While there are some legislators who are hearing from a lot of opponents.  There are several who have told me they are discouraged at the lack of communication.  Even if you know your legislator supports you – he or she needs to hear from your employees, customers, vendors, church members, community leaders, local law enforcement in order to support his or her position.  You must provide that support.

Senate Assessment and Taxation Committee Hearing on SB 233

Link to SB 233 – Bill Language

Link to SB 233 – Fiscal Note Explanation

Link to KABR Testimony by Jeff Jones, Grand Slam Liquor

Link to written testimony by Brown Bag Liquor

Neither the Senate nor the House is expected to take action on any of their tax proposals until after the April spring break which begins after Drop Dead Day - April 3.  Once the March and April revenues are reported, leaders will have a better idea how much is needed to fill the budget deficit.  At this point, the Senate is supposed to work on their budget bills tomorrow, while the House has postponed work on its budget proposal.  The House may elect to simply work with the Senate plan.  

Veto session is scheduled to begin April 29, when legislators will come back to Topeka to wrap up the session.  Most years, the veto session lasts only a week or two.  This year, some are predicting much longer.

Hearing:  Proponents

Richard Carlson, Dept. of Revenue

Governor’s budget includes proposals for revenues – encompassed in two pieces of legislation: SB 234 and SB 233.  Tomorrow, will hear SB 234 = 207.11 million revenue.  Today, SB 233 is the other half of the revenue package as proposed by the Governor.

SB 233 increases tobacco tax and enforcement tax.   Testimony, history.  While tax increases are unpopular, will become necessary to be able to put revenue on the table as the session comes to a close and the Legislature must balance expenditures with revenues.

Regan Cussimanio – Kansas Cancer Center/Cancer Action Network – pro-tobacco tax.  Good for public health, encourages people to quit.  Saves public health expenditures.

Dr. Roy Jensen – University of Kansas Cancer Center – no public policy action we can take that would make a bigger impact on my job, treating cancer.  Impacting the price at the counter has been shown over and over again to effectively reduce rates of smoking.  Will save 15,000 Kansans from premature death.  Five times the number of people who died 9-11 or at Pearl Harbor.  Do something that is visionary in nature and not solely focused on present concern of the budget.

Jeff Willett – Kansas Health Foundation – smoking is leading preventable cause of disease and death in Kansas.

Opponents

Jason Watkins, Kansas Beer Wholesalers Association – oppose.  Dunham Economic Impact Study showing loss of jobs and income.   We will lose additional sales to Missouri by making our tax even higher.  Craft beer industry is growing in Kansas.  Raising the liquor enforcement tax will stifle that growth.

Tuck Duncan, KS Wine and Spirits Wholesalers Association – jelly bean bowl – the more jelly beans are in the bowl, the more my niece will eat.  Taxes are the same.  The more revenue we collect, the more we spend. 

Filled a bottle with liquid to represent the percentage of the overall volume that is committed to taxes.

Manufacturer / Wholesaler (gallonage) / Liquor Retailer (enforcement) / Restaurant (drink tax) / other payroll, property taxes.    Over half of the consumer cost of alcohol products is taxes / fees.

One of the few taxes that has consistently brought increased tax revenues to the state annually.

James Franco – don’t have a tax problem, we have a spending problem.  Alcohol and tobacco taxes are terribly regressive.  Mr. Carlson’s testimony points out that Missouri has the lowest taxes on tobacco and very low taxes on alcohol.  Mackinaw Center – Tax Foundation = 15% of cigarettes in Kansas are already smuggled in with current tax rates.

William Kipe (?) – former Ohio budget director – Tobacco tax increase harmful to consumers and businesses.  It is a declining revenue source.   Some people will quit or cut back.  Some will look to the internet for smuggling.  Would be 13 times the tobacco tax rate in Missouri.  Some people will move to vapor products / e-cig products.   Smokers do have options. 

