House Commerce Committee Narrowly Approves Inserting County Option into Sub for HB 2200 but Must Re-Vote to Pass Bill Out  - Don't forget to thank our supporters!

The House Commerce Committee held a limited public hearing on adding county option to HB 2200 - the Big Box Liquor bill.   Many were surprised to learn that the new language did more than just create a county option.  It changes several elements of the bill, including creating a third class of license for the liquor stores - which has different requirements than the class A and class B licenses.  The motion to create a substitute bill including the new language narrowly passed - the vote was 7 to 7, with the Chairman voting aye to pass the motion.   There was confusion after the meeting as to whether or not the bill was actually passed out of the committee or simply amended.  We learned this evening that the Committee will have to vote again in order to pass the bill to the full House - because the language of the motion was not phrased properly to include passing the bill.  A changed vote by one person could halt the bill's progress and shut down Uncork for the year.     The vote was as follows: YES:  Rep. Mark Hutton, Rep. J.R. Claeys, Rep. Travis Couture-Lovelady, Rep. Erin Davis, Rep. Lane Hemsley, Rep. Marvin Kleeb, Rep. Scott Schwab (replacing Carpenter), Rep. Gene Suellentrop NO:  Rep. Rick Billinger, Rep. Steve Brunk, Rep. Ken Corbet, Rep. Stan Frownfelter, Rep. Fred Patton, Rep. Louis Ruiz, Rep. Jim Ward (replacing Whipple). Did not vote:  Rep. Mason, Rep. Tietze  (Both of these legislators voted yes to get the bill to the floor for a vote of the full House before, but did not assist with adopting the substitute bill today.)  Read the Proposal to Amend HB 2200 from Uncork HERE See Chart for County Option Retailer Act License Descriptions Read the Notes from the Committee HERE Amy Campbell KABR Testimony Opposed to HB 2200 with County Option Tuck Duncan KWSWA Testimony Opposed to HB 2200 with County Option Whitney Damron KARLL Testimony Opposed to HB 2200 with County Option David Dillon, Dillon Food Stores, Testimony Supporting HB 2200 with County Option Mike O'Neal, Kansas Chamber, Testimony Supporting HB 2200 with County Option   The House Could Debate Sub for HB 2200 As Early As Thursday - Senate Delays Liquor Bill Debate URGENT:  It is very important to know if your representative and senator will support Uncork with either of these amendments.  If legislators maintain their opposition to Big Box Liquor, SB 298 and HB 2200 could remain in committee. Please speak to your senator and representative and ask if they are planning for vote for or against Uncork with these amendments.   Please generate as many calls and emails to representatives and senators as you can over the next week from employees, family, vendors, peers, and neighbors!  The hotline is open and operates during business hours:   Hotline:  1-866-519-2200     Email Site for Employees/Customers/Friends:  http://keepksjobs.org                                                   House Commerce Committee: Chair Rep. Mark Hutton Vice Chair Rep. Les Mason Ranking Minority Member Rep. Stan Frownfelter Members House     Rep. Rick Billinger     Rep. Steve Brunk     Rep. Will Carpenter     Rep. J. R. Claeys     Rep. Ken Corbet     Rep. Travis Couture-Lovelady     Rep. Erin Davis     Rep. Lane Hemsley     Rep. Marvin Kleeb     Rep. Fred Patton     Rep. Louis Ruiz     Rep. Gene Suellentrop     Rep. Annie Tietze     Rep. Brandon Whipple

 

House Commerce Committee Public Hearing:  County Option HB 2200 1:30 pm - Kansas Statehouse Room 346-S - BE THERE! The House Commerce Committee plans to meet on Monday and hold a limited public hearing on adding county option to HB 2200 - the Big Box Liquor bill.  The structured hearing will allow 10 minutes testimony from proponents and opponents, then the House Commerce Committee will have the option of adding county option language to HB 2200.   More than one House member has told us that they are disappointed at the lack of phone calls and emails they are receiving from opponents to Uncork.  These are legislators who support us, but they want to hear from the public!   Some are rural legislators who know their retailers personally, but tell me they haven't heard from them since shopping in December.  Let's get busy!  It is very important to know if your representative and senator will support Uncork with either of these amendments.  If legislators maintain their opposition to Big Box Liquor, SB 298 and HB 2200 could remain in committee. Please speak to your senator and representative and ask if they are planning for vote for or against Uncork with these amendments.   Please generate as many calls and emails to representatives and senators as you can over the next week from employees, family, vendors, peers, and neighbors!  The hotline is open and operates during business hours:   Hotline:  1-866-519-2200     Email Site for Employees/Customers/Friends:  http://keepksjobs.org         House Commerce Committee: Chair Rep. Mark Hutton Vice Chair Rep. Les Mason Ranking Minority Member Rep. Stan Frownfelter Members House     Rep. Rick Billinger     Rep. Steve Brunk     Rep. Will Carpenter     Rep. J. R. Claeys     Rep. Ken Corbet     Rep. Travis Couture-Lovelady     Rep. Erin Davis     Rep. Lane Hemsley     Rep. Marvin Kleeb     Rep. Fred Patton     Rep. Louis Ruiz     Rep. Gene Suellentrop     Rep. Annie Tietze     Rep. Brandon Whipple

KABR partnered with KS Association for Responsible Liquor Laws, KS Wine and Spirits Wholesalers, and Keep Kansans in Business to send a joint letter to legislators during their spring break.  Read the letter.  The county option concept does nothing to make HB 2200 a better bill.    

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.

The Senate Federal and State Affairs Committee is not likely to vote on SB 298, which means that Uncork may make a move to be amended into other liquor bills that will be debated on the Senate floor. 

HB 2200 awaits action after being sent back to the House Commerce Committee for more work.  Uncork proponents are working to gain votes for the bill with the addition of a local option requirement or strong beer amendment.

It is very important to know if your legislators will support Uncork with either of these amendments.  If legislators maintain their opposition to Big Box Liquor, HB 2200 could remain in committee.

Kansas legislators are at home for spring break until April 29 when they will return to Topeka to attempt to reconcile the proposed state budget with revenue reductions.  Today, the Consensus Revenue Estimating Group forecast additional reductions for state revenues - deepening the fiscal hole.  This could mean an extended Veto Session - leaving plenty of time for additional action on legislation that failed to advance during the regular session...including Big Box Liquor.

KABR has teamed with KS Association for Responsible Liquor Laws, KS Wine and Spirits Wholesalers, and Keep Kansans in Business to send a joint letter to legislators prior to their return.  Read the letter.  Retailers should also reach out to legislators at home during this time - see tips at http://kansasretailer.org.  

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.

The Senate Federal and State Affairs Committee is not likely to vote on SB 298, which means that Uncork may make a move to be amended into other liquor bills that will be debated on the Senate floor. 

HB 2200 awaits action after being sent back to the House Commerce Committee for more work.  Uncork proponents are working to gain votes for the bill with the addition of a local option requirement or strong beer amendment.

It is very important to know if your legislators will support Uncork with either of these amendments.  If legislators maintain their opposition to Big Box Liquor, HB 2200 could remain in committee.

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

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.