Amicus lector
Liquor licenses: City vs. county and the crime conundrum

Liquor licenses are hot commodities in Sioux Falls, as evidenced by J.L. Atyeo’s story in today’s paper.

There’s a 13-strong waiting list for the licenses at the moment. If you could get one, you’d have to fork over a $192,605 application fee to the city for a liquor-only license or $260,245 for a liquor-and-food license.

There’s a $1,500 annual fee after that for either one. Beer-only licenses are far cheaper ($345 a year).

Given that Minnehaha County has seen a 49 percent increase in crime since 2009 and that prosecutors are fond of pointing out that 80 percent of crime is “chemically-propelled,” my first thought was “I wonder if that money goes to the police department?”

Some of it certainly does. The money goes into the city’s general fund, which pays most of the police department’s $31 million budget.

The license money isn’t earmarked, but Police Chief Doug Barthel said today that the city’s been pretty good about giving his department what they need, so earmarking it “probably wouldn’t change much for us.”

There’s another government entity paying for all that crime that isn’t getting any help from the license fees, though: Minnehaha County. The county pays to house inmates, prosecute crime and defend criminals. The issue of funding is at the heart of the discussion on the possibility of expanding the jail or building a new one altogether, and it has prosecutors and public defenders asking for new employees every year.

The issue of funding for prosecution and defense actually came up in court a few weeks back, when Minnehaha County Public defender Traci Smith argued that the state ought to be preempted from seeking a death sentence against confessed killer James McVay because the county hadn’t adequately staffed her office.

Commissioner Jeff Barth is the county’s firebrand on the alcoohol-fueled crime issue. Because the county’s only real means of generating revenue is through property taxes, he tends to say things like “your house doesn’t drink, but your house has to pay for all the drunken drivers who might run into it.”

Barth doesn’t want a chunk of license fees. He wants a change to state law that would allow counties to levy a sales tax on alcohol.

That would be a far steadier revenue stream than one-time application fees or annual renewals, so it makes more sense as a means to pay the crime bills. License fees only make up one percent of the city budget, so it’s not the most important of revenue streams.

The county collects its own liquor license fees, anyway. Those licenses are nowhere near as lucrative as they are for the city of Sioux Falls, though.

Here’s how it works: If you have a bar outside city limits but inside the county, you pay the county for your license. The fee you pay is based on the city your establishment is nearest to.

If you’re near Baltic, for example, you pay the Baltic fee, which is $1,200. If you’re near Sioux Falls, you pay $192,360.

The Crooks Gun Club lost interest in a county liquor license for that reason. The club is near the Flying J, so their license would be plenty pricey. If they were near Crooks, as they were in the 1960s, they’d pay the $1,200 fee.

Based on its population, the city of Crooks only has two licenses (in case you were curious).

Anyway, there’s one upside to a county liquor license for a business owner: You can have one if you want it. There are 14 available and 11 of them are taken.

Maybe you wouldn’t want to open a Steak House in Sherman. But here’s something to ponder: If you get a license from the county and your business is later annexed into the city of Sioux Falls, you keep the license.

In a city growing at the speed of Sioux Falls, a forward-looking business owner might be tempted to set up shop at the edge of town and bypass the city’s waiting list altogether.

Here’s the county’s license cheat sheet.

2013 Liquor License Information.pdf

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