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Archive for Sunday, January 18, 2009

Partying boosts city coffers

Revenue from alcohol sales up in 2008

From left friends Larry Waldron, Jeff Gutshall, Sarah Minshull, Amy Lonsway and Michelle Gautheir celebrate a baby shower for a friend and watch the KU basketball game against Colorado Saturday at Johnny's Tavern. Celebrations in 2008, like the Orange Bowl victory and a National Basketball Championship may be the reason city liquor tax numbers skyrocketed for the year.

From left friends Larry Waldron, Jeff Gutshall, Sarah Minshull, Amy Lonsway and Michelle Gautheir celebrate a baby shower for a friend and watch the KU basketball game against Colorado Saturday at Johnny's Tavern. Celebrations in 2008, like the Orange Bowl victory and a National Basketball Championship may be the reason city liquor tax numbers skyrocketed for the year.

January 18, 2009

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2008. An Orange Bowl victory. A national championship. A year to remember.

Actually, parts of it may be a bit hazy.

New liquor tax numbers from the city show that we started toasting with the Orange Bowl in January, partied like there was no tomorrow with the national championship in April, and then decided for good measure to kick it into overdrive to end the year.

According to tax figures, Lawrence bars and restaurants sold an additional $3.2 million worth of liquor in 2008 compared with 2007. Overall, bars and restaurants sold $24.9 million worth of booze in 2008. Those numbers don’t include liquor store sales.

“I think it is safe to say that the kids all had a damn good time when we won the national championship,” said Rick Younger, owner of Rick’s Place, 846 Ill.

Excise tax boost

The city’s coffers also received a boost. The state charges a 10 percent excise tax on liquor sales at bars and restaurants. Traditionally, cities have received 70 percent of that tax — although Gov. Kathleen Sebelius’ proposed budget calls for the state to begin keeping all the drink tax revenue in fiscal year 2010.

For 2008, the Lawrence liquor tax collections increased by 16 percent, the largest yearly jump since at least 2000. The city received $1.91 million in 2008, up from $1.64 million in 2007. Statewide, liquor tax collections increased by 6 percent.

Bar owners weren’t over-thinking the reasons behind the large Lawrence increase.

“Last March and April were pretty exciting,” said Rob Farha, owner of The Wheel, 507 W. 14th St.

But an analysis of the numbers show there might be an even larger reason for the increase: KU football. The fourth quarter of the year — the heart of KU’s football season — posted an even larger increase than the time period surrounding KU’s national championship in basketball.

Fourth-quarter liquor tax collections were up 27.7 percent compared with 2007. Second-quarter collections — which included the Final Four, the national championship game and the postgame celebrations — were up by 22.9 percent.

Football’s coattails

Farha said the resurgence of KU football has provided a boost to the local bar and restaurant business.

“This year it helped that we had a lot of 11 o’clock games,” Farha said. “This place doesn’t do that well with the six o’clock games. Everybody goes tailgating before, and not as many people come out to the bars.”

Also adding to the boost was — unlike some other seasons — all of KU’s away games and most of its home games were on television, which allowed local sports bars to attract crowds during the games.

But there are signs that the party may be coming to an end. Bar owners this week weren’t overly upbeat. At Rick’s Place, Younger said that December had been one of his worst months on record. And Farha estimated that on non-game days his bar’s business was off by about 20 percent.

“People are just broke,” Younger said.

Future concerns

And, believe it or not, the bar business has been feeling that. Since 2004, growth in drink tax numbers have been relatively flat. From 2004 to 2005 — the first year after the city’s smoking ban went into effect — drink tax revenues declined by about 1 percent. From 2005 to 2006, drink tax numbers increased by 2.3 percent. From 2006 to 2007, drink tax numbers were up by 0.9 percent.

Bar owners have argued the numbers are even worse because drink prices have increased during those time periods, which would cause the amount of tax charged on each drink to increase since the tax is based on a percentage of the price.

But perhaps 2009 will produce better days for bars, even if it doesn’t produce better days for anybody else. The adage is people toast their successes and drown their sorrows. Bar owners said there likely will be some of the latter going on in 2009.

“I think our business will go down, but probably not as drastically as some other types of businesses,” Farha said.

Younger agrees.

“Think of shoe stores,” Younger said. “First of all how many shoes do you need, and then when times are tough, you’ll probably just get by with what you have. But you can always use a mouthful of beer or a swig of whiskey.”

Comments

Sigmund 5 years, 11 months ago

At the cost of how many DUI deaths and serious injury? Perhaps the real reason for the pot ordinance and the DA and judges are so lenient on DUI killers and those who flee the scene is to insure they don't hurt Lawrence's only growing industry?

