Originally Published: April 6, 2011 9:57 p.m.
PRESCOTT - A liquor-license fee that has been in effect in Prescott for more than 75 years continued to raise concerns among bar and restaurant owners this week.
And that concern likely will lead to another council discussion next week. City officials said Wednesday that a council workshop likely would take place on April 12. The discussion reportedly will look into the possibility of changes in the liquor-license fee, as well as the implementation of a general business-license fee.
Even so, officials noted that the city probably could not simply replace the liquor-license revenue with a general business-license fee.
Although the city could opt to impose a business-license fee, officials say that decision would have to be separate from discussion of a liquor-license fee. "You cannot substitute revenue (from one to the other)," Mayor Marlin Kuykendall said Wednesday afternoon.
The issue first arose in early March, when two members of the Prescott Area Independents organization appeared before the City Council to complain about the liquor-license fee that the city charges to local businesses that sell alcohol.
The local restaurateurs maintained that the fees were unfair because their amounts were "arbitrary," and because they targeted only alcohol-related businesses.
Those comments prompted council members to place the liquor-license matter on their agenda for this week's workshop.
Prior to the discussion, city Management Analyst Joe Brehm met several times with members of the Prescott Area Independents, a group of restaurant and bar owners, to discuss the fees.
After researching the origin of the liquor-license fee, Brehm reported that it dates back to 1933, when the Prescott City Council implemented it during a public meeting.
At that time, Brehm said, the city charged as much as $250 per year to hotels that sold liquor other than beer and wine. Using the Consumer Price Index to calculate inflation, Brehm said the $250 in 1933 would equate to about $4,235 in today's dollars.
That is considerably more than today's fees - the highest of which is $662 per year for bars and restaurants, and the lowest of which is $62 for special events fees and $178 for domestic microbreweries.
But local restaurant owner Barry Barbe pointed out that the 1933 fee coincided with the end of prohibition of alcohol in the United States.
"Alcohol was seen as extreme at that time," Barbe said, maintaining that the high fee was a reflection of the times.
Over the years, the city has adjusted the fees. The most recent change came in 2003, when the city raised the fees by 50 percent. Prior to that, the fees had remained the same since 1991.
Barbe said that while the Prescott Area Independents group was "not asking for a burden on anybody," he added, "But when your neighbor pays nothing, and you pay a lot, it is unfair."
Currently, the city raises about $66,000 through the liquor-license fees. Officials have maintained that in order to do away with the liquor fee, the city would have to find replacement revenue somewhere else. That is what initially prompted the discussion of resurrecting the business-license fee consideration.
But city records show that a business license has not been a popular concept in Prescott.
Several times over the past two decades or so, the city has broached imposing a license fee on local businesses. The discussion has always ended with the council stepping back from the idea in the face of broad business opposition.
Brehm says the most recent consideration of a business license came in March 2009.
The reasoning for the fees on liquor-related businesses, Brehm said, has been to "recoup costs for public safety calls."
The revenue from the fees goes into the city's general fund. Brehm noted that more than half of the general fund goes to pay for public safety departments, including police and fire.
Although specific statistics were not available this week, acting City Manager Laurie Hadley told the council, "If you ran our (police) call volume, you would see that there are a higher number of calls to alcohol establishments."
The city has yet to finalize the time and agenda for next week's workshop.