Budget woes lead US states, to weigh getting out of the booze business

Posted by Linda Casey

March 11, 2015

4 Min Read
Budget woes lead US states, to weigh getting out of the booze business

Copyright 2010 Press News Limited
All Rights Reserved

The Canadian Press(CP)



February 6, 2010 Saturday



SEATTLE _ Thousands of cases of whiskey, vodka and rum zip along three miles (five kilometres) of conveyor belts inside a massive distribution centre in industrial south Seattle, the sole location for shipping booze to liquor stores across Washington state.

The 250,000-square-foot (23,000-square-meter) warehouse is the nexus from which all of the state's liquor is imported, processed, and moved out to the 315 state and contract stores, the only place where Washingtonians can buy hard liquor for home consumption.

As states scramble to deal with gaping budget deficits, many are looking for any opportunity to increase revenue, and Washington is one of a handful of states weighing whether privatizing liquor sales is the way to get back into the black.

Some lawmakers here want to sell the distribution centre _ bringing the state a one-time boost of about $33 million _ and let the private sector step in to sell liquor, which some say will reap long-term cost benefits.

''To me this isn't a core function of government,'' said Sen. Rodney Tom, a Democrat who is a chief budget writer for the state senate. ''It's a retail operation. Private companies can do it as good or better.''

Tom has introduced a bill that would have Washington get completely out of the liquor business, allowing an unlimited number of people to buy licenses to sell liquor, as is done in California. Other lawmakers have introduced measures taking smaller steps toward privatization, including bills that would auction off franchise agreements for stores like Costco, or which would allow a limited number of smaller contract stores to sell booze.

''When states are struggling around revenue, the idea of privatization often rises,'' said Steven Schmidt, spokesman for the National Alcohol Beverage Control Association, the Alexandria, Virginia-based group that represents states who are directly involved in the sale of liquor. ''This year we're seeing more efforts to privatize than we have in the recent past.''

In Virginia, which is facing a $2 billion shortfall this year, recently elected Republican Gov. Bob McDonnell ran, in part, on a pledge to privatize liquor stores as a way to raise transportation money. While privatization bills have been introduced by lawmakers in the current session that runs until March, McDonnell is working on putting together a commission on government reform and restructuring that will look at liquor privatization. His staff said that while McDonnell isn't opposed to the current bills, the issue is most likely to come up later this year, possibly in a special session.

''Liquor sales just don't fall under the category of top government functions to be providing to the taxpayers,'' said McDonnell's policy director, Eric Finkbeiner.

In Mississippi, bills to privatize wholesale wine business have been introduced. In Vermont, a bill has been introduced to disband the Department of Liquor Control and permit second class licensees to sell spirits. And in North Carolina, a state task force is studying various types of government reform including liquor privatization.

The five states are among 18 so-called ''control'' or ''monopoly'' states, which exercise broad powers over wholesale liquor distribution. Of those states, only eight _ including Washington, Virginia and North Carolina _ also are involved in retail alcohol sales, Schmidt said. Thirty-two states are license states, where the private sector handles wholesale distribution.

Currently, liquor brings in about $320 million in revenue to Washington each year, but a recent report by Washington state Auditor Brian Sonntag found that the state could increase revenue by as much as $277 million over five years if it changed its current liquor model.

In a year when Washington lawmakers are looking to patch a $2.6 billion deficit, Tom said privatization just makes sense.

A part of the potential savings is the loss of about 800 union jobs, which means that the state would save on long-term pension and health costs for those workers. Tom knows that the union issue is the most controversial aspect of privatization, but he said union jobs are at risk either way.

''I would rather cut jobs at the state liquor store than to cut jobs of teachers,'' he said. ''We have a decision to make.''

The state Liquor Control Board has managed the wholesale distribution and retail sales of hard liquor through state-owned stores and contracted agencies since 1933. Those stores also compete with private retail stores that sell wine and some malt beverages.


On the Net:

Washington state Legislature: www.leg.wa.gov

Washington state Liquor Control Board: http://liq.wa.gov

National Alcohol Beverage Control Association: http://www.nabca.org

National Conference of State Liquor Administrators: http://www.ncsla.org

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