Governments Turn to Alcohol to Patch Budgets

Some formerly dry communities are allowing alcohol sales in order to generate tax revenues in tough fiscal times, while states are seeking higher alcohol taxes to close their own budget deficits, MSNBC reported Sept. 28.

Lubbock County, Texas recently began issuing alcohol-sales permits for the first time in years, after long banning such sales in most places. Experts say the county  — which had a $3.5 million budget shortfall this year — could gain $5 million in new revenues from the move.

Most “dry” areas in the U.S. are in the rural South. Morality plays a big role in the decision not to sell alcohol, but in some cases that argument is losing out to economic concerns. Typically, battles over alcohol sales in such communities pits church leaders against local business owners.

In so-called “moist” communities, local lawmakers are looking at allowing Sunday alcohol sales and sales in more outlets, like grocery stores, to increase revenues.

Lawmakers in at least 14 states have considered creating or raising alcohol taxes for similar economic reasons. Tax plans typically have focused more on liquor than beer and wine. Some states that already charge excise taxes on alcohol, like Massachusetts, are adding higher sales taxes. Illinois, Kentucky, New Jersey, New York, North Carolina, Oregon, Vermont and Washington are among the other states that have turned to new alcohol taxes and fees to generate more revenue.