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Restaurants, wineries see mixed results during session

While the 2011 legislative session brought gains to the winery and restaurant industries, it also served up a 50 percent increase in alcohol taxes in the closing moments.

“It’s a sad commentary for how the business community is viewed by the legislature,” said Jack Milani, legislative director for the Maryland State Licensed Beverage Association.

Milani said he doesn’t know how he’s going to handle the tax increase when it hits his bar and restaurant, Monaghan’s Pub in Gwynn Oak.

But Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, was pleased about the increase.

DeMarco has been gunning for a dime-a-drink excise tax since last year, but he said the 3 percent increase was still historic.

“It’s a tremendous public health victory for Maryland,” DeMarco said.

Beer and wine excise taxes — beer at 9 cents per gallon and wine for 40 cents — were last raised in 1972. The liquor tax was last changed in 1955, when it was raised to $1.50 per gallon.

The tax on liquor, beer and wine will jump from 6 percent to 9 percent, starting July 1. Senate Bill 994 was amended Saturday to do away with the increase over a three-year period. The bill will channel $15 million of revenue from the first year to programs for the developmentally disabled.

The second bill, House Bill 1213, gives $47.5 million of the $85 million projected to be generated by the tax in its first year to school construction.

In the first year, the tax will also provide $5 million for those on a Developmental Disabilities Administration waiting list. That amount will increase to $10 million next year and $15 million the year after that.

Laura Howell, executive director for the Maryland Association of Community Services, said the money will help hundreds of people considered a “crisis” case on the waiting list for employment help and residential services. About 5,300 people in Maryland are on the waiting list.

“It doesn’t meet all the needs of the people on the list,” Howell said. “But the developmental disabilities community across the state was just thrilled to see the General Assembly bill pass.”

Not only will the tax hurt restaurants that are already struggling to make a profit in a sluggish economy, but the change in tax would require businesses to spend more money to update their point-of-service systems, said Melvin R. Thompson, senior vice president of government affairs and public policy for the Restaurant Association of Maryland.

But not all was lost for restaurants and wineries. The legislature also passed a bill to make it legal to bring dogs to restaurants with outdoor dining space. The bill goes into effect July 1.

Del. Dan K. Morhaim, D-Baltimore County, who sponsored the legislation, said he believes it will provide a financial boost for restaurants and bars heading into the outdoor dining season.

“This promotes economic development and costs nothing,” he said. “It’s a small thing, but it all helps when you’re a business owner.”

Wineries were also finally given the OK to ship wine to consumers. For a $200 licensing fee, wineries would be able to send their products to Maryland wine drinkers who may not want to travel miles for their favorite bottle.

For big winery states like Virginia, direct shipping has given wineries on average a 30 percent increase, said Maryland Wineries Association Executive Director Kevin Atticks.

The General Assembly also passed legislation that would allow wineries in Baltimore, Frederick and Carroll counties to sell products at farmers’ markets.