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Parting Shot

Liquor-license quotas may be the next to go.

By Ted McDonough
Photo by Steve C.wilson / AP 
Posted // July 8,2009 -

At Kathryn Balmforth’s final meeting as a Utah liquor commissioner, the commission approved new rules to formally start the open-club system passed by the Legislature. Her term on the commission expired after the meeting. She hasn’t been asked to serve another. And the lone holdout for keeping Utah’s liquor laws strict says she would likely decline another term if one were offered by incoming Gov. Gary Herbert.

The Utah liquor commission, says Balmforth, has turned from being a regulator of alcohol to being a promoter. “It’s not something I really want to be a part of.”

“In most places where an agency ends up either in the pocket of, or as an advocate for, the business they are supposed to be enforcing, that is considered scandalous,” she says. “In the last couple of years, the scandal has been anybody actually trying to enforce the law. They view the liquor industry not as the industry they are supposed to be regulating but as their customers. That seems very odd to me.”

Sam Granato, chairman of the commission that lobbied the Legislature to get rid of private-club memberships, counters that his commission has only been fair. “Under my tenure, I tried to have more compassion and some passion for the licensees. They are also our constituents,” he says. “There is a community out there that enjoys alcohol, and they need to be treated as fairly as those who don’t drink.”

The change in private-club law is already paying dividends, Granato says, with one big convention, the International Society for Magnetic Resonance in Medicine, booking Salt Lake City after the law passed opening bars to the public.

Now, some are suggesting even more reform for Utah’s liquor laws. At the end of the liquor commission’s June meeting, departing commissioner Mary Ann Mantes called for abolishing the liquor-license quota system by which the Legislature limits the number of licenses based on the state’s population. Granato says the commission will take its cue from the Legislature on that question. “We only work under their guiding hand,” he says. But Granato has publicly questioned if Utah needs to maintain a cap on the number of beer-and-wine licenses for restaurants. The current quota might be holding back new eateries, he says. “I don’t think we should hinder economic growth for anyone.”

The Utah Legislature has traditionally been reluctant to increase the total number of liquor licenses in the Beehive State. When restaurant licenses ran out in 2008, lawmakers took licenses away from clubs in order to make additional licenses available for restaurants. The official ratio of clubs to people actually went down after the change. The current quota is one bar license for every 7,850 Utahns. That is about 500 more people per license than were available last year.

According to data collected for the 2002 U.S. Census, Salt Lake County has just one bar for every 9,500 county residents. That number is comparable to Phoenix, but just one third as many bars per capita as Denver or Portland. Even the Boise area has about 40 percent more bars per person than Salt Lake County. And in Boise, the Republican governor has become convinced that Idaho’s liquor license quota system is holding back the economy.

The way Idaho doles out liquor licenses is even more convoluted than Utah. The number of available licenses is set city-by-city based on city populations. A license shortage has led to long waiting lists and liquor licenses selling on the open market for $500,000. “There is no certainty for businesses that want to relocate to Idaho,” says David Hensley, legal counsel to Gov. Butch Otter who is proposing change. “It’s harming economic development.”

Otter asked Idaho’s Legislature to scrap the quota system this year. Under his proposal, cities would be put in charge of handing out liquor licenses for restaurants, licensing as many as needed. The state would continue to be in charge of the bar licenses. Otter pitched the reform as a compromise in keeping with Idaho’s Constitution that pledges the state to maintain the “temperance and morality” of residents. But, while the license proposal passed the Idaho Senate, it failed in the House.

In Utah, tampering with the Beehive State’s liquor-license-quota system isn’t currently a high priority for Utah tourism lobbies. Scott Beck, CEO of the Salt Lake Convention and Visitors Bureau, is basking in the afterglow of Utah’s new liquor reform, telling newspapers from The New York Times to the London Daily Mail that the opening of Utah’s once private clubs “really signifies that Salt Lake has changed.” It’s true that Salt Lake doesn’t have a lot of bars or nightclubs, he says, but so far, it appears that every one who wants a license has been able to get one.

When demand for licenses increases, the Legislature will react, he says. “We’ve always felt like the market will dictate” the number of club licenses.

 
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