Increased fees for select liquor licenses considered

Fees charged for two liquor licenses would be raised by a bill heard Jan. 31 by the General Affairs Committee.

LB411, introduced by Wilber Sen. Russ Karpisek, would raise the application fee for a special designated liquor license (SDL) from $40 to $75 and the fee for a catering liquor license from $100 to $250. The increases are estimated to generate $125,000 in revenue annually.

An SDL permits a business or nonprofit to engage in the sale or consumption of alcohol at a designated location. The SDL fee is collected daily, unless the SDL holder has a catering license, in which case the fee is paid annually.

Those with a retail liquor license, craft brewery license, microdistillery license or farm winery license currently may apply for a catering license, which may be subject to a local occupation tax of up to double the fee’s cost.

Karpisek said the intent of the bill is to curb a rise in SDL applications. He said a fee increase would reflect the true value of an SDL and control administration costs.

Hobert Rupe, executive director of the Nebraska Liquor Control Commission, testified in support of the bill. He said two main groups purchase SDLs: retailers with a liquor license and nonprofits. However, 3,700 applications were processed last year in a state that has only 4,200 retailers with liquor licenses, he said.

“Right now, it seems that people are getting SDLs just because they might want to have a fundraiser with alcohol,” Rupe said. “There is not really a value attached to the license as it is.”

The catering license is affected by the proliferation of SDLs, Rupe said, because entities that would otherwise purchase an SDL opt for a catering permit to avoid the daily fee associated with an SDL. Consequently, many licensees with catering permits, such as local bars, aren’t really involved in catering, he said.

Rupe said the commission wants to ensure that those who apply for licenses will use their privileges professionally. In order to accomplish this, he said, the fees associated with the licenses must be appropriate.

Since SDLs were created in 1983, the fee has changed only once, Rupe said, when it increased from $25 to $40 in 2000.

Kathy Siefken, executive director of the Nebraska Grocery Industry Association, testified in opposition to the bill. She said another bill currently under consideration by the Legislature would permit the commission to grant standard liquor license waivers to applicants within 300 feet of a university. That bill would do more to reduce the number of SDLs than a fee increase, she said.

Siefken said the increased fee costs would be passed on to consumers. Furthermore, due to local occupation taxes on catering licenses, the bill’s increased fees could triple the cost of catering licenses, she said.

The professionalism of SDL holders already is checked by local governing boards, Siefken said, which must approve an SDL application before it is issued by the commission.

“[License applicants] are already very motivated to do things right the first time, because they won’t get a second chance,” she said.

Jim Partington, owner of Deer Spring Winery, also testified in opposition to LB411. He said the bill essentially would be a tax increase on his small winery.

“The imposition of this kind of a fee is a pretty significant burden on us in our attempt to grow and become profitable,” he said.

The committee took no immediate action on the bill.