Bill Nigro – Overland Park homeowner – opened Torrie’s pizza in Missouri 1998.  Since then, have opened a number of businesses in Missouri and Kansas.  Sued KC, MO over smoking ban.  Consider myself something of an expert on impact of smoking bans on entertainment businesses.  Drives customers to one side of the state line or another based on policies.  Will drive customers to Missouri. 

Cheaper tax on gas, cheaper tax on alcohol, cheaper tax on food, all in Missouri.   Want to see the people employed in my industry keep their jobs.

Curt Diebel – premium cigar products retailer – all handmade – my customers are not addicted.  My customers are no underage.   I pay OTP tax – the proponents of this bill do not.  Increase would equal 1.19 per cigar (up 71 cents).   My customers have options   1. Might decide to pay their share to help Gov. Brownback balance the budget – unrealistic.  2.  Go to Missouri.  3.  Go to the internet.  4.  Quit altogether. 

Tobacco taxes appear to be the fifth highest tax source now.  Adding $80 million would make it #3.   Quoted article by Gov. Brownback re: Kansas pro-business environment and tax policy.

Whitney Damron – tobacco testimony – list of revenues Kansas received over six years.   Percentage increase in annual cost results in annual increase in revenues.  OTP tax increase will have a negative impact.

Doug Mays – cigar / tobacco industry – if you do nothing, the OTP receipts will continue to increase annually.   Very aggressive marketing of cigar and tobacco products online.   I don’t think anyone believes this bill is before this committee due to health reasons.  I think it is unconscionable to punish through taxation the people who make personal choices to use legal products.  If you can do it with tobacco and liquor, you can do it with all kinds of things. 

Philip Bradley, KS Licensed Beverage Association – skipped – he is at SFSA liquor bills hearing

Tom Palace, Petroleum Marketers and Convenience Stores Association of Kansas – independent fuel distributors and convenience stores.    $547 increase annually to a one pack a day smoker.  Last tax increase ultimately led to a 26% drop in tax paid to the state.  1300 convenience stores – tobacco is the number one product we sell inside the store.  Most people are a single pack buyer daily.  When they come in, they buy a sandwich or a beverage.   By sending buyers to Missouri, we lose those ancillary sales and the sales tax paid on those products.  Also – a big impact to our stores is the inventory tax – that is where your big bump comes in right away.  The convenience store industry is not protected by any laws, we compete against smoke shops

At one time, we had bad compliance – but we have improved to 90% statewide.  We do a good job.  This is a regressive tax we are going to put on 20% of the population, and then we know from history that those sales are going to go down.

Brad Smoot – Distilled Spirits Council of the U.S. – raising the cost of any product changes consumption habits.  The higher the tax rate, the less will be spent on those particular products within the state of Kansas, thereby impacting the jobs and other products sold by those businesses.  That then affects the revenues that come from payroll and sales taxes from the other products. 

This industry is already highly taxes.  For every dollar that businesses make from the sale of alcohol products, the state collects two dollars.

Jeff Jones, Bonner Springs, KABR – see testimony above.

Tom Jacobs – cigar stores and liquor store – have served on the board of the International Premium Cigar and Piper Retailers Association – about fifteen of these premium shops in Kansas.   Have tracked when states increase the targeted tax on these products – and they don’t pay off.   At federal level, looking at pulling premium handmade cigars from the

Also in opposition to the increased liquor tax.  It will affect everywhere – not just near Missouri.  People who buy wine, beer and spirits are for the most part creatures of habit.  When you take the typical $10 product and increase it to an $11 product, they will begin to look at other products.  Budweiser likes to raise their prices every year, so they now have to market 20 packs and smaller packaging because the consumer looks for similar pricing.

Spencer Duncan – Kansas Vapers Association – written opponent

 Multiple written opponents – Read Brown Bag Liquor Testimony at top of notes.

