OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5021

AN ACT CONCERNING COMPETITIVE ALCOHOLIC LIQUOR PRICING AND HOURS OF OPERATION FOR PERMITTEES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 12 $

FY 13 $

Department of Revenue Services

GF - Revenue Gain

806,000

5,337,620

Various State Agencies; Legislative Mgmt.

GF - Potential Cost

Less than $1,000

Less than $1,000

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 12 $

FY 13 $

Various Municipalities

Revenue Gain

8,500

52,000

Explanation

The net impact of the bill is an approximate state revenue gain of $5. 3 million per year. The municipal revenue account share of sales and use tax revenue would increase by approximately $52,000 per year. Assuming passage of the bill occurs May 1st, the bill would result in $806,000 in state revenue and $8,500 for municipalities' share of the sales tax for FY 12. The FY 12 revenue stems from 1) extension of the sale of alcohol at off-premise retailers to Sunday and certain holidays and 2) the extension of hours for the sale of food for café permit holders.

The following table summarizes the estimated annual fiscal impact of each major policy change in the bill:

 

State

Municipal

 

Revenue

(Cost)

Net Impact

Revenue Share

Sunday Sales1

3,960,000

-

3,960,000

40,000

Sales on Certain Holidays1

300,000

-

300,000

3,000

Extended Hours (Café Permits - Food Only)1

280,000

-

280,000

5,000

Sale of "Complementary" Food1

250,000

-

250,000

4,000

Permit Fees Revenue Changes

547,620

-

547,620

-

Alcohol Pricing1

Minimal Loss

-

-

-

Task Force (terminates FY 13)

-

Less than $1,000

Less than $1,000

-

Total Impact

5,337,620

Less than $1,000

5,336,620

52,000

1These revenue estimates reflect the assumptions that certain businesses would change their operative hours of sales and/or include sale of food as a result of this bill. Actual revenue will depend on the number of retailers that change their current sales policy.

DAYS/HOURS FOR SALES OF ALCOHOL

Sunday Sales

The sale of alcohol on Sunday by off-premise retailers of alcohol would increase the annual volume of alcohol sales by an estimated 2. 8%. Such an increase would generate a total General Fund revenue gain of $4. 0 million; this total stems from a $2. 5 million increase in sales and use tax and a $1. 5 million increase in excise tax. The municipal revenue share account will increase by $40,000.

Holiday Sales

The bill allows the sale of alcohol by off-premise retailers on Memorial Day, July 4th, Labor Day, and any Monday following a Sunday holiday. This results in a state revenue gain of $300,000 annually. This includes approximately $190,000 in state sales tax revenue and $110,000 in excise tax revenue. The municipal revenue share account will increase by less than $5,000.

FOOD SALES

Café Permit Extension of Hours for Sale of Food

The bill permits café permit holders to open at 6: 00 a. m. to serve food, but not alcohol. 1 Currently, there are 784 café permit holders. 2 Assuming that 10% of café permit holders extend their hours as a result of the bill, the resulting state revenue gain would be $280,000 in sales tax with a municipal revenue share increase of $5,000 annually. The actual revenue increase is dependent upon the number of café permit holders which elect to extend their hours of operation.

“Complementary” Food Sales

The bill allows the sale of food products that are “complementary” to alcohol (e. g. fruit, cheese, crackers, chips, nuts) by package store permit holders. This would result in an estimated state sales tax revenue gain of $250,000 annually. The municipal revenue share account will increase by less than $5,000 annually. The actual revenue increase is dependent upon the number of stores which elect to sell food at their establishment.

PERMITTING

The bill makes a number of changes to various permits and certificate fees. The following table summarizes the impact of these changes.

Permit and Certificate Fee Impacts

 

State Revenue Gain/(Loss)

Manufacturer Permit for Beer and Brew Pub (Sec. 3)

1,200

Wholesale Salesman Certificate (Sec. 4)

35,720

Grocery Store Permit Fees (Sec. 5)

551,950

Bowling Permit/Racquetball Facility Permit (Sec. 6)

(41,250)

Total Impact

547,620

ALCOHOL PRICING

The bill allows off-premise sellers to discount either one beer or one alcoholic liquor item other than beer each month to no less than 90% of the permit holder's cost. It is anticipated that the allowance of a discount will have a minimal impact on the volume of alcohol sales. The result is anticipated to be a minimal revenue loss.

COMPETITIVE ALCOHOLIC LIQUOR PRICING TASK FORCE

Section 14 of the bill may result in a cost of less than $1,000 to agencies participating in the task force to reimburse legislators and agency staff for mileage expenses.

All other changes in the bill result in no fiscal impact.

The Out Years

The annualized ongoing fiscal impact pertaining to the days/hours for sales of alcohol, food sales, and alcohol pricing would continue into the future subject to inflation. The revenue impact from the permit and certificate fees will vary depending on the number of permits issued. There is no ongoing fiscal impact related to the task force since it terminates in FY 13.

Source:

Department of Consumer Protection

1 Currently, cafés can only be open when they can sell alcohol, which begins at 9: 00 a. m.

2 As reported by Department of Consumer Protection, February 2012.