Before a heated informational session Monday evening, mayor John Powell turned to a few other members of the Vermillion City Council.
“I might get impeached tonight,” Powell said jokingly.
The City Council is proposing an ordinance for a five percent malt liquor mark-up to help fund renovations to Prentis Park. The mark-up would be charged directly to businesses as a wholesale cost, leaving individual businesses the choice to raise prices on beer and other malt liquors.
Tammy Baisden, manager of Freedom Valu Center, spoke up at the public informational session in contempt. She said larger businesses can swallow the added city charge without raising prices, but her small operation would feel a big hit if it had to begin charging more for its malt liquors.
“For me, we’re talking a couple thousand dollars a month, which I’m sure (for) the bars and some of the other businesses that sell more it could be double and triple that,” Baisden said. “It’s going to put smaller businesses out of business.”
The informational session came one week after many business owners in town felt tricked by the City Council.
During Jan. 19’s meeting, the City Council expected to give its second reading and final approval on the ordinance. However, business owners in opposition to the ordinance claimed they did not have word about the vote until hours before the meeting.
The Council decided to table the decision until Feb. 17.
The Prentis Park project includes a new waterpark area and other improvements to the public space. The project’s estimated cost is $5.25 million.
The City Council would use the mark-up to pay off a $3 million bond alongside $1 million from the city’s general fund reserve, $1 million from the second penny fund reserve and $250,000 from grants and fundraising.
The yearly debt of the $3 million bond that the malt liquor ordinance would have to cover is estimated at $222,127.
A five percent mark-up on Bud Light would raise a $12.70 18-pack by 72 cents or a $1.03 for one-sixth of a barrel of Michelob ULTRA costing $48.00.
Twenty-three communities in South Dakota have a malt liquor mark-up. Brookings has a 10 percent mark-up on malt liquor that generated more than $465,000 in 2013.
Steve Ward, southeast ward city council member, said Vermillion’s mark-up would help make the project affordable.
“I believe that this tax — because it is a tax, we can use the word mark-up, but it’s a tax — will help in that endeavor,” Ward said. “By creating a pool and a park, that will be the envy of the area.”
The public discussion included no recommendations for changes to the Prentis Park project. Only Chad Gruenwaldt, owner of Old Lumber Company, suggested the city consider scaling back the project’s cost in some way.
Multiple people spoke out Monday in defense of the city’s proposal, saying the sales of beer is inelastic because people are going to buy beer anyway.
Addressing business owners and opposition in attendance, Ward said the City Council also expects to review the ordinance periodically.
“We have in the language of the ordinance a yearly review of this tax,” Ward said. “You all are invited here every time we have this review to talk about how this tax is affecting your business. If I hear evidence that it is affecting it so negatively that you might go out of business, then I, at least, will be reconsidering my vote on this.”
(Old Lumber Company Grill and Bar displays its disapproval of the City Council’s ordinance for a five percent malt liquor tax designed to help pay for Prentis Park project improvements with a neon sign above its entrance. The City Council is expected to vote on the ordinance Feb. 17. Nathan Ellenbecker/The Volante)