Kansas retailers showed up to hear the testimony from Proponents and Opponents for the Big Box Bill February 11, 12, and 13.   Read First Day notes here.  Read Second Day notes here.  Read Third Day notes here.   Read HB 2200 here.

The hearings this year featured testimony from more than the Kansas retailers who will be impacted by transforming the current private retail system to a private corporate retail system.  HB 2200 puts strong beer in 1775 retail convenience, grocery and big box stores in 2018.  It also allows grocery and big box stores to purchase liquor licenses to sell strong beer, wine and spirits.

There was testimony opposing the bill from former legislative Rep. Jim Howell, Frances Wood - Women's Christian Temperance Union, Seth Fox - High Plains Distillery, customer Ron McDowell, Culture Shield Network, Kansas Association for Responsible Liquor Laws, Kansas Wine and Spirits Wholesalers Association, Kansas Association of Beverage Retailers.  Written testimony was submitted expressing the opposition of sheriffs from Harvey and Montgomery counties, Lyons Bank, EZ Spirits, KS Winery and Viticulture Association, as well as accountants, attorneys and other small businesses.

Uncork Chair David Dillon testified that a 2011 economic study by Dr. Art Hall showed that Kansas would gain jobs and tax income if HB 2200 were passed - even though liquor stores would close.  He said these gains would come from expansion of grocery and convenience store businesses.  Several consumers testified that Kansas should pass the bill for customer convenience.  Lobbyists for the convenience stores and Dillons stated that they were interested in possible amendments.  

Whitney Damron, KARLL, shared a more recent study that shows the loss of jobs and businesses that will occur.

Legislators asked questions - attempting to understand if the bill's provision for grocery stores selling strong beer, wine and spirits would be limited to grocery stores or would include big box stores, drugstores and dollar discount stores.  The expansion of strong beer sales to all convenience stores also raised questions - the strong beer license created by the bill appears to be for convenience stores and big box/grocery stores only, meaning that other retailers who currently sell cereal malt beverages would be unable to get the new strong beer license.  Taverns are not addressed.

Rep. Brunk asserted that the predicted jobs and tax gains seemed unlikely and the current liquor licensing system appears to be more of a free market, since anyone who qualifies can open a liquor store now - rather than the proposed bill which includes caps and restrictions for licenses.

The operator of a small grocery store was asked if he could open a liquor store in his current location, and he could.  The opponents brought forward a letter from the small grocer in Grain Valley who has added his own liquor store and now opposes Uncork legislation.    A Manhattan liquor store owner testified in support of the buyout portion of HB 2200 and felt this was the best deal that liquor stores were going to get.  When questioned, he stated that it would be better for liquor store small businesses if the legislation never passed in Kansas, but stated he didn't think Uncork would ever go away.

Chair Mark Hutton has said that if HB 2200 is defeated this year, he is not likely to hold any hearings next session.  

BY DION LEFLER,  THE WICHITA EAGLE                 02/07/2015 3:08 PM      02/07/2015 3:19 PM

http://www.kansas.com/news/politics-government/article9521867.html

Read more here: http://www.kansas.com/news/politics-government/article9521867.html#storylink=cpy

After years of political stalemate and trench warfare in Topeka, a pivotal next two weeks at the Kansas Legislature could lead to a breakthrough in the battle of the booze.

At issue: Will chain grocery stores be allowed to sell full-strength beer, wine and spirits, and convenience stores allowed to sell stronger brews? Or will the state continue to restrict sales of full-strength alcoholic beverages to independent stand-alone liquor stores?

The state’s largest grocery chains and convenience stores have spent the past five years trying to get a bill passed that would let them sell stronger stuff than the 3.2 percent beer and wine coolers that are all they can currently stock.

So far, they’ve been held off by a determined resistance movement of liquor store owners, who say they’ve poured their lives into their businesses. They fear that allowing out-of-state big-box retailers to sell booze would mean extinction for locally owned mom-and-pop liquor shops.

House Speaker Ray Merrick intervened last week, summoning lobbyists from both sides and telling them to try to work toward a compromise.

