Oregon Wine Board CFO discusses privilege tax effects on local wineries

In a recent meeting of the Joint Committee on Ways and Means Subcommittee on General Government, Oregon lawmakers delved into the financial workings of the state's Wine Board, revealing both challenges and opportunities for the local wine industry. As the session unfolded, committee members scrutinized the board's budget and expenditures, which were notably impacted by the pandemic.

The Wine Board reported actual expenditures of $4.9 million for the 2021-2023 biennium, with a proposed budget of $5.8 million for the upcoming period. This marked a significant 15.8% underspend in the previous cycle, largely due to the cancellation of research projects and tourism events that were sidelined by COVID-19. The board also scaled back on promotional activities, raising concerns about the long-term effects on Oregon's wine tourism and trade education.

Questions from committee members highlighted the board's financial oversight and performance tracking. Representative Smith confirmed that while the board's ending fund balance is monitored, it does not adhere to the same performance measures as state agencies. This raised a critical point of discussion regarding the authority the legislature holds over semi-independent agencies like the Wine Board. Representative Gomberg noted that the legislature could revoke the board's semi-independent status if necessary, returning it to direct state control.

A significant topic of concern was the privilege tax on wine, which is levied per gallon sold in Oregon. Representative Tran questioned whether this tax disproportionately affects local growers compared to out-of-state competitors. Sally Crawford, CFO of the Wine Board, clarified that the privilege tax applies to all wines sold within the state, regardless of origin, and is separate from the grape assessment that funds the board. This distinction is crucial as it underscores the competitive pressures faced by Oregon's wine producers, who must navigate both local taxation and competition from imported wines.

As the meeting concluded, the discussions underscored the delicate balance between supporting Oregon's wine industry and ensuring fair competition in a challenging market. The committee's ongoing oversight will be vital in shaping policies that protect local growers while fostering a thriving wine culture in the state.