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First Substitute H.B. 136

Representative Jack R. Draxler proposes the following substitute bill:


             1     
ALCOHOLIC BEVERAGE CONTROL RELATED AMENDMENTS

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jack R. Draxler

             5     
Senate Sponsor: John L. Valentine

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Alcoholic Beverage Control Act and beer tax provisions to
             10      increase charges imposed on the sale of alcoholic products in the state and target the
             11      increase in revenue on enforcement related purposes.
             12      Highlighted Provisions:
             13          This bill:
             14          .    increases the markup on certain alcoholic products in the state;
             15          .    provides for the distribution of a certain percentage of the markup;
             16          .    addresses the Alcoholic Beverage Control Act Enforcement Fund;
             17          .    increases the beer tax rate;
             18          .    provides for the deposit of a certain percentage of the beer tax increase; and
             19          .    makes technical amendments.
             20      Money Appropriated in this Bill:
             21          This bill appropriates in fiscal 2014:
             22          .    to Attorney General - Administration as an ongoing appropriation:
             23              .    from the Markup Holding Fund, $62,000 to pay for costs associated with
             24      enforcement of Title 32B.
             25      Other Special Clauses:


             26          This bill takes effect on July 1, 2013.
             27      Utah Code Sections Affected:
             28      AMENDS:
             29          32B-2-301, as last amended by Laws of Utah 2012, Chapter 357
             30          32B-2-304, as last amended by Laws of Utah 2012, Chapter 357
             31          32B-2-305, as last amended by Laws of Utah 2012, Fourth Special Session, Chapter 1
             32          59-15-101, as last amended by Laws of Utah 2010, Chapter 276
             33          59-15-109, as last amended by Laws of Utah 2011, Chapter 281
             34     
             35      Be it enacted by the Legislature of the state of Utah:
             36          Section 1. Section 32B-2-301 is amended to read:
             37           32B-2-301. State property -- Liquor Control Fund -- Markup Holding Fund.
             38          (1) The following are property of the state:
             39          (a) the money received in the administration of this title, except as otherwise provided;
             40      and
             41          (b) property acquired, administered, possessed, or received by the department.
             42          (2) (a) There is created an enterprise fund known as the "Liquor Control Fund."
             43          (b) Except as provided in Sections 32B-3-205 and 32B-2-304 , money received in the
             44      administration of this title shall be transferred to the Liquor Control Fund.
             45          (3) (a) There is created an enterprise fund known as the "Markup Holding Fund."
             46          (b) In accordance with Section 32B-2-304 , the State Tax Commission shall deposit
             47      revenue remitted to the State Tax Commission from the markup imposed under Section
             48      32B-2-304 into the Markup Holding Fund.
             49          (c) Money deposited into the Markup Holding Fund may be expended:
             50          (i) to the extent appropriated by the Legislature; and
             51          (ii) to fund the deposits required by Subsection 32B-2-304 (4), Subsection
             52      32B-2-304 (7), and Subsection 32B-2-305 (4).
             53          (4) The state treasurer shall by warrant draw from the Liquor Control Fund and, to the
             54      extent appropriated by the Legislature, from the Markup Holding Fund, the expenses, debts,
             55      and liabilities incurred by the department in connection with the administration of this title or
             56      any other expense necessary for the administration of this title, including:


             57          (a) salaries;
             58          (b) premiums, if any, on a bond for which the department pays premiums; and
             59          (c) an expenditure incurred in establishing, operating, or maintaining a state store or
             60      package agency.
             61          (5) The department shall transfer annually from the Liquor Control Fund and the State
             62      Tax Commission shall transfer annually from the Markup Holding Fund to the General Fund a
             63      sum equal to the amount of net profit earned from the sale of liquor since the preceding transfer
             64      of money under this Subsection (5). The transfers shall be calculated by no later than
             65      September 1 and made by no later than September 30 after a fiscal year.
             66          (6) (a) By the end of each day, the department shall:
             67          (i) make a deposit to a qualified depository, as defined in Section 51-7-3 ; and
             68          (ii) report the deposit to the state treasurer.
             69          (b) A commissioner or department employee is not personally liable for a loss caused
             70      by the default or failure of a qualified depository.
             71          (c) Money deposited in a qualified depository is entitled to the same priority of
             72      payment as other public funds of the state.
             73          (7) If the cash balance of the Liquor Control Fund is not adequate to cover a warrant
             74      drawn against the Liquor Control Fund by the state treasurer, the cash resources of the General
             75      Fund may be used to the extent necessary. At no time may the fund equity of the Liquor
             76      Control Fund fall below zero.
             77          Section 2. Section 32B-2-304 is amended to read:
             78           32B-2-304. Liquor price -- School lunch program -- Remittance of markup.
             79          (1) For purposes of this section:
             80          (a) (i) "Landed case cost" means:
             81          (A) the cost of the product; and
             82          (B) inbound shipping costs incurred by the department.
             83          (ii) "Landed case cost" does not include the outbound shipping cost from a warehouse
             84      of the department to a state store.
             85          (b) "Proof gallon" has the same meaning as in 26 U.S.C. Sec. 5002.
             86          (c) Notwithstanding Section 32B-1-102 , "small brewer" means a brewer who
             87      manufactures in a calendar year less than 40,000 barrels of beer, heavy beer, and flavored malt


             88      beverage.
             89          (2) Except as provided in Subsection (3):
             90          (a) spirituous liquor sold by the department within the state shall be marked up in an
             91      amount not less than [86%] 90% above the landed case cost to the department;
             92          (b) wine sold by the department within the state shall be marked up in an amount not
             93      less than [86%] 90% above the landed case cost to the department;
             94          (c) heavy beer sold by the department within the state shall be marked up in an amount
             95      not less than 64.5% above the landed case cost to the department; and
             96          (d) a flavored malt beverage sold by the department within the state shall be marked up
             97      in an amount not less than [86%] 90% above the landed case cost to the department.
             98          (3) (a) Liquor sold by the department to a military installation in Utah shall be marked
             99      up in an amount not less than 15% above the landed case cost to the department.
             100          (b) Except for spirituous liquor sold by the department to a military installation in
             101      Utah, spirituous liquor that is sold by the department within the state shall be marked up [47%]
             102      50% above the landed case cost to the department if:
             103          (i) the spirituous liquor is manufactured by a manufacturer producing less than 30,000
             104      proof gallons of spirituous liquor in a calendar year; and
             105          (ii) the manufacturer applies to the department for a reduced markup.
             106          (c) Except for wine sold by the department to a military installation in Utah, wine that
             107      is sold by the department within the state shall be marked up [47%] 50% above the landed case
             108      cost to the department if:
             109          (i) the wine is manufactured by a manufacturer producing less than 20,000 gallons of
             110      wine in a calendar year; and
             111          (ii) the manufacturer applies to the department for a reduced markup.
             112          (d) Except for heavy beer sold by the department to a military installation in Utah,
             113      heavy beer that is sold by the department within the state shall be marked up 30% above the
             114      landed case cost to the department if:
             115          (i) a small brewer manufactures the heavy beer; and
             116          (ii) the small brewer applies to the department for a reduced markup.
             117          (e) The department shall verify an amount described in Subsection (3)(b), (c), or (d)
             118      pursuant to a federal or other verifiable production report.