Different sides had different takeaways from the House speaker’s meeting.

Uncork Kansas, the coalition of grocers and convenience store owners, interpreted it as Merrick endorsing their effort and trying to get a bill through the House.

Keeping Kansans in Business, the coalition of liquor store owners, said their impression was that Merrick just wants to bring it to a floor vote to settle the question one way or the other.

Rep. Mark Hutton, R-Wichita and chairman of the committee that will hear the bill, said he hasn’t been pressured by the speaker to get the bill through his committee, nor is he pressuring his committee members to approve it.

“He (Merrick) encouraged both sides to have discussions and see if they could come closer to agreement,” Hutton said. “He didn’t ask me to get it out of committee and I’m not talking to members” about how to vote.

Hutton’s Commerce, Labor and Economic Development Committee is slated next week to hold three days of hearings on Uncork Kansas’ bill,House Bill 2200. Proponents will testify Wednesday, opponents Thursday, and neutral parties, such as police and state agencies, Friday.

Committee debate, possible amendments and a vote on the bill will likely come the following week, Hutton said.

The hearings were originally scheduled to begin Monday but were postponed to allow members time to attend the funeral for Annette Hedke, the wife of Rep. Dennis Hedke, R-Wichita. She was killed in an auto accident Thursday.

House Bill 2200 would cap the number of liquor licenses in the state at about 760. Grocery stores that wanted to put high-octane beverages on their shelves would have to buy out an existing liquor store to get the license.

The theory is that would escalate the value of the license high enough to allow the independent liquor store owners to sell theirs to a Dillons or Wal-Mart and make enough money to recoup the investment in their business.

“If anything is moving this bill, it is the support of Kansans who are growing increasingly impatient with the lack of action by the Legislature and liquor store lobbyists reluctant to negotiate reasonable outcomes,” said Uncork Kansas spokeswoman Jessica Lucas.

The liquor store owners argue that major store chains would be able to use their market dominance in groceries to leverage small-time liquor store owners to sell out at cut rates.

“We have never seen an offer,” said David Dvorak, owner of Flint Hills Wine and Spirits in Andover, whose store sits across the street from a Dillons market. “Is it $2,000, is it $10,000? My inventory is $150,000 and I’ve got blue sky (business value beyond the value of hard assets) attached to that as well.”

Dvorak plans to testify at the hearing and scoffed at Uncork Kansas’ argument that its bill upholds free market principles. He said he thinks it is carefully written to let big grocery stores sell alcohol but cut out middle-sized retailers.

“They’re trying to eliminate Walgreens, they’re trying to eliminate CVS, they’re trying to eliminate Dollar General … whoever’s not a grocer is who they’re going to try and eliminate in any bill,” he said. “Well, wait a minute, guys, what’s this free market you’re talking about? If you want to open it up, open it up.”

Despite Merrick’s directive to compromise, the odds seem slim. The liquor store owners don’t want to and the grocery stores think they already have.

“Uncork Kansas has always been willing and ready to compromise,” Lucas said. “The liquor lobbyists never came to the table. So what happened this week is that the speaker said grocery stores have come up with solutions, and you guys haven’t, and I want to see solutions, not excuses.”

Liquor store owners see their opposition as a matter of survival and a last stand for their small businesses.

“We know for a fact that some local liquor stores will go out of business” if the bill passes, said Spencer Duncan of Keep Kansas Jobs. “We also know no Hy-Vee or Wal-Mart or Dillons is going out of business if it doesn’t pass.”

A version of the Uncork bill made it through a Senate committee about four years ago. But it never got to the floor because Senate leaders wouldn’t schedule a vote unless the bill’s backers could line up commitments from a majority of senators.

If it gets through the House committee this time, Merrick will almost certainly put it up for a floor vote. If it passes, then it goes to the Senate. If it doesn’t, it will probably be back next year.

