California restaurants demand state return liquor fees, other charges collected in pandemic
California restaurants in five counties filed claims against local governments and the state on Monday seeking refunds for a list of fees they’ve had to pay for liquor licenses, health permits and tourism assessments to stay open during COVID-19.
Restaurants in Los Angeles, Orange, San Diego, Sacramento and Monterey counties have filed the claims against their boards of supervisors and a state office, according to the California Restaurant Association. Establishments in San Francisco, Fresno and Placer counties expected to follow suit. The claims are considered a precursor to a lawsuit.
The claim filed in Los Angeles County alleges “unlawful taxation, fees, and/or charges that were collected” despite restaurants’ inability to operate in accordance with California’s reopening regulations.
“It is without dispute that the government-ordered closure of neighborhood restaurants have wreaked havoc on small businesses that are the cornerstones of every California community,” the claim says. “These small business owners are struggling to pay their bills and keep people employed.”
Restaurants, bars and wineries are subject to California’s tiered reopening rules that categorize counties by color according to their infection risk. Guidelines for these businesses include rigorous sanitation protocol, increased air circulation recommendations and a reconfiguration of standard operations, like ordering from a menu, providing utensils and sharing condiments.
Even in the least restrictive tier, the businesses must limit capacity to no more than 50% for indoor services. Up and down California, restaurants and other dining establishments have established creative ways to stay afloat, like setting up temporary outside seating or running specials on takeout menus.
Brian Kabateck, an attorney representing the restaurants, said that because restaurants have to follow the rules to stay in business, “it’s offensive and tone deaf” for state regulators to charge them compliance fees for permits they can’t necessarily use.
“Restaurant owners are obligated to pay these government fees just to operate, yet the same government entities who have collected those fees have forced these businesses to close their doors or drastically restrict operations due to the pandemic,” Kabateck said. “We simply want the government to return those fees to those restaurants who followed the law and closed.”
California Restaurants Association President and CEO Jot Condie said “easing fees” would help businesses stay open and keep employees on the payroll. Condie also urged Gov. Gavin Newsom in August to call a special legislative session to address sectors of the economy struggling to survive during the pandemic, especially California’s restaurants.
California Business, Consumer Services and Housing Agency spokesman Russ Heimerich said the administration has “been deeply sympathetic to the difficulties facing restaurants” since the start of COVID-19.
Heimerich added that the state provided “various forms of regulatory relief,” including to-go alcohol sales and postponing annual renewal fees without penalty.
“Alcoholic Beverage Control has kept an open line of communication with the industry throughout and continues to do so in order to hear the concerns and ideas from the industry as we respond to the pandemic while fueling our economic recovery,” he said.
Without intervention, the association has warned, the tight rules will run close to a third of the state’s restaurants into the ground. The group estimates that before the coronavirus swept through California and shuttered businesses, 1.4 million workers were employed by restaurants. Today, the association said around 1 million have faced furloughs or layoffs.
“Even when the restrictions are lifted,” Condie said, “the devastating impact on the restaurant industry will extend for years.”
