BY ROGER SMITH
MOUNTAIN CITIZEN
INEZ — Residents voted in November to allow the sale of alcohol in Inez, and the city will technically be “wet” Jan. 12. As the date approaches, Inez Mayor Ed Daniels conducted the first official reading of the “Alcoholic Beverage Control Ordinance” summary during a city meeting Dec. 19.
The 19-page ordinance outlines 23 different license fees, sets a 5% local government regulatory license fee on gross alcohol sales, and establishes additional regulations.
Upon the mayor’s request, Megan Griffith, an attorney with the Kentucky League of Cities, attended part of the meeting via Zoom. The lawyer discussed the regulatory license fee, describing the 5% rate as “high” and “really hard to justify” without a police department.
“You’re heavily restricted in what you can use that for,” Griffith began. “It’s not a tax; it’s a fee. When it’s a fee, you’re restricted to only offset your cost. You can’t spend it on any government service. You’re restricted to spending it only on policing alcohol.”
Daniels asked if the city could use the proceeds to pay the Martin County Sheriff’s Office for services.
“No,” Griffith clarified. “You would not be able to pay the sheriff any money out of that because the sheriff has the ability to collect property tax for their services, and they do do that. And also any money has to be related to enforcing alcohol. So, no, you can’t just pay the sheriff out of that money because they’re already obligated to provide law enforcement services in the whole county, which Inez is a city within the county, so they’re already obligated to do that.”
Commissioner Nita Collier inquired about the sheriff’s DUI checkpoints.
“If alcohol enforcement is the only thing they are doing, you could potentially contract with the sheriff to specifically do alcohol-related enforcement,” said Griffith. “You cannot just supplement the sheriff’s department for general patrol of the city.”
She added, “I don’t foresee you all having enough licensed establishments. Certainly you could do DUI checkpoints, but as far as investigations of licensees, I don’t think you’re going to have enough business to issue a full-time officer or deputy.”
Daniels asked Griffth what she would suggest.
“I’m not the city’s attorney. I can tell you what the law says and what other cities are doing,” stated Griffith. “But again, I just want to reiterate that 5% is really, really hard here. We have some bigger cities that can’t even get close to justifying 5%.”
The attorney explained that if the city builds up a reserve of regulatory licensing fee funds, a licensee could bring legal action and challenge the fee.
Commissioner Roy Penix asked Griffith what rate she would recommend for a city the size of Inez.
“My suggestion is to start with 1%,” said Griffith. “I know you all will have some administrative expenses if you choose to pay the ABC administrator; you’re going to have time spent reviewing applications and those kinds of things.”
Commissioner Jennifer Wells noted that Warfield and nearby cities impose a 5% rate while Prestonsburg’s is 3%. She added that with the number of businesses in Prestonsburg, their 3% rate might generate more revenue than 20% would bring in other cities.
“I think we need to talk to Warfield and see how they’re doing theirs,” said Wells.
Collier agreed that because Inez is a smaller city, the 5% regulatory fee will not generate “a lot” of revenue or reserve revenue.
Family Dollar and Zip Zone Express in the City of Inez have advertised their intentions to apply for malt retail package licenses.
According to Kentucky regulations (804 KAR 10:031), allowable expenditures for the regulatory license fee include employment, salary and benefits of the ABC administrator and staff who administer ABC laws; office supplies and equipment to administer an ABC office; office space for the administrator or staff; travel costs; policing expenses that incur solely as a result of the discontinuance of prohibition, over and above previous expenses; miscellaneous costs and expenses solely and directly related to the discontinuance of prohibition.
ABC administrator
Collier mentioned that the ordinance states the mayor is the only person who can appoint the ABC administrator.
“I thought it would have been the commission,” she said.
Daniels, who announced Dec. 12 that he would assume the duties of ABC administrator, told Collier that he reviewed the ordinance with Griffith.
“She said it was all right,” said Daniels. “I’m not going to do it forever.”
The commission will meet at 6 p.m. Thursday (Dec. 28) to conduct the second reading of the ABC ordinance.