“Kansans want the opportunity to be able to buy their beer, wine and spirits in grocery stores,” Lucas said. “Until legislation is passed that affords them that opportunity, this issue doesn’t go away.”

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

Read more here: http://www.kansas.com/news/politics-government/article9521867.html#storylink=cpy

Uncork introduced their bill in the House Federal and State Affairs Committee on Wednesday.  UnCork Chairman David Dillon requested the introduction of a bill that would allow grocery stores to sell full-strength beer, wine and spirits; capping liquor licenses in the state.  The bill allows convenience stores to sell full-strength beer.   Uncork Kansas has refocused their campaign to convince legislators that this is a consumer movement, that they are working on behalf of their (Dillons) customers and voters of Kansas.

We have obtained a copy of the bill – see attached document.  The bill has not yet been published or numbered.  Hearings are expected the second week of February.

David Dillon has been meeting with numerous legislators in groups and individually.  On Kansas Day, Dillons managers were in the building meeting with legislators, as well.  We are hearing rumors that some House leaders are very interested in pushing this bill forward.  Terry Bruce, Senate Majority Leader, is quoted in the UnCork press release about the bill introduction (read here).  And a liquor store owner from Manhattan has accompanied UnCork representatives meeting with legislators to share his interest in seeing the bill passed in order to provide a market in which he could sell his store.  The first three weeks of the session have revealed an aggressive public relations and lobbying effort by the UnCork Coalition.  

It is imperative that Kansas retailers carry the message of Kansas independent businesses to their legislators immediately.  Ask what they are hearing and where they stand on the bill this year.  Create an open conversation where your legislator can keep you informed what is happening in Topeka and you can be a resource on this issue and the many liquor bills that are rolling out this year. 

Source: The Columbus Dispatch 

By Dean Narciso

Saturday January 24, 2015

A Delaware County grand jury has indicted three petition circulators accused of falsifying signatures on a Kroger liquor option last year.

The six-count indictment, returned yesterday, includes two felony charges each of election falsification and forgery against Felicia Dawson, 49; Shampayne Thompson, 26; and Tiffany Gaston, 38. The fifth-degree felonies are punishable by up to one year in prison and a $2,500 fine.

The women live in Columbus and were employed last fall by Strategy Network to go door to door and solicit signatures in support of a petition for the Polaris Kroger store to obtain a Sunday liquor license. As many as 34 of the required 113 signatures did not match signatures on file, said Josh Pedaline, director of the Delaware County Board of Elections. The women were paid $3 a signature.

The investigation included similar allegations against other Strategy Network workers in Union County, where only 181 of 432 signatures on two petitions were deemed valid for a Kroger Co. liquor option. Many of the signatures appeared similar in style, and some signers misspelled the names, elections officials said at the time.

Gary Wallace, Union County elections board director, said he was told by an investigator that that case is moving forward. No criminal charges have been filed.

Neither Kroger issue made it to the November ballot.

Ian James, Strategy Network's CEO, said he's been working with law enforcement in other counties but has no information about other criminal charges.

"When someone breaks the law, we work with law enforcement to fully prosecute them," James said. "They are not only breaking the law, but also ripping us off and ripping off our clients.

"We're not talking about a lot of money," he added. "If you're collecting 50 signatures and making $4 or even $5 a signature, why would you put yourself in legal jeopardy and a felony for $250? It's stunning to me that people think that they can break the law and not get caught."

James said he'll use the prosecutions as examples when hiring new petitioners. By state law, petitioners can't be felons.

Currently, the company has contracts with about 1,500 petitioners. It has obtained more than 5 million valid signatures in nearly 10 years, James said.

The new budget plan released today by Governor Sam Brownback proposes consumption tax increases for cigarettes, tobacco products and liquor enforcement.  Liquor enforcement tax is the 8 percent tax that is paid on all purchases at the retail liquor store.  The proposal increases that tax to 12 percent.  According to the Governor’s Budget Report, the last increase in the liquor enforcement tax was 1983, when it was increased from 4 percent to 8 percent.

