Commissioners to weigh in on proposal to privatize liquor sales

Published 12:00 am Saturday, January 15, 2011

By Karissa Minn
A trip to a local grocery store for bread and milk could soon include vodka and gin if the state overhauls its alcohol control system to save money.
While Gov. Beverly Perdue awaits a report this month on the option of privatizing the state’s Alcoholic Beverage Control System this month, the debate has reached local officials.
On Tuesday, the Rowan County Board of Commissioners will consider a resolution supporting the continuance of the North Carolina ABC system.
The resolution also would oppose “any efforts to privatize the ABC system, diminish local control or to diminish the local government revenue stream afforded from local ABC store profits.”
Perdue said in December that she would consider privatizing the system to help close a $3.7 billion budget shortfall. The North Carolina Alcoholic Beverage Control System has hired the Valuation Research Corporation, a Chicago-based consulting firm, to study potential savings and revenue from privatization.
North Carolina is one of 18 control states that have a monopoly on liquor sales.
Right now, the state ABC Commission distributes liquor from a central warehouse to 167 local ABC boards appointed by counties and cities.
If the control system was eliminated, liquor licenses could be sold to private businesses — like specialty liquor stores or even grocery and convenience stores — to sell it by the bottle.
Terry Osborne, general manager of the Rowan-Kannapolis ABC Board, wrote in a letter to commissioners that privatization would be counterproductive.
“Control as we know it will continue to offer our state long term revenues, less crime and violence, less issues involving underage consumption and fewer liquor stores to occupy our streets,” Osborne wrote.
He said North Carolina ranks 48th in consumption of alcohol and third in revenue to state and local governments.
Privatizing would not result in downsizing of state government or reduction in state expenditures, he continued.
“Not one dime of taxpayers’ money is used to fund ABC stores or their employees,” Osborne wrote. “The profits are returned without any investments.”
He said the only two states to fully privatize their retail stores in the last two decades — Iowa and West Virginia — did not see the profits they expected from privatization. Virginia is currently transitioning its system and found that it may see a significant reduction in revenue.
Chad Mitchell, chairman of the Board of Commissioners, said Friday he is leaning toward supporting privatization but will listen to discussion Tuesday and consider the resolution.
“I’d like to see as many things privatized as possible, but I don’t necessarily know that ABC is one of the things that can be privatized well,” he said.
He said he would need to see a plan before supporting privatization. Some states allow liquor to be sold in grocery stores, while others require a separate establishment for liquor sales.
Local governments would gain revenue at first from the sale of buildings and stock, Mitchell said. Over the long run, though, the county would lose revenue from the ABC board’s profit distributions.
Linda Lowman, chair of the Rowan-Kannapolis ABC Board, said more than $20 million has come to the county through its ABC system.
“We feel like we’ve got a good system the way it is,” Lowman said.
She said the board provides alcohol education and law enforcement services to the community, and it helps keep liquor out of underage hands.
“Our people strive to do their very best to not sell to underage people,” Lowman said. “We train them as to what to look for.”
The seven ABC stores in Rowan County are closed Sundays, and their longest hours are 9 a.m. to 9 p.m. She said privatization could result in liquor being sold on nearly every corner at all hours.
Salisbury resident Jerry Fink, who visited the Ketner Center ABC Store Friday, said he wouldn’t mind that because he sometimes works night shifts.
“If I got off at 5 o’clock in the morning and wasn’t going to work for 24 hours, it would be nice to be able to stop in and grab something,” Fink said.
Jane McLaughlin and Tracy Shearer live in Salisbury but are from Illinois, which is not a control state. They said Friday that privatizing liquor sales here would be “great.”
“I’m a one-stop shop kind of guy,” Shearer said. “In grocery stores back home, they put it behind a turnstile, and you have to have ID to buy it. It’s not out where anyone can take it.”
McLaughlin said the prices can be lower in private stores, thanks to sales and competition.
If Perdue recommends privatization, the issue will come before the General Assembly in the upcoming session. Right now, Rowan County legislators are split on the idea.
N.C. Rep. Harry Warren said he applauds the governor for looking at every possible way to save money.
“I’m in favor of less government, and I’m certainly not in favor of the government being in business in the private sector,” Warren said. “I’m anxious to see… what it will save or benefit the state by going through privatization.”
He said even though the ABC system is self-sustaining, private business typically runs leaner and more efficiently than the government, so it might raise more tax revenue and provide more jobs. The state also stands to make money from the licensing process.
Crime and impaired driving are concerns for Warren, and he said he wants to look at other states that have gone through privatizations to see what has happened there.
N.C. Rep. Fred Steen said local governments have been able to choose if they wanted to allow the sale of liquor or other alcohol in their communities, he said, and he doesn’t want to take away that choice.
Steen said he is skeptical that privatization will bring revenue to the state or counties. He said no studies he’s seen have shown it would be profitable for North Carolina.
“Until I’m convinced otherwise that privatization is the best thing, I’m going to stick to my guns because I like the way it is,” Steen said. “I’m a free market kind of guy… but this is not just a commodity. This is something that has some social issues that go along with it.”
N.C. Sen. Andrew Brock said he isn’t sure if he supports privatization, but he doesn’t think the ABC system should stay the way it is, either. He said the behavior of some boards in the control system has gotten “out of control.”
“If the system can be run more efficiently if we privatize, that’s one way to go,” Brock said. “Another is to look at how to make things more efficient and effective in the system of control we have now.”
Privatization would not be a “magic bullet” to fix the budget, he said, but it’s worth considering if it will save the state money without harmful consequences.
Contact reporter Karissa Minn at 704-797-4222.