Debate broke out among the Le Sueur City Council at a June 22 meeting, as local bars requested relief in the form of reimbursement in liquor license fees and future fee reductions.
The COVID-19 pandemic and related health and safety restrictions from Gov. Tim Walz forced bars to shut down from March 17-May 31, leading to a significant drop in revenues. Even now, bars and restaurants may only operate at 50% capacity and the future trajectory of coronavirus case numbers remains a mystery.
In a memo to the City Council, three on-sale liquor license holders requested financial relief from the city to help with present and expected costs. Their first request was that the city reimburse each establishment for liquor license fees while they were shut down under state mandate. Refunding these fees would cost $416 per establishment in potential revenue for the city — around $1,250 total.
The City Council unanimously voted in favor of reimbursing the bars for the time they were shut down. Councilor John Favolise believed it would be unethical for the city not to reimburse the bars since the establishments were not allowed to use their liquor license to sell during that time. Only off-sale license holders — those who sold alcohol to be consumed elsewhere — were allowed to operate.
However, the memo’s second request was more controversial. The on-sale license holders wanted liquor license fees from July 1, 2020 to June 31, 2021 to be reduced from $2,000 to $1. In addition, off-sale license holders wanted Sunday Sales fees reduced to $1 for the stay-at-home order and from 2020-2021.
While the loss of revenues for bars and restaurants has been severe, the city of Le Sueur is also grappling with costs related to COVID-19. At the same council meeting, the city voted to open the Aqua Valley Pool which would leave the Community Center with a $60,000 deficit under the assumption that potential funds from the CARES Act and volunteer work do not offset expenses. If the city cannot be reimbursed for the lost revenues from waiving liquor license fees, city projects and expenses would need to be cut to make up for it.
“If we do reduce fees or refund fees, that will have a negative effect on our miscellaneous revenue line item that we have,” said City Administrator Jasper Kruggel. “Depending on the amounts we would likely either have to move funds around or do something with our contingency fund.”
Councilor Newell Krogmann believed that it was too early for the city to be cutting license fees for next year. Because the future impact of COVID-19 is uncertain, Krogmann wished to delay making a decision until the next council meeting and — in the meantime — have city staff work with license-holders to set up a payment plan.
“I understand the sympathy with our businesses and certainly want to support them, but candidly I think we’re being premature here,” said Krogmann. “We’re trying to do something good, but we’re not in a position to make this decision. We don’t know what the future is going to be.”
But other councilors believed the city needed to take immediate action and Krogmann’s resolution to table the issue until next week was voted down 4-3. Councilor Marvin Sullivan pointed out that the coronavirus is likely to stay an issue in July and that bars are still operating at half-capacity.
“I understand the feeling that we’re premature, but we know this is going into July and numbers are currently rising,” said Sullivan. “Businesses in our area have been closing their doors because of outbreaks, so there’s a great possibility this will extend further than next month.”
“We don’t know how long it’s going to last, we don’t know how long it’s going to be in the future, so my recommendation is we come up with some sort of reduction for even a month or two until we know where it’s going to go in the future,”Sullivan added. “I understand the impacts it’s going to take on the city, but on the flipside without our businesses, we don’t have our community.”
Councilor John Kirby proposed that the city waive all liquor license fees for three months from July 1 to September 30 with the council reevaluating license fees in the fall. However, this proposal was also voted down 4-3. Councilor Scott Schlueter believed that a full fee waiver was unnecessary at this point, especially during the summer.
“The next three months are also the nicest months of the year where most of their business is going to be outdoors anyways,” said Schlueter. “So they aren’t going to have a lot more capacity inside, but they can still be outside.”
Councilor John Favolise was open to reducing fees, but believed that as long as bars were using their liquor licenses, they should be paying for it.
“For me, I feel ethically that we should only be charging 50% during the time they are at 50% capacity because they can only use 50% of their license during this time,” said Favolise.
With resolutions to delay a decision and to waive fees both struck down, Sullivan proposed that the city drop liquor license fees for the month of July and return to the issue at the end of the month. The resolution passed 4-2, with Schlueter and Mark Huntington opposed.