Rise in Nebraska beer pubs, wineries increases workload for state alcohol regulators

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LINCOLN, Nebraska — Beer and wine are booming in Nebraska, and state regulators are struggling to keep up.

Rapid growth in the brewpub and wine industries has increased the workload for state officials who police the industry and approve liquor licenses for special events. Now, the Nebraska Liquor Control Commission is asking the governor and lawmakers for additional staff to handle it.

In a budget proposal submitted to the governor's office last week, the commission requested a second field auditor to help the one who now oversees the industry statewide.

The auditor inspects Nebraska's breweries, wineries and other alcohol businesses to ensure their sales match up with the excise taxes owed to the state. Law enforcement relies on the auditor when investigating fraud. For example, an auditor could spot an owner who doesn't qualify for a liquor license because of a criminal record but skirts the requirement by finding another person to apply.

"In a perfect world, we would have had a new auditor a few years ago," said Hobert Rupe, the commission's director. "Now, it's changing from something you'd like to have to something that you need to have."

The number of licensed brewpubs in Nebraska has grown from 21 to 37 in the last two years, according to the commission. The state also had 34 farm wineries this year, up from 28 in 2012.

At the same time, the number of "special designated licenses" — required for weddings, political gatherings and events like Lincoln's Ribfest — is expected to reach 4,300 by the end of this year. Applications have increased consistently every year since 2008, when 3,309 were approved. Rupe said the commission has paid nearly $6,000 in overtime so far this year to employees to process the applications.

Lawmakers boosted alcohol law enforcement last year by allowing six Nebraska State Patrol investigators to focus primarily on background checks for liquor license applicants and on-site inspections. The troopers also run sting operations to ensure that bars and liquor stores aren't selling to minors.

Beyond those services, the state patrol plays a limited role in regulating the industry, said Nebraska State Patrol Sgt. Lonnie Connelly.

Connelly, the patrol's leading alcohol law enforcement officer, said the troopers don't have the expertise to investigate tax issues among the businesses.

"We're cops. We're not accountants," Connelly said. "When you're dealing with something like hidden ownership or tax evasion, that's where the auditors come in. They depend on us ... and we depend on them."

The new state auditor position would cost the state more than $77,000 a year.

Nebraska drinkers consumed 35.2 gallons of beer per person in 2012, according to a 2013 study by the Beer Institute, an industry group. Nationally, the state ranked No. 8 in per-capita consumption.

Nebraska also passed a law in 2012 that doubles the production limit of microbreweries to 20,000 barrels per year. One barrel contains 31 gallons, or about two kegs of beer.

The rise of breweries and wineries in Nebraska tracks with the industry's growth nationally, with customers who want a larger variety of flavors, said Carla Otredosky, marketing coordinator for Empyrean Brewing Company in Lincoln.

"We've done a lot of growing, and we have a lot of newcomers to the field," Otredosky said. "We feel there's a lot of consumer interest out there."

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