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Legislative special session could remedy city’s ongoing problem with liquor licenses
by Freddy Monares, staff writer Nov 16, 2017
The city of Belgrade might be getting a fix to keep liquor licenses within city limits sooner than officials think.
The city has been meeting with a local government interim legislative committee to change a law allowing liquor licenses to float from city to city as long as the two municipalities are within five miles of each other. In Belgrade, the issue has claimed businesses that simply could not keep afloat and were tempted to sell their licenses off to Bozeman-area businesses for a profit.
Legislators were called back this week for a special session by Gov. Steve Bullock to consider a fix for the state’s $227 million budget deficit. The Democratic governor proposed three steps to avoid the steepest cuts which include cutting $76.6 million from the state budget, suspending some contributions to state retirements and health plans that have surpluses and temporarily increasing some taxes.
Part of the governor’s package of bills to enhance revenue includes one piece of legislation that would change the process of obtaining a liquor license from a lottery to an auction. The revision could generate an extra $13 million by 2021 for the state, according to a fiscal note attached to the bill.That bill is currently making its way through the special legislative session, and was unanimously passed out of committee on Tuesday. Since the session is expedited, the status of the bill is constantly changing. The bill would also eliminate the provision that allows license holders to float them from city to city.
Sen. Steve Fitzpatrick, R-Great Falls, is the sponsor of the bill and said the proposed legislation would draw a straight line between municipalities like Bozeman and Belgrade. “I think we’ve come to an agreement that I think everyone likes,” he said at the bill’s first hearing on Monday.
Belgrade Mayor Russell Nelson has been active in the discussions with the Montana Tavern Association and the interim committee, and said he was happy to see the division between the two cities moving forward. The mayor said the bill does what the city was hoping for by dividing the two cities, and having separate quota systems.
“This is certainly good for the city of Belgrade and we support the action of (the bill),” he said. Nelson said he would like to extend the 12-year limit barring inter-municipal sales to, at least, 20 years. “It’s pretty obvious to me that those people would sell those licenses to somewhere where they could make more money, and that’s Bozeman,” Nelson said. “I don’t want to force people to make that decision and leave the Belgrade area.”
At the first hearing for the bill Department of Revenue Director Mike Kadas said the state creates and administers the liquor licenses. He said he’s proposing the change from a lottery to an auction because the state should receive the value of the new licenses. “Of course, the reason we’re considering it in this special session is largely because of the revenue that is generated by this bill,” Kadas said. To set the price for the minimum bid, he said the revenue department would look to previous liquor license sales and determine what the market value is for the given area in which new license would become available. Then the agency would set the minimum-bidding price at 75 percent of that determined value. Kadas said the lottery system has been in place in the state since about 1945. “It is really like winning the lottery because if you win, in some areas, you have just won a value of up to half $1 million,” he said.
Bozeman Republican Rep. Bruce Grubbs introduced a similar bill last session that would have expanded the liquor license quota system and given municipalities more local control over licensure. The bill failed to pass out of committee, with representatives of the House Business and Labor Committee citing the legislation seemed like a fix for Belgrade alone, rather than a statewide benefit.