Sean Livingstone 5 years, 11 months ago

xbusguy, Tell me why tax is no good? It provides you the road to drive on, the trucks to clear the snow everytime you need, the pavement for you to walk on, the emergency services that you need when disaster strikes and so on. We pay for some services that we don't need, like public buses and libraries. But, ain't it the responsibility of those who can afford to pay something a little more for those who cannot pay for them? We're not giving the poor money directly, but providing a mean for them to get proper education, a transportation system to get them to work, and other means to let them have a better live. I don't support giving them money directly, but giving money to support services that they can get by with their lives. Tax does a lot of goods, it pays for the police force that keeps our street safe, it pays for the fire fighters that keep us from the peril of fire, it pays for the tree that cleans up our air. Tell me why is tax no good? Unless you're the kind of selfish people.... who prefer to keep yourself in the shell!

jumpin_catfish 5 years, 11 months ago

And in 2009 maybe the govt. will but the booze for all the college kiddies. We must all do our part to save the economy. Think I'll go get some ammo.

Sigmund 5 years, 11 months ago

livingstone (Anonymous) says… "But, ain't it the responsibility of those who can afford to pay something a little more for those who cannot pay for them?"Who gets to decide who "can afford to pay" and who can't? When I buy a drink I don't pay "a little more" I pay exactly the same amount as the poorest person in Lawrence pays. In fact a poor family of four will likely pay more in food taxes than the wealthiest single person. Much of the sales tax doesn't go to the poor but gets spent on subsidizes to the rich like private fire sprinklers for a handful of downtown landlords which IS a direct payment. Nationally what do you think TARP is? The bottom line is that every dollar in taxes is one less dollar from the private sector to the government. The average American works nearly five months to pay all their tax bills. How many LESS government services would be needed if we were allowed to keep 30% more of what we earned?The debate isn't whether taxes or needed, they are. The debate is what is taxed, how much tax, what services are needed, how efficient is government in delivering the needed services, how accountable the government is for waste and self dealing, political payoffs or kickbacks and fraud. In high tax cities there is likely to be an increase in the rate at which business go out of business. When new arising companies have option of deciding where to locate their factories or offices, cities and states where high tax rates are likely are to be avoided. The high-tax jurisdictions can begin the process of losing business. Early on those losses may not be on a scale large enough that they are noticeable. The reductions in local business in turn beings to reduce the locally earned income. Employees transfer to the lower taxed locations and hiring new people at that location. Eventually, enough companies' desert, high tax city or state, for which, total revenue is LESS at a higher rate than during the time of lower rates!By this time, many of the politicians that set in motion higher-tax rate processes in motion have moved to higher office in state or national government. Remaining politicians in office are likely to be blamed for that decline in tax revenues and reduced services (or budget deficits) as they try to reverse this death spiral of increase need from the poor and declining income.

cowboy 5 years, 11 months ago

Bring back the 4th of July to lawrence !

bearded_gnome 5 years, 11 months ago

every time LJWorld runs a booze-related story, they put a Johnny's Tavern picture on it. don't know whether that's a plus or a minus? apparently, when the ljworld staff thinks booze, they think Johnny's!

akuna 5 years, 11 months ago

@Larry_the_Moocher, I don't understand you. Based on your comments, I assume you are a stand by your man type of person as long as that man is a Republican. You seem to want good things for good people, yet you are very pessimistic about the up coming Obama presidency. That's a shame because, right now, our country needs a lift. Bush's presidency has literally destroyed the America that he inherited when he began office in 2001.I for one give all people a chance to prove themselves before I pass judgement. I take the fundamental American philosophy of innocent until proven guilty and apply it to as many situation as possible. Even if it is towards people that I have a fundamental disagreement with.I wish you well and I hope you will give the Obama presidency a chance. He may prove to be the best president this country has seen in a long, long time. Only a few days left. Woohoo.

Sean Livingstone 5 years, 11 months ago

Sigmund (Anonymous) says…"Who gets to decide who “can afford to pay” and who can't? When I buy a drink I don't pay “a little more” I pay exactly the same amount as the poorest person in Lawrence pays. In fact a poor family of four will likely pay more in food taxes than the wealthiest single person...."I'm not here to debate the taxation and spending systems. I'm here to tell someone that tax is good in the first place, but what you want to discuss is the taxation and spending systems. That is up to debate of course, but tax is necessary in the first place, and this is where many conservatives are fighting against higher tax, i.e. something that they enjoyed but didn't want to pay. How we spend the tax, is another story.... we can have a debate... but not here, not now.

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