             119          (4) The department shall deposit 10% of the total gross revenue from sales of liquor
             120      with the state treasurer to be credited to the Uniform School Fund and used to support the
             121      school lunch program administered by the State Board of Education under Section
             122      53A-19-201 .
             123          (5) This section does not prohibit the department from selling discontinued items at a
             124      discount.
             125          (6) (a) The department shall collect the markup and remit the markup collected by the
             126      department under this section:
             127          (i) to the State Tax Commission monthly on or before the last day of the month
             128      immediately following the last day of the previous month; and
             129          (ii) using a form prescribed by the State Tax Commission.
             130          (b) For liquor provided to a package agency on consignment, the department shall
             131      remit the markup to the State Tax Commission for the month during which the liquor is
             132      provided to the package agency regardless of when the package agency pays the department for
             133      the liquor provided to the package agency.
             134          (c) The State Tax Commission shall deposit revenues remitted to it under Subsection
             135      (6)(a) into the Markup Holding Fund created in Section 32B-2-301 .
             136          (d) The assessment, collection, and refund of a markup under this section shall be in
             137      accordance with Title 59, Chapter 1, Part 14, Assessment, Collection, and Refunds Act.
             138          (e) The department if it fails to comply with this Subsection (6), is subject to penalties
             139      as provided in Section 59-1-401 and interest as provided in Section 59-1-402 .
             140          (f) The State Tax Commission may make rules, in accordance with Title 63G, Chapter
             141      3, Utah Administrative Rulemaking Act, to establish procedures under this Subsection (6).
             142          (7) Beginning with fiscal year 2013-14, each fiscal year, 3.17% of the markup under
             143      this section shall be distributed as follows:
             144          (a) $62,000 shall be distributed to the Office of the Attorney General to be used to pay
             145      costs associated with the enforcement of this title; and
             146          (b) the amount collected in excess of the amount distributed under Subsection (7)(a)
             147      shall be deposited into the Alcoholic Beverage Control Act Enforcement Fund created in
             148      Section 32B-2-305 .
             149          Section 3. Section 32B-2-305 is amended to read:


             150           32B-2-305. Alcoholic Beverage Control Act Enforcement Fund.
             151          (1) As used in this section:
             152          (a) "Alcohol-related law enforcement officer" is as defined in Section 32B-1-201 .
             153          (b) "Enforcement ratio" is as defined in Section 32B-1-201 .
             154          (c) "Fund" means the Alcoholic Beverage Control Act Enforcement Fund created in
             155      this section.
             156          (2) There is created a restricted special revenue fund known as the "Alcoholic
             157      Beverage Control Act Enforcement Fund."
             158          (3) (a) The fund consists of:
             159          (i) deposits made under Subsection (4); [and]
             160          (ii) deposits made under Subsections 32B-2-304 (7)(b) and 59-15-109 (1)(b); and
             161          [(ii)] (iii) interest earned on the fund.
             162          (b) The fund shall earn interest. Interest on the fund shall be deposited into the fund.
             163          (4) After the deposit made under Section 32B-2-304 for the school lunch program, the
             164      department shall deposit 1% of the total gross revenue from the sale of liquor with the state
             165      treasurer to be credited to the fund to be used by the Department of Public Safety as provided
             166      in Subsection (5).
             167          (5) (a) The Department of Public Safety shall expend money from the fund to
             168      supplement appropriations by the Legislature so that the Department of Public Safety maintains
             169      a sufficient number of alcohol-related law enforcement officers such that beginning on July 1,
             170      2012, each year the enforcement ratio as of July 1 is equal to or less than the number specified
             171      in Section 32B-1-201 .
             172          (b) Beginning July 1, 2012, four alcohol-related law enforcement officers shall have as
             173      a primary focus the enforcement of this title in relationship to restaurants.
             174          Section 4. Section 59-15-101 is amended to read:
             175           59-15-101. Tax basis -- Rate.
             176          (1) (a) A tax is imposed at the rate specified in Subsection (1)(b) on all beer, as defined
             177      in Section 32B-1-102 , that is imported or manufactured for sale, use, or distribution in this
             178      state.
             179          (b) The tax described in Subsection (1)(a) shall be imposed at a rate of:
             180          [(i) $11 per 31-gallon barrel for beer imported or manufactured:]


