SENATE BILL REPORT
SB 5503
BYSenators Hansen, Benitz, Stratton, Deccio, Hayner, Patterson, Saling, Barr, West, Bauer, Newhouse, Anderson, Bluechel, Bailey, McDonald and McCaslin
Establishing the Washington wine commission.
Senate Committee on Agriculture
Senate Hearing Date(s):February 12, 1987; February 17, 1987
Majority Report: That Substitute Senate Bill No. 5503 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.
Signed by Senators Hansen, Chairman; Bauer, Vice Chairman; Anderson, Bailey, Barr.
Senate Staff:Kaleen Cottingham (786-7415)
February 17, 1987
AS REPORTED BY COMMITTEE ON AGRICULTURE, FEBRUARY 17, 1987
BACKGROUND:
The Washington wine industry has experienced substantial growth in the past several years. To assure continuing development, the industry believes that it is necessary to expand promotion, marketing and research efforts. Washington is the second largest U.S. producer of premium varietal wines and the Washington wine industry believes that the formation of a wine commission will increase viticultural, enological and economic research. Such research will help this industry improve conditions and foster further investment in the industry.
There are three programs that currently address promotion and research needs of the Washington wine industry: (1) the wine marketing program in the Department of Agriculture; (2) the viticultural, enological and agricultural economic research at WSU; and (3) programs of specific trade associations. Currently, the research at WSU is funded through a dedicated tax of 1/4 cent per liter on wine sales.
Commodity commissions are currently formed for numerous Washington grown agricultural commodities. There are several enabling acts which allow the formation of such commissions. These commissions are formed by an affirmative vote of a majority of the producers. Such formation allows an assessment to be imposed on the quantities of commodity sold or processed. These funds are then expended for promotional and/or research purposes.
Of the 20 commodity commissions, five were formed under individual enabling legislation (apples, dairy products, fruit, beef, and tree fruit research), nine were formed under the 1955 enabling act and six were formed under the 1961 enabling act.
The wine industry has determined that formation under one of the existing enabling acts would not accommodate the method of assessment most advantageous to the industry. The industry thus requests specific legislation to allow the formation of a wine commission.
SUMMARY:
A Washington wine commission is created composed of 11 members (five growers, five wine producers and one member at large). The members shall represent a variety of interests within the categories of grower and producer and shall be distributed in both eastern and western Washington. The terms of the commission members shall be three years (established in staggered terms). The Director of the Department of Agriculture shall appoint the members of the commission, with recommendations made by the growers association and the wine institute.
Obligations and liabilities incurred by the commission shall be enforced only against the assets of the commission. No liability exists against the state, subdivisions of the state or employees in their individual capacity for actions of the wine commission.
The wine commission is given powers associated with rulemaking, hiring employees, entering into contracts and acquiring property. The wine commission is given all powers necessary to carry out this act and specifically to promote Washington grapes and products made from Washington grapes. In its promotional efforts, the commission may disseminate products without charge in order to foster agricultural development, trade promotion (including promotional hosting) or research into marketing, advertising or sale.
The commission shall keep records and make them available to the state auditor. The commission shall maintain a list of producers and shall use it to gather and disseminate information.
The commission shall determine the needs of producers, conditions of market, and public awareness. Not less than one third of the commission's budget shall be allocated to research relating to growing and processing Washington grapes and its products. Not less than one third of the budget shall be allocated to marketing of wine. Allocations to Washington State University from the liquor revolving fund for wine grape research may be considered as partial satisfaction of this allocation requirement.
The commission's objectives may include establishing Washington wine in markets everywhere; promoting wineries for tourism; encouraging favorable press coverage; encouraging favorable legislation and regulatory treatment; fostering investment in grape and wine production; advancing knowledge in terms of grape production; and improving grapes wine production.
Moneys to fund the activities of the wine commission are derived from a 1-1/2 cent per liter tax on wines sold to wine wholesalers. In the beginning, however, the Liquor Control Board shall transfer an advance of $110,000 to the wine commission. This advance will then be returned to the Liquor Control Board by way of a reduction from the quarterly remittance (i.e. four equal payments of $27,500 will be deducted from the amount generated by the 1-1/2 cents per liter tax).
Fiscal Note: requested
Effective Date:The bill contains an emergency clause and takes effect immediately.
EFFECT OF PROPOSED SUBSTITUTE:
The mechanism for funding the Wine Commission is changed so that the 1-1/2 cents per liter coming from the liquor revolving fund comes only from the 50 percent distributed to the general fund. The funding of 1-1/2 cents per liter continues only for five years, then the funding is dropped to 3/4 cent per liter for another five years. Within five years, the Wine Commission must return to the Legislature with a proposal for self-assessment.
All of the liquor laws, except licensing and bonding are made applicable to the Wine Commission. The Commission is allowed to accept donations of Washington wine from wineries or distributors for promotional purposes.
A nongrape wine producer is added as a nonvoting member to the Commission. Commission members are allowed travel compensation.
It is clarified that the percentage of the budget going to research may be offset by the funds going to Washington State University for wine and wine grape research.
Senate Committee - Testified: Mike Hogue, Hogue Cellar; David Adair, Columbia Winery; Bob Betz, St. Michelle; Baker Ferguson, Winery; Kay Simon, Chinook; Mike Saver, grower; Fred Artz, grower; Don Mercer, grower; Wayne Piper, grower; Stan Finkelstein, Washington Cities Association