Providing for a one-time waiver or refund of certain license or permit fees collected by the alcoholic beverages division of the department of commerce, providing for related procedures, and including effective date provisions

Description

Senate File 602 provides for the following:

• Holders of a Class A, Class B, Class C, or special Class C liquor control license; a Class B beer permit; or a Class C native wine permit with an expiration date between May 6, 2020, and May 5, 2021, are not required to pay the annual license or permit fee or any additional applicable fee or surcharge to the Alcoholic Beverages Division (ABD) as specified in Iowa Code chapter 123 upon renewal of the license or permit.
• The ABD is required to remit to the local authority in which the licensee or permittee is licensed the amount that otherwise would have been collected from the licensee or permittee. These remittances are to be paid from the Liquor Control Trust Fund before August 31, 2021.
• A holder of a Class A, Class B, Class C, or special Class C liquor control license; a Class B beer permit; or a Class C native wine permit that was eligible for a deferment of the expiration of the license or permit due to the Governor’s Proclamation during this time frame but paid the appropriate license or permit fee is permitted to receive a refund from the ABD. These refunds must be paid by the ABD from the Liquor Control Trust Fund before August 31, 2021. Local authorities are permitted to retain any remittances already made in connection with these renewals.
• Holders of a Class C native distilled spirits liquor control license or a Class D liquor control license with an expiration date between July 1, 2021, and June 30, 2022, are not required to pay for the renewal of the license.

The Bill is effective upon enactment.

Background

All license and permit fee revenue is deposited into the Liquor Control Trust Fund. In FY 2020, $17.7 million in license and permit fee revenue was deposited into the Fund, which was a decrease of $1.1 million (6.6%) compared to FY 2019. Deposits to the Fund from all sources in FY 2020 totaled $405.7 million, an increase of $20.4 million (5.3%) compared to FY 2019. This increase was primarily due to an increase in liquor sales in FY 2020. ABD expenses that are covered by the Fund increased by $16.8 million (6.7%) compared to FY 2019. Other ABD expenses are covered by the ABD’s General Fund appropriation. Table 1 provides a summary of deposits, expenses and net revenues for the Liquor Control Trust Fund. Table 1

Liquor Control Trust Fund Summary

FY 2016 – FY 2020 Iowa Code section 123.17 requires transfers from the Liquor Control Trust Fund to the following:

• General Fund
• Iowa Department of Public Health
• Cities and counties
• Iowa Economic Development Authority

Table 2 provides a summary of transfers from the Alcoholic Beverages Division. Table 2

Alcoholic Beverages Division Transfers

FY 2020

Assumptions

• A total of 5,604 license and permit holders are eligible for a refund under the Bill.
• The total renewal license and permit fee amount that will be collected for these license and permit holders is approximately $7.5 million. Approximately $4.9 million of this amount is to be remitted to local authorities. Under current law, the ABD would retain the remaining $2.5 million.
• There are 323 license and permit holders that were eligible for license or permit renewal deferment pursuant to the Governor’s Proclamation and the amount collected from these license and permit holders was $378,000.
• There were 7 Class C native distilled spirits liquor control licenses and 26 Class D liquor control licenses with an expiration date between July 1, 2021, and June 30, 2022, which are not required to pay for the renewal of the license under the Bill. The total associated renewal license revenue is $12,000.Deposits FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Liquor Sales 288,908,791$ 305,619,127$ 320,049,812$ 339,537,641$ 367,284,902$ License and Permit Revenue 15,608,360 15,664,468 16,613,682 18,773,557 17,676,967 Beer Tax Collections 14,231,744 13,904,082 13,592,912 13,438,680 9,435,077 Wine Tax Collections 7,648,753 8,078,043 8,166,553 8,219,810 5,677,108 Miscellaneous Revenue 4,226,128 6,115,965 4,806,557 5,290,473 5,614,701 Total Deposits 330,623,776 349,381,685 363,229,516 385,260,161 405,688,755 Total Expenses 200,367,526 219,986,581 228,179,166 244,804,012 261,613,359 Net Revenues 130,256,250$ 129,395,104$ 135,050,350$ 140,456,149$ 144,075,396$Transfer FY 2020 Actuals General Fund Reversion 116,935,077$

Iowa Department of Public Health 25,763,936 State Aid to Cities and Counties 3,301,218 Sunday Sales Grants 931,125 Iowa Economic Development Authority 306,369 Total 147,237,725$ Table 3 provides the total refund amount for holders of a Class A, Class B, Class C, special Class C liquor control license; a Class B beer permit; or a Class C native wine permit with an expiration date between May 6, 2020, and May 5, 2021.

Table 3 Estimated Refund and Local Authority Retained Revenue Under SF 602 for May 6, 2020, to May 5, 2021 Table 4 provides the total refund amount due to license and permit holders remitting license fees during the license and permit renewal deferral pursuant to the Governor’s Proclamation. Table 4 License and Permit Holders Eligible for Deferral Table 5 provides the total lost fee revenue to the ABD due to waivers for Class C native distilled spirits liquor control licenses and Class D liquor control licenses in FY 2022. Table 5 Revenue Loss Due to Class C Native Distilled Spirits and Class D Liquor Control License Waivers Under SF 602

Fiscal Impact

The total revenue reduction to the State General Fund as a result of SF 602 would be approximately $4.9 million for FY 2021. This amount includes the total amount the ABD would remit to local authorities for their uncollected portion of license and permit revenue (Table 3). The ABD would use current licensing revenue for this expense and reduce the ABD’s General Fund reversion for FY 2021 by this amount.Total On-Premise Licenses/Permits Impacted by SF 602 5,604 Amount Retained by Local Authorities 4,932,954$ Amount Refunded by ABD fom Liquor Control Trust Fund 2,546,766 Total Estimated Refund Amount 7,479,720$Total Licensees/Permittees Eligible for Deferment 323 Total Refund Amount Due to Payment During Deferral 377,854$Total Class C Native Distilled Spirits License Waivers 7 Total Class D Liquor License Waivers 26 Total Lost Fee Revenue Due to Waiver 11,590$

Source

• Alcoholic Beverages Division