Originally Published: December 13, 2017 6:01 a.m.
Maintaining that the fee amounted to double, if not triple, taxation, the Prescott City Council did away with its decades-old liquor-license fee this week.
The newly-seated council members unanimously agreed on Tuesday, Dec. 12, that establishments that sell, serve, and produce liquor in Prescott should not pay the city a license fee on top of the state liquor-license fee they already pay, as well as the city’s business-license fee.
“I’ve had a lot of you approach me with some feeling that this is a case of double taxation,” City Manager Michael Lamar told the council in introduction of the ordinance for eliminating the fee.
Councilman Phil Goode took that even further. “In my mind, it is not only a duplication of taxing, but probably a triplication,” he said, pointing to the state fee, as well as the city’s business-license fee.
Under the liquor-license fee, bars and restaurants were required to pay the city $662 per year — a fee that owners of the establishments have objected to for years, maintaining that their industry was being unfairly singled out.
Lamar said the original justification for the fee likely stemmed from a perception that the liquor establishments caused an “undue burden” in services such as law enforcement, but he said that had not been the case for the city.
“It’s tough to argue that this needs to stay in place from my perspective,” Lamar told the council.
Councilman Steve Blair — one of three council members who supported doing away with the fee more than a year ago — agreed, calling it “an antiquated fee.” He added: “This thing needs to go away.”
Mayor Pro Tem Billie Orr, one of four council members who voted to keep the fee in effect in October 2016, said things had changed in the city’s finances over the past year to change her mind.
“Things are very different from October of a year ago,” Orr said. For instance, she said, the city’s tourism department, which was the recipient of the liquor-license-fee revenue, had demonstrated “a major return on investment” over the past year, resulting in more revenue through the city’s bed tax.
In addition, Orr said, “Our city is in such a different financial situation this year than we were last fall” because of the August voter approval of Proposition 443, the measure that will add 0.75-percent to the city’s sales tax (effective Jan. 1) to go toward paying down Prescott’s pension liability.
City Budget and Finance Director Mark Woodfill pointed out that the bills for the annual fees were scheduled to go out soon – prompting the need for a decision this month.
A city memo stated: “If the council wishes to change the requirements for 2018, action would need to be taken in December.”
The annual fee generated $82,530 in the last fiscal year. State law required that the money go toward tourism promotion, say city officials.
The memo noted that the city’s bed tax (paid by customers at motels, hotels, and other short-term accommodations) fund had $964,217 in revenues in the past fiscal year, and had $812,236 in expenditures – resulting in “an excess of revenues over expenditures of $151,981.”
Along with the cost for bars and restaurants, the city’s liquor-license fees also applied, in varying amounts, to liquor producers, liquor stores, farm wineries, hotels/motels, and private clubs.
Under the ordinance change, a one-time application fee of $300 (down from $354) will remain in effect for those who apply for or are making changes to their liquor license.
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