A current discussion between lawyers for city hall and the Hotel Santa Barbara has centered around what is a tax and what is a fee: The hotel threatens to sue if the utility fee is really a tax. This is a topic that I studied briefly, in my capacity as a citizen, when trying to assist the city with its budget shortfall. A fee must represent some actual and specific service/s out of the ordinary rendered by the city while a tax is simply to provide funds for city services. While not wanting to comment on the current discussion, I would like to report that I did discover many places where the city is not collecting fees for extraordinary services, particularly in the area of policing.
You can check the studies on this or ask a cop. A huge portion of city policing is caused by the consumption of alcoholic beverages, beer being the most common. This is not just in the bars, but a majority of domestic violence, disorderly conduct, and gang violence are committed under the influence as are many motor vehicle violations and accidents. This is above and beyond ordinary police services, and the taxpayer should be compensated through a fee charged to anyone who sells alcoholic beverages. In October of 2005, the Ventura City Council approved an Alcohol Sales Permit Ordinance. Funds collected pay for policing required by the consumption of alcoholic beverages. This has been done elsewhere and has not been challenged in the courts.
—Rowland Lane Anderson, S.B.