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East Dubuque council says ‘no’ to food and beverage tax

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EAST DUBUQUE–A proposal to initiate a one-percent sales tax on food and beverage sales in East Dubuque has met with few supporters and many detractors, including the city council.

Meeting Monday, April 27, the council voted down the proposal on a 4-2 vote with council members Adam Arling, Dawn Stelpflug, Martin Werner and Robin Pearson rejecting the new tax while Randy Degenhardt and Delbert Belken supported it.

East Dubuque City Manager Loras Herrig raised the issue in an attempt to balance the city’s budget which has a projected $300,000 deficit for the 2020-21 fiscal year which started May 1.

The proposed tax could produce $100,000 in additional income for the city, he thought.

The East Dubuque city budget is in a precarious place right now and is awash in red ink.

“Before the pandemic,” Herrig said, “I forecast a $200,000 deficit.”

But, now, with no video gaming revenue for the foreseeable future and the prospect of other revenue sources diminishing for the new fiscal year, Herrig saw that deficit grow by $100,000.

“You can’t get it all from one side. You can’t get it all from revenue and there’s no way I can cut $300,000. There is no home run here.”

Brenda McDonald from MidTown Marina told the council that with a projected increase in the minimum wage and “price gouging that is going on,” there are lots of other costs being put on customers. A food and beverage tax would add even more, she argued.

Frustrated, Herrig asked, “Anytime the city wants to raise fees, the city is told it shouldn’t do it. What do you suggest to us when we eat up our reserves?”

McDonald responded, “You should do what we’re doing and watch our budget. I don’t think this is the time to do it.”

Nancy Neuses from Timmerman’s Supper Club took a different tact. She noted, “I understand your situation. I understand the food and beverage side. We can dicker back and forth, but why are you only pinpointing this on us and not all business.

“We can pass a food and beverage tax with agreement of the council. But I would be in favor of doing it for the whole town. . .My concern is that we are all shut down and doing what we can to keep ourselves afloat.

Herrig told the council that on April 30, 2019, the city had over $1 million in reserves. Projected reserves on April 30, 2020 are $786,000. Projected reserves on April 30, 2021 are $584.

“We are in violation of state accounting laws,” he said.

Herrig continued, “No one has accepted any of my suggestions. No one in the last year has agreed to raise fees I’ve recommended (other than the liquor license fees). When is a good night that you will raise fees? Can you guys tell me when we can raise fees?

“I’ll meet any night. Sometime, someone has to make a motion to balance the budget.”

Stelpflug said she was opposed to putting “it on the backs of bars. I don’t care if we raise taxes across the board. I think we need to be a little more creative.”

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After voting down the proposal, the council agreed to hold a work session on the budget on Thursday, April 30. The council met for two hours and will be continuing the discussion on another evening.

East Dubuque bars occupied another large segment of the council’s attention.

The city’s newly adopted liquor ordinance leaves it to the police chief to determine what size area in a bar window should be clear so officers can look inside.

“This puts Luke (Kovacic) in a bad position,” Herrig noted. Herrig was proposing a three foot by three foot unobstructed area for officers to look inside.

The reason for doing this is for officers to visually assess a situation in the bar if there is a disturbance before they enter and to make sure there were no customers inside after closing time.

Council member Adam Arling suggested taking more time and study what other communities are doing.

“I want the guys (police officers) to be safe. Second, I don’t want my youngest child to see people in the bars. Galena only wants 20 percent (of the window clear).

Stelpflug wanted no change to the ordinance and made a motion to do so. That motion failed.

Arling’s motion to table the issue for further study passed unanimously.

In other business, the council:

•set the date for its next meeting for May 18. The council normally meets twice a month, but due to the pandemic is making an effort to meet once a month.

•approved a sixth video gaming machine for the Golden Pheasant Club.

•agreed to move forward with condemnation proceedings for three properties owned by Jim Runde: 69, 339 and 341 Sinsinawa Ave.

•approved payments of $234,489 to Leander Construction and $10,875 to Fehr Graham and Associates for work on the sewer treatment plant.

•agreed to spend $5,000 for the submission of a Community Facilities Loan with the United States Department of Agriculture for a new East Dubuque fire station. The loan, if approved, comes with an interest rate of one quarter of one percent and can be repaid over 40 years. Funding for repayment would come from TIF funds.

•approved the American Legion’s request for a Memorial Day Parade. Plans are still in the works due to the COVID-19 pandemic. Thought is being given to take the parade throughout the community.

•approved a plat survey for Wayne Stewart and Ken Buesing.

•approved the city’s budget for the 2020-21 fiscal year. Next week’s Gazette will include a detailed story about the budget.

The meeting was held at East Dubuque City Hall with all council members present. The meeting was also streamed on Zoom.