Drop in special alcohol tax collections could affect funding for Lawrence social services

photo by: Nick Krug/Journal-World File Photo

A local bartender pours a beer in this file photo from 2009.

Health orders related to the coronavirus that closed bars and restricted some alcohol sales have significantly decreased the money the city collects from taxes on alcoholic drinks, potentially affecting the social service organizations funded by that money.

Under state law, bars, restaurants and other public venues that sell alcoholic drinks must charge a 10% liquor drink tax — which is different from the tax charged by liquor stores — and a portion of those proceeds are distributed to local governments to fund substance abuse support and prevention programs and other community services. But this spring, public health orders put in place to help stop the spread of COVID-19 closed bars and restricted the hours that businesses with liquor licenses could sell drinks. The restrictions have significantly reduced the amount of money collected from the drink tax and the amount available in the city’s special alcohol fund.

Specifically, the city’s drink tax distribution for the third quarter, which represents purchases made in April through June, is about 75% less than the distribution from the same period last year, according to a city staff memo to the Special Alcohol Fund Advisory Board. If that trend continues into the fourth quarter, which represents purchases made in July through September, then the city’s special alcohol tax distribution for the year would be about $502,000, or about $323,000 less than the $825,000 that was budgeted for the fund for this year.

The special alcohol fund helps support 10 programs or organizations, including Bert Nash Community Mental Health Center, Boys & Girls Club of Lawrence, DCCCA and others. Specifically, the city’s 2020 budget allocated $736,000 from the special alcohol fund and $1.54 million from the general fund toward social service agencies and programs.

The board, which provides funding recommendations regarding the special alcohol funds to the City Commission, met earlier this month regarding the decrease in collections and what to do about the deficit. The fund has about $275,000 in fund balance, but to fully fund all the 2020 budget allocation would result in an approximately $110,000 deficit in the fund assuming the city completely spends down that balance, according to the memo.

In addition to the allocation to the community and social service organizations, Danielle Buschkoetter, budget and strategic initiatives administrator for the city, said that some of the funding was allocated for a Safe Bar training program and a Bert Nash staff member for the city’s mobile integrated health unit.

The memo asked for the board to recommend action regarding the expected deficit, including subsidizing the special alcohol fund with general fund dollars so no agencies receive a reduction to their allocation, making an across-the-board reduction to all agencies, reallocating the distributions, or some combination of reductions.

At its meeting Oct. 2, the board voted to recommend that the city avoid a reduction of any grants from the special alcohol fund by subsidizing the fund with general fund dollars. In making its recommendation, the board cited the importance of social services in preventing societal issues and the comparatively large amount of money the city allocates to its police department and its facilities.

“If we want to talk about public safety and really making an investment in the public safety, we need to be starting with prevention and we need to be investing into social services,” Board Chair Lea Roselyn said.

Buschkoetter said that the board’s recommendation would go to the City Commission for consideration at its meeting Tuesday. She said the city would not know the amount of its fourth quarter distribution of the drink tax until mid-December.


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