Liquor permit costs skyrocket for state’s private clubs

Legislators planning to fix unintended consequences of 2019 law that raised some fees from $300 to $2,000

The Groton Elks Lodge #2163 had been paying $300 annually for its main liquor permit.

But last April, the club received a letter from the Department of Consumer

Protection’s Liquor Control Division explaining their permit type was being eliminated, and their new permit would have a renewal fee of $2,000.

Other private clubs — such as American Legion and VFW — were dealing with the same thing.

This is what Democratic and Republican state lawmakers now call an “unintended consequence” of An Act Streamlining the Liquor Control Act, an overhaul of liquor laws that passed in 2019 with overwhelming bipartisan support.

The Connecticut General Assembly intended to fix the issue in its 2020 session, but the session was cut short by the COVID-19 pandemic. Legislators want to fast-track the issue this year, but in the meantime, Gov. Ned Lamont has temporarily addressed the issue through executive orders.

The orders extend the expiration date to Feb. 9 for groups that used to have the cheaper club, nonprofit club, or golf country club permits.

That means that many clubs haven’t yet paid the higher renewal fee, and legislators would like to get those that have a refund.

The Senate passed An Act Streamlining the Liquor Control Act on May 30, 2019, the House passed the bill on June 1, and Lamont signed the measure June 5.

The 76-page bill, which cut the number of liquor permits from more than 40 to 12, was designed to modernize liquor laws and support the burgeoning craft beer industry, which saw a positive impact from the law soon after passage.

In a fiscal note dated May 31, 2019, the Office of Fiscal Analysis said the bill “consolidates various liquor permits and results in a revenue gain of $800,000 to $900,000 beginning in FY 21.”

An analysis from the Office of Legislative Research, also dated May 31, explained, “The bill combines various permits for on-premises consumption into the existing cafe permit. The annual fee for a cafe permit is $2,000, which the bill applies to the consolidated permittees.”

The analysis went on to list the consolidated permittees as club permits ($300), nonprofit club permits ($815), and golf country club permits ($1,000). These clubs would see their fees go straight to $2,000, whereas this amount would be phased in over four years for tavern permit holders.

In explaining the $615 difference between a club and nonprofit club permit, DCP spokesperson Kaitlyn Krasselt explained in an email Friday that club permit holders could only rent their facilities to members and their guests, whereas nonprofit club permittees also could rent to nonmembers. She said while some parts of the bill went into effect immediately and others in January 2020, the permit changes didn’t take effect until July 2020.

Legislators seek to lower permits from $2,000 to $815

Unless Lamont’s executive order is extended or the legislature acts before Feb. 9, all permit renewals are due that day, Krasselt said.

Sen. James Maroney, D-Milford, therefore encourages clubs to hold off on paying renewals for now. Maroney is co-chair of the General Law Committee, which is where the 2019 bill originated and which is now trying to rectify the issue for private clubs.

The committee met over Zoom on Thursday morning and voted to raise bills, including one called An Act Concerning Non-Profit Club Fees.

“That is a fix that I think a lot of us have heard from our constituents about when we did the large revision to the liquor statutes a few years ago,” Maroney explained in the meeting. He said the new bill would grandfather everyone in at $815.

Sen. Cathy Osten, D-Sprague, asked if the bill could be fast-tracked, as her understanding is that people already have gotten their renewal bill and are being told they’ll be closed if they don’t pay the $2,000.

Maroney said he believes “it is our intent to get this through as quickly as possible.” He said the bill would allow for reimbursements for those who already have paid, but this would create extra work for DCP, so his hope is to get this done in time for DCP to not have to issue more reimbursements.

Ranking Member Rep. David Rutigliano, R-Trumbull, stressed “the level of commitment on both sides of the aisle to fix the issue, which I believe would’ve been fixed last year if not for the pandemic.”

‘There’s sometimes unintended consequences’

Maroney told The Day on Friday he hopes there will be a public hearing the week of Jan. 25 on the bill. The draft bill hasn’t been filed yet, but he said it should be filed this week and available on the Connecticut General Assembly website.

“Unfortunately, with most major legislation, there’s sometimes unintended consequences, and this is one of those unintended consequences,” Maroney said.

Sen. Kevin Witkos, R-Canton, a ranking member on General Law, hailed the passage of the bill in May 2019, saying it “aims to update and modernize the Liquor Control Act for the first time since the fall of Prohibition.”

Witkos said Friday, “Other than this bill changing the price structure for the nonprofits, I think the basis of what we did was really good, and sometimes you don’t know until your theory’s put into practice, and that’s why we’re back every year.”

Witkos said he wanted a bill freezing clubs at their previous rate to be heard in special session last year, but that didn’t happen.

Sen. Rob Sampson, R-Wolcott,, who voted in favor of the 2019 bill, lamented that when you’re in the minority party, “you have almost no time to review the legislation that’s put forward to you, and you end up relying on the ranking members of the committee.” But he said in this case, even the majority party didn’t know the ramifications.

To Sampson, a small-government conservative, this is an example of the government being too big and doing too much. He said he read through this bill but that bills aren’t in plain enough language, and the issue with private clubs “snuck by me.”

Similar to Maroney, Sen. Paul Formica, R-East Lyme, commented, “Sometimes the law of unintended consequences rears its ugly head, and I think that’s kind of what happened here.”

He said “in the effort to do a wholesale revamp of the liquor laws in Connecticut,” private clubs got lumped in with another group, and fees became too high to be feasible for places not designed to make money.

‘We don’t have that kind of money’

One person Formica heard from was New London resident Keith Robbins, who first made The Day aware of the issue for private clubs through an op-ed he wrote.

Robbins noted in a phone conversation that increased permit costs are coming at a time when private clubs are struggling with revenue, due to capacity limits and people concerned about going out due to the pandemic. Many clubs offer free space for organizations to meet, he added, and alcohol is one of the few things people will pay for.

Diane Hancock, permittee for VFW Post 189 in New London, said before the pandemic, the post did events for The Arc Eastern Connecticut and gave out food baskets to people in need. With COVID-19, she said, “We’re just keeping our head above water. It’s been a struggle.”

Hancock said she hadn’t heard about the executive orders pushing back renewal due dates, and she already sent in the $2,000.

“We don’t have that kind of money,” she said. “I mean, it’s a private club.”

Harry “Butch” Hansen Jr., adjutant for the American Legion Department of Connecticut, said he first became aware of the permit changes and increased fees toward the end of 2019. Of the 143 posts in Connecticut, 35 have a bar.

Hansen said when he contacted legislators on the Committee on Veterans’ Affairs and then Maroney, “they apologized; they didn’t realize what effect it would have on our type of organizations.”