Whitesburg KY

Proposed change could endanger Jenkins liquor law

A controversy that could possibly end legal alcohol sales in the City of Jenkins erupted at the September meeting of the Jenkins City Council when citizen Betsy Addington asked the council to separate the taxes from food and alcohol sales at the city’s only restaurant that sells alcohol.

Addington was supported in her request by her brother, Councilman Rick Damron.

Addington told the council that she had been opposed to the occupational tax passed in the city in May 2012, and said she is also opposed to the tax that is placed on food and alcohol served in Las Peñas, a popular Mexican restaurant that opened in July under the ownership of Charles Colwell, who also owns a sister restaurant in Whitesburg. Addington said she believes the tax should only be levied on alcohol sales.

However, several council members joined City Revenue Officer Benny McCall in raising concerns that the two taxes are intertwined in Kentucky Revised Statutes and that if the food tax is removed, the restaurant could possibly lose its alcohol license as well.

Council Member Rebecca Amburgey asked Addington if Addington felt the same way when she went out of town and ate in a restaurant that served alcohol and paid an additional tax on food there even if she didn’t drink alcohol. Addington replied that she was only concerned with “my” town. Damron said he had asked that the topic be placed on the agenda.

Damron said he felt he had been “misled” on the ordinance, although the council conducted two readings before it was passed in August 2011. At that time, the council voted unanimously to approve the second reading of ABC Ordinance No. 227, which allowed for the sale of alcoholic beverages in restaurants in Jenkins with 50 or more seats that derive a minimum of 70 percent of their gross receipts from the sale of food. The unanimous vote to pass the ordinance followed the second reading of the ordinance by City Attorney Randall Tackett.

“Didn’t you read the ordinance?” asked Amburgey.

“I didn’t understand it,” said Damron, and made a motion to change the ordinance to tax alcohol only.

Mayor G.C. Kincer told Damron that he believes it would be very difficult to enact the request to separate the food and alcohol tax, and that doing so would damage Las Peñas’s business if the restaurant were to lose its alcohol license because of the change. Kincer also pointed out that the law requires Las Peñas to sell food and alcohol at a 70/ 30 percent rate, and that if the food tax were removed it would reduce the tax receipts to a minimum for the city.

McCall told Damron that the ordinance states that a tax of six percent, in addition to the six percent Kentucky sales tax that goes to the state, is to be placed on food and alcohol. Mc- Call told Damron he had spoken about the matter with the Kentucky Alcoholic Beverage Control’s legal department. Contacted later by The Mountain Eagle, Mc- Call added that he has also spoken to attorneys with the Kentucky League of Cities but has not received a definitive reply from either about the restaurant’s ability to sell alcohol if the two taxes are separated.

City Attorney Randall Tackett also expressed doubts as to whether the city could maintain its ability to sell alcohol if the two taxes are separated

“”If we separate the tax on food and alcohol, we may lose the right to sell alcohol by state law,” Tackett said.

McCall said he needs time to get a definite answer from the state before the city takes action, and several other council members agreed. Kincer also suggested that if the city voted to allow full sales of alcohol, as the City of Whitesburg did in 2013, then the two taxes would be separate. Kincer said he believes that interfering with the two taxes under the city’s present status would definitely harm the city. He told the council that the city has grown and moved forward in the last four years, and that the new swimming pool and inclusion of Las Peñas have both been important factors in that growth. He added that the question should definitely be passed to Frankfort before any action was taken.

“If you want to stop the growth, go ahead,” said Kincer. “If you want to vote to have full sales, the tax would be lifted. If you want to stop the growth, go ahead and stop it.”

No action was taken on the matter.

In other business, the council addressed the issue of the finances of the Little Shepherd Amphitheater.

Kincer told Don Amburgey, who manages the theater, that the city must create a special checking account where grants, ticket receipts and other funds taken in by the theater could be deposited. Kincer stressed that the city will only administer the accounts and act as a “pass through” for the money and will allow the theater to continue its work. However, Kincer added that since the city was asked to take over the Little Shepherd’s financial business earlier this year, Kentucky law requires the city to supervise the theater’s account in the same way it does with other city accounts.

Kincer also said the city needs to know the rates charged for renting the amphitheater for non-theater uses such as weddings or parties because city officials have received inquiries about renting the site. Don Amburgey said it is customary to charge $250 for a wedding or other events, but to return $125 of the money if the area is well cleaned and maintained after being used.

Both Don Amburgey and Councilman Damron, who volunteers with the theater on electrical issues and other matter, said the grants that are made to the theater are generally very specific about how the funds can be spent. Damron asked that a separate bank account be established for the theater. Kincer replied that it is not the city’s intention to tell the theater how to spend the grant money or other revenue it takes in, but by law the city has to monitor expenditures and revenue since the council voted to take over the theater’s management.

Paul Nesbitt of Nesbitt Engineering reported that the Payne Gap Water Project is almost complete, all the lines have been installed, and that most of the Payne Gap Customers will be hooked up soon. The City of Jenkins acted as administrator for the Payne Gap Project in order to expedite the work and the Letcher County Water and Sewer District will serve the customers, selling them water from the City of Jenkins. Abandoned Mine Lands paid for the entire project except for $600,000 in start up funds allocated by the Letcher County Fiscal Court.

Nesbitt also told the council that Kentucky Infrastructure Authority has approved $150,000 in funding for the completion of a long awaited sidewalk project, to extend the city’s sidewalks from Lakeside to the highway across from Jenkins Middle High School. Nesbitt told the council that the funds will be allocated as a reimbursement to the city and asked that the city authorize Kincer to negotiate a line of credit that will allow the city to take a short term loan for each invoice, in order to get the amount reimbursed from the state.

Damron said the city had originally been granted $15,000 for the sidewalk and Nesbitt said that amount was included in the state allocation of $150,000. Nesbitt said bids for the work would have to come from bidders that have been pre-qualified by the Kentucky Infrastructure Authority. Damron said he wanted more information and suggested that engineering companies usually go for larger expenditures since their fees come from a percentage of the overall expenditures. Nesbitt replied that the bid would be voted on by the council. Councilman Chuck Anderson said it will be up to the council to accept the right bid and members can reject them all if they are excessive.

“I don’t want to see this delayed,” said Anderson. “But we can look at it.”

Rebecca Amburgey added that the council has been looking at getting this project completed for the last three administrations and that she had no idea why the council would delay it now that the funding is available.

“Do we want the sidewalk?” asked Amburgey.

“Why would we not?” answered Kincer.

In other council business:

• The council voted unanimously to table setting property tax rates and rates for motor vehicles, watercraft, and tangible property until they can hold a work session.

• The council voted to reinstate the city Ethics Committee and re-appoint old members Joe DePriest and Fred Fleming and appoint Joanne Baldwin, John Roberts and Kenny Mullins as new members.

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