PIERRE - Two very different bills to give cities more liquor licenses are headed for either a showdown or a compromise in the state Legislature.

The fight pits cities and developers, who say they need more licenses to attract chain restaurants, against current license owners, who say adding more licenses will diminish their investments.

One bill comes from the Senate, the other from the House.

On Wednesday, the Senate voted 20-14 to approve SB126, which would allow both cities and counties to issue an unlimited number of liquor licenses. The number is currently limited by population.

The cities of Rapid City and Sioux Falls and retail groups are pushing the bill. A similar measure failed last year.

Supporters of SB126 argue the state shouldn't create an artificial, inflated value by limited the licenses. Still, SB126 would offer some protection to current owners by setting the price of new licenses at the market value at the end of 2007. Current license holders could sell at that price to people who wanted new licenses, or they take their chances on the future market. If no one wanted to sell, cities or counties could sell new licenses at the same price.

The House bill takes a different approach.

Earlier Wednesday, the House Commerce Committee approved HB1283, a counter measure offered by the liquor industry.

That bill would allow cities with populations of 5,000 or more to issue 10 percent more licenses for "full-service" restaurants that did not have video lottery and that derive at least 70 percent of their revenue from food and nonalcoholic beverages.

Tim Dougherty, a lobbyist for the Licensed Beverage Dealers of South Dakota, said HB1283 would give Rapid City five or six new licenses. Sioux Falls would get eight or nine.

The new restaurant-only licenses would cost $75,000 to $200,000, depending on the size of the municipality.

Dougherty said HB1283 would give more licenses to larger communities, where chain restaurants are likely to locate, while at the same time limit the total number of licenses to preserve the value of existing licenses.

Yvonne Taylor of the South Dakota Municipal League opposed limiting the licenses to towns with more than 5,000 people. "We don't understand why you would want to stop Oacoma or Hill City or Webster from developing," she said.

Rep. Brian Dreyer, R-Rapid City,voted against the bill. "Why should the government guarantee an investment?" he asked.

Still, the committee voted 9-3 to send HB1283 to the House floor with a "do pass" recommendation.

Now, some lawmakers will work on a compromise between HB1283 and SB126, a much-traveled piece of legislation. SB126 already failed once in the Senate, by a 16-19 vote Jan. 24. Supporters got it reconsidered, and it passed out of committee in an amended version.

Other lawmakers, like Sen. Gene Abdallah, R-Sioux Falls, will try to kill the idea that he says should not have been revived. "I've never seen a bill drug around and drug around and drug around for this long," he said.

How they voted on SB126

Voting yes: Sen. Tom Katus, D-Rapid City, Sen. Royal "Mac" McCracken, R-Rapid City, Sen. Jim Lintz, R-Hermosa; Sen. Theresa Two Bulls, D-Pine Ridge.

Voting no: Sen. Jerry Apa, R-Lead; Sen. Ken McNenny, R-Sturgis; Sen. Dennis Schmidt, R-Rapid City.

Contact Bill Harlan at 394-8424 or bill.harlan@rapidcityjournal.com