Commonwealth Journal

November 15, 2012

Alcohol revenue will benefit city

Mayor anticipates liquor store licenses by January

by Chris Harris
Commonwealth Journal

Somerset —  

The City of Somerset will have a lot to be thankful for next week when it becomes clear how much money they’re likely to make off of local beer sales.
At Monday’s Somerset City Council meeting, Mayor Eddie Girdler said that city officials would know shortly what the regulatory frees from the current businesses selling alcohol would put into the city coffers.
“Knock on wood, things have gone remarkably smoothly,” said Girdler at the meeting. “We haven’t had any complaints.”
Well, with one exception: Girdler quipped to much laughter that a lady had recently sent him a letter calling him “an idiot ... but other than that, the rest of it has been pretty smooth.”
Girdler told the Commonwealth Journal that based on conversations with neighboring cities that have recently undergone transitions to full-scale alcohol sales (as opposed to just restaurants) like Corbin and Danville, he believes the first full month will bring about $35,000 to $45,000 in regulatory fee revenue.
Though the first alcohol sales occurred in September, it wasn’t until October that most all the establishments selling beer or serving spirits and wine by the drink were in place. The numbers will be in around November 20, he said.
The issue was raised Monday when Councilor Jim Rutherford asked whether a specific fund needed to be set up for those monies. By Kentucky Alcoholic Beverage Control (ABC) mandate, revenue generated by alcohol sales must go to administration or enforcement of alcohol policies, which includes the town’s police department.
However, “by virtue of doing that, it fees money up for other items,” said Girdler. In other words, the more alcohol can fund the police department, the less the city has to from other tax revenues and can do other things with that money. 
He added that because of the way Somerset in particular operates, the police department is included in the general fund, and as such, the alcohol revenue will be going into that fund, even if it is purposed very specifically.
“We’ve put an emphasis on kids programs, education programs, afterschool initiatives, and things that will assist kids to have a better quality of life in this community,” said Girdler.
The regulatory fee has three different schedule — 4 percent for malt beverages by the package, 5 percent for distilled spirits by the package, and 6 percent for any alcoholic beverages by the drink.
That 5 percent regulatory fee hasn’t been utilized yet however because the state ABC offices haven’t sorted out which five applicants out of more than a dozen will receive the “quota” licenses to open liquor stores. It’s a slow process that’s in the state’s hands rights now — and while it’s a partnership between the city and state, Girdler noted at the meeting that “the state’s 90 percent, we’re 10 percent ... That’s the kind of partnership we’ve had, but they’ve been very nice, very cordial, very professional, and I think those (revenue opportunities) will come in around the first of the year.”
The licenses are actually likely to be decided by early December, noted Girdler, but once it’s in hand, the business owners “must go ahead an option the property, which takes time, and the renovation of the building — all of that will probably take about 30 to 90 days.”
That means it could be anywhere from January to March before those stores will be in operation, and their regulatory fees will be adding to the city’s funds.
Girdler noted that Corbin just opened two or three of their stores in the last month, and they’ve been working on it since last spring. From what he can see from the business Corbin is doing though, “they’re meeting our expectations” as far as what he expects Somerset’s revenue to be like.
Also, Jim Mitchell brought up a complaint from a business owner that served as a reminder for other businesses retailing alcoholic products. Mitchell said the business owner was upset because he wasn’t allowed to put signs advertising special on his beer products outside of his business, but that larger grocery or drug store chains were featuring their alcohol deals in newspaper ads.
The council discussed how it’s perfectly legal under city policy for any business to advertise their alcohol sales in the newspaper if they want — it’s just the outdoor signs that are ruled out by city ordinance. City Attorney Carrie Wiese even specified that signs in windows are okay — just not outside.
“I’d say most all other cities will not allow banners (advertising alcohol),” said Girdler. “Can you imagine 10 banners at Speedway, or (at a store) in town? Those banners would be very unsightly, and then you’d have a lot of complaints about the banners and kids being exposed to them.”
Mitchell agreed that “anyone who wants (alcohol) knows it’s here” and that “it’s a more beautiful city” without such commercial signage.