A second measure proposing that alcohol producers and wholesalers in Colorado help fund mental health care treatment in the state was narrowly defeated in the House Health and Human Services Committee on Wednesday.
House Bill 1301, sponsored by Rep. Bob Marshall, D-Highlands Ranch, would have referred a measure to the November ballot proposing an excise tax increase of $0.0733 per gallon on beer and hard cider, $0.08 per liter of wine, and $0.6026 per liter of spirits, as well as an increase of 0.42 percentage points for marijuana.
Under TABOR, any tax increase must be approved by voters.
All excess funds generated through the tax increase would go toward a new Colorado Mental Health Institute in Aurora. Construction and operation of the hospital would be the top priority for funds collected, with any additional dollars left over to be directed toward long-term civil commitment facilities in Mesa County.
Colorado’s excise taxes on alcohol, last increased in the 1980s, are among the lowest in the nation.
The 50 to 70-bed facility, which would have been located on the University of Colorado’s Anschutz Medical Campus, would cost about $40 million to build, Marshall told the committee.
Colorado’s lack of mental health beds has been well-documented, but policymakers have struggled to find a long-term solution, particularly as the state’s budget crisis leaves no funding to spare.
According to Marshall, Colorado had about 2,000 mental health beds in the 1960s. The state now has four times the population it did back then, but only a few hundred more beds.
“It’s not like these people have disappeared; they’re on our streets, they’re in our jails, and we know that,” Marshall said. “We have made our penal system the default mental health system for people that are over 18 years old. It has been a known travesty for years and years and years, and yet nothing happens to fix the issue.”
Advocates stress there is a need
Arapahoe County District Attorney Amy Padden explained that people with severe mental illness often get caught in a cycle: they commit a crime, are found incompetent to stand trial, are released, and then reoffend.
“The criminal justice system is not designed to house mentally ill individuals, and we need to stop this cycle,” she said. “In order to stop this cycle, we need beds for individuals to be civilly committed after their cases are dismissed.”
An example of this cycle from Padden’s home county has garnered significant media attention.
In April of 2024, Solomon Galligan, a man with severe mental illness, was arrested for attempting to kidnap children from a playground in Aurora, causing a public outcry. However, Galligan’s charges were eventually dropped after he was found incompetent to stand trial.
According to court records, it was at least the fourth time prosecutors have dropped charges against Galligan due to competency issues.
Padden believes the incident in Aurora would have never happened if Galligan had somewhere to go rather than being released back onto the streets.
“Had there been civil commitment beds, for example, when he had a case in Denver that was dismissed because of his incompetency, the incident in Arapahoe County may not have occurred,” she said.
Marshall’s bill aimed at addressing a “critical bottleneck” in Colorado’s behavioral health system, said Veronica Bell of the Colorado Behavioral Health Care Council.
The mental health bed shortage is backing up hospital emergency departments and delaying competency restoration in prisons.
Using substance-related revenue to address mental health is a funding approach voters have supported in the past, Bell said; for example, in 2020, voters approved a new tax on tobacco and nicotine products to fund physical and behavioral health programs.
“Expanding state hospital beds and long-term civil capacity is a necessary step to rightsize the system, ensuring individuals are treated in the appropriate setting and allowing both the civil and forensic systems to function more effectively,” she concluded.
Small businesses argue against another tax
Witnesses representing Colorado’s small brewers, distilleries and wineries argued that HB 1301 and a separate bill proposing enterprise fees on alcohol to fund addiction treatment that died the day before would negatively impact both small businesses and consumers.
Matthew Estrin, owner of 477 Distilling in Loveland and Greeley, said the alcohol industry is already declining across the country.
“Consumer habits are shifting, costs are rising, and small independent producers like us are being squeezed from every direction,” he said. “As an owner, I’m feeling that reality every single day.”
Small businesses would be forced to fire or cut staff pay to afford the additional tax costs, Estrin said, and those costs will undoubtedly be passed on to consumers.
“If there’s any goal for long-term economic health and vibrant communities, then we should be supporting small businesses, not adding new financial burdens to them,” he said.
Cassidee Shull of the Colorado Association for Viticulture and Enology, a trade organization representing the state’s wineries, agreed that the state is in dire need of additional mental health facilities. However, she took issue with increasing taxes on small businesses to fund facilities that would only benefit certain communities.
“The bill increases taxes on alcohol statewide, but the primary infrastructure investments are concentrated in one location, Aurora, and potentially a second in Mesa County,” she said. “That means small wineries and businesses across the entire state would be taxed to fund services that are not equitably distributed statewide.”
Marshall argued that while the facilities would be built in Aurora and Mesa counties, they would serve individuals statewide, as the Colorado Mental Health Hospital in Pueblo does.
Bill fails on a 6-7 vote
Last week, the Capital Development Committee sent a letter to the Health and Human Services Committee members asking them to reject House Bill 1301. Capital Development Committee members outlined the tax’s funding longevity and the creation of standalone funding sources for capital development projects.
Following the recommendation, the Health and Human Services Committee narrowly killed the measure, 6-7, with all Republican members and all Democratic Reps. Katie Stewart of Durango and Sheila Lieder of Littleton, voting no.
Stewart said she had received “overwhelming” outcries from small businesses in her district urging her to vote against the bill.
“I want to acknowledge that you are right, this is a need, and we as a state need to do better; I don’t know that this is a path,” she said.
Rep. Brandi Bradley, R-Roxborough Park, also voted in opposition, saying the state continues to “go after” small businesses when they’re already struggling.
“Why we continue to attack these smaller companies when maybe the bigger corporations can take the brunt of it is unfathomable to me,” she said.