             181          [(A) before July 1, 2003; and]
             182          [(B) for sale, use, or distribution in this state; and]
             183          [(ii) $12.80 per 31-gallon barrel for beer imported or manufactured:]
             184          [(A) on or after July 1, 2003; and]
             185          [(B) for sale, use, or distribution in this state.]
             186          (i) $13.40 per 31-gallon barrel for beer that contains not more than 4% of alcohol by
             187      volume or 3.2% by weight:
             188          (A) on or after July 1, 2013; and
             189          (B) for sale, use, or distribution in this state; and
             190          (ii) $12.80 per 31-gallon barrel for beer that contains more than 4% alcohol by volume:
             191          (A) on or after July 1, 2013; and
             192          (B) for sale, use, or distribution in this state.
             193          (c) The tax imposed under this Subsection (1):
             194          (i) shall be imposed at a proportionate rate for:
             195          (A) any quantity of beer other than a 31-gallon barrel; or
             196          (B) the fractional parts of a 31-gallon barrel; and
             197          (ii) may not be imposed more than once on the same beer.
             198          (2) A tax may not be imposed on beer:
             199          (a) sold to the United States and its agencies; or
             200          (b) (i) manufactured or imported for sale, use, or distribution outside the state; and
             201          (ii) exported from the state.
             202          Section 5. Section 59-15-109 is amended to read:
             203           59-15-109. Tax money to be paid to state treasurer.
             204          (1) Taxes collected under this chapter shall be paid by the commission to the state
             205      treasurer daily for deposit as follows:
             206          (a) beginning with fiscal year 2013-14, each fiscal year, 3.17% of the revenue collected
             207      under Subsection 59-15-101 (1)(b)(i) shall be deposited into the Alcoholic Beverage Control
             208      Act Enforcement Fund created in Section 32B-2-305 ;
             209          [(a)] (b) after making the deposit described in Subsection (1)(a), the greater of the
             210      following shall be deposited into the Alcoholic Beverage Enforcement and Treatment
             211      Restricted Account created in Section 32B-2-403 :


             212          (i) an amount calculated by:
             213          (A) determining an amount equal to 40% of the revenue collected for the fiscal year
             214      two years preceding the fiscal year for which the deposit is made; and
             215          (B) subtracting $30,000 from the amount determined under Subsection (1)(a)(i)(A); or
             216          (ii) $4,350,000; and
             217          [(b)] (c) the revenue collected in excess of the amount deposited in accordance with
             218      [Subsection] Subsections (1)(a) and (b) shall be deposited into the General Fund.
             219          (2) (a) The commission shall notify the entities described in Subsection (2)(b) not later
             220      than the September 1 preceding the fiscal year of the deposit of:
             221          (i) the amount of the proceeds of the beer excise tax collected in accordance with this
             222      section for the fiscal year two years preceding the fiscal year of deposit; and
             223          (ii) an amount equal to 40% of the amount listed in Subsection (2)(a)(i).
             224          (b) The notification required by Subsection (2)(a) shall be sent to:
             225          (i) the Governor's Office of Planning and Budget; and
             226          (ii) the Legislative Fiscal Analyst.
             227          Section 6. Appropriation.
             228          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, for
             229      the fiscal year beginning July 1, 2013, and ending June 30, 2014, the following sums of money
             230      are appropriated from resources not otherwise appropriated, or reduced from amounts
             231      previously appropriated out of the funds or accounts indicated. These sums of money are in
             232      addition to any amounts previously appropriated for fiscal year 2014:
             233          To Attorney General - Administration
             234          From Markup Holding Restricted Account
$62,000

             235          Schedule of Programs:
             236              Administration                        $62,000
             237          The Legislature intends that the money be used for the purposes outlined in Subsection
             238      32B-2-304 (7)(a).
             239          Section 7. Effective date.
             240          This bill takes effect on July 1, 2013.


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