The last increase on cigarette taxes was in 2003 when it was increased to 79 cents per pack.  The tobacco products tax has remained at 10 percent of wholesale price since 1972.  The new rates would be $2.29 per pack and 25 percent of wholesale price.    

Thursday evening, Governor Sam Brownback delivered his State of the State address, declaring that Kansas recent tax policies have been successful and that he would stay the course toward achieving zero income tax in Kansas.  Briefly addressing the State’s revenue deficit (projected to exceed $700 million in FY 15 and FY 16), the Governor laid the blame directly on increased expenditures for education.  He recommended rewriting the school funding formula entirely and assured legislators that his proposed two year budget would balance, with revenues exceeding expenditures.

Friday morning, the Governor’s Budget Director Shawn Sullivan and former legislator, now Department of Revenue representative Richard Carlson delivered the budget proposal to a joint meeting of the Senate Ways and Means and House Appropriations Committees.  Some legislators are not sure that the proposed tax plan actually lines up with the promises of the Governor’s speech, because it would revise the statutory scheduled income tax reductions.  (Calling off these further reductions was a primary recommendation of the Paul Davis campaign for Governor.)

The current tax statutes are scheduled to decrease income tax rates progressively, then establish a cap on revenue growth of 2%, so that any additional revenues must be committed to tax reduction.  Under the Governor’s proposal, there would be only one more scheduled rate reduction, reducing the lower income tax rate from 2.7% to 2.66% (paid by those who earn less than $15,000 a year if single or $30,000 a year if married).  The 4.6% rate paid by higher earners would not change.  It would also implement immediately the reduced value of home mortgage interest and property tax deductions to individual income taxes.   (This “haircut” was part of last year’s tax bill, but was not scheduled to begin.)  Revenue growth exceeding 102% would go into a budget stabilization fund (replacing the need for 7.5% ending balance) and growth exceeding 103% would go into a tax reduction fund.  This is similar to the current policy designed to limit growth of government expenditure to 2%, but provides for a reserve budgetary fund before pursuing further tax reduction.

The session has only just begun, and legislators return next Tuesday after the Martin Luther King Jr. holiday to get started on real committee work.  This week, most committees only held informational meetings or agency reports.  

Another new year brings a new round of news coverage for the Uncork Kansas message.  David Dillon, newly retired CEO of the Kroger grocery chain, has been named the new chair of Uncork Kansas and has been meeting with the press and legislators to promote changing Kansas laws to put strong beer wine and spirits into corporate retailers such as grocery and convenience stores.  Read the article.  

The 2015 version of the legislation has not yet been released, but Uncork representatives say that it will include expanding the sale of strong beer to any retailer who could currently qualify to sell cereal malt beverages and grant licenses to sell strong beer, wine and spirits to grocery stores.  The proponents say that this proposal should gain more support because it will limit the number of liquor licenses in the state and those licenses would have to be purchased by the grocery store from a liquor store holding a current license thus giving some “value” to current license holders.  

Liquor store owners point to studies that indicate expanding strong beer sales to 2000 to 3000 additional outlets would be devastating to current liquor stores as proof that this proposal will not provide any “value” for existing licenses.  If current stores fail at the predicted rate of 40% or more, their licenses will likely become available for purchase for very little, or the Division of ABC will have to manage their allotment.  

Uncork says their bill should be printed - or available to read - perhaps next week.  It is anticipated that Mr. Dillon will come to Topeka to request its introduction.  

There are many open questions:  Will the bill be a true "one-strength beer" bill - eliminating 3.2 beer in Kansas altogether?  Or will it allow current CMB retailers to choose whether or not to sell stronger beer?  Will the bill attempt to raise more revenue for the State by increasing fees or taxes?  The current State budget deficit is clearly the biggest issue facing the Legislature this session.  So far, the proponents aren't saying.