Newport is considering reducing its alcohol regulatory fee, noting that it would benefit anyone who holds retail alcohol sales.
Under Kentucky law, eligible cities or counties may impose a regulatory license fee of up to 5% on gross receipts of each establishment’s sale of alcoholic beverages—distilled spirits, wine and malt beverages. Newport’s fee is currently 2.5%, but the commission is considering reducing it to 2%.
The regulatory license fee may be imposed at the beginning of each budget period at a percentage rate that is “reasonably estimated to fully reimburse the local government for the estimated costs of any additional policing, regulatory, or administrative expenses related to the sale of alcoholic beverages in the city and county,” according to the Kentucky statute.
“That revenue has actually grown year over year which has prompted us to consider the reduction,” Newport Mayor Tom Guidugli Jr. said. “So, there’s actually more alcohol sales generally, which has made the money grow, which has prompted us to reduce it.”
Newport City Manager Tom Fromme said the city is looking at the future with Margaritaville and other planned developments like Ovation, which will cause revenue to grow. However, he said the city’s obligations and costs will also increase.
The ordinance’s first reading was held on May 20. If Newport votes to reduce the fee at its second reading, it would become effective July 1, coinciding with the beginning of the city’s fiscal budget period and annual review period.
“Anybody that holds a retail alcohol sale, they have an alcohol regulatory fee that’s applied to all their sales,” Fromme said. “And it was 2.5% for the last four or five, six years whenever we instituted that originally. And we are recommending that we reduce that to 2%, and that’s across the board so everyone benefits equally.”
Fromme said they also removed nonprofit events and charitable functions from having to pay the fee.
Newport Commissioner Ken Rechtin asked Fromme how the city came to the 2.5% number.
“What we do is we take all the calls for service dealing with alcohol establishments,” Fromme said. “Mr. Hayden (Newport Assistant City Manager John Hayden) tracks those at least weekly. So, we have an ongoing number of calls that we have to establishments in the city. We also track all alcohol-related arrests whether it be DUI or alcohol intoxication or disorderly conduct arising from alcohol use. We take all squad calls dealing with alcohol-related accidents and also our administrative staff time.”
Newport Director of Finance Lenny Kuntz said each department, such as the alcoholic beverage control administrators, legal staff, the police department, and the fire department, sends their data monthly.
“I saw revenue reports, and it looked like $900,000 to $ 1 million currently regulatory fee for this year,” Rechtin said.
Fromme pointed out that anybody who has a retail license and pays the regulatory fee gets their license fee reimbursed out of the program.
“So, it’s not all necessarily going to the city,” Fromme said. “If they spend $5,000 on licenses, they get that reimbursed through the regulatory fee every year. There are some benefits derived by the owners as well. I mean, if they’re passing the cost on to the consumer, they do get their license paid for out of the fee.”
