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Local lawmakers on privatizing liquor sales

Staff and wire reports
After the governor announced Thursday she won’t pursue privatizing the state’s Alcoholic Beverage Control system, local legislators said their opinions haven’t changed.
Gov. Beverly Perdue said the one-time windfall from privatizing government-run stores would hardly quench North Carolina’s fiscal needs unless alcohol regulations were loosened.
That doesn’t convince N.C. Sen. Andrew Brock, who said any revenue could help the state make up for a projected $3.7 billion budget shortfall.
“If programs are inefficient or ineffective, like this one, we need to get rid of them,” Brock said. “(Perdue) isn’t willing to make those tough choices.”
N.C. Rep. Harry Warren said he believes the government shouldn’t be involved in the liquor business and wants to see the numbers for himself before his opinion is swayed.
“Everything I saw leading up to this indicated that there would be a recurring revenue source in the issuing and selling of licenses,” Warren said. “I want to see what the report says about that.”
After saying last week that he didn’t support privatization, N.C. Rep. Fred Steen said he is glad the governor decided not to push for it. He said the House will probably still take a look at ways to make the system more efficient.
A consultant hired by the state Alcoholic Beverage Control Commission said the state would gain roughly $300 million in one-time money by selling licenses for private businesses to run the state warehouse and stores at a profit. The amount is little more than what state and local governments gain annually through the system.
Perdue said if the state wanted more money — such as $1 billion or more — it would have to ease the controls placed on liquor for more than 70 years at the more than 400 ABC stores statewide, and she’s unwilling to do that.
Easing regulations could mean expanding greatly the number of stores, lengthening their hours or allowing store advertising.
“I do not believe that the privatization of our ABC system is the right business decision for North Carolina,” Perdue said at a meeting of the North Carolina Association of County Commissioners — a privatization opponent and recipient of local store profits. “The juice just is not worth the squeeze for the people of this state.”
The Democrat’s decision doesn’t prevent the new Republican majority at the Legislature from considering privatizing the state’s Alcoholic Beverage Control system. Top GOP leaders said soon after her announcement they still would examine the possibility as part of a larger effort to make government more efficient and trim a $3.7 billion budget gap expected this summer.
“We will begin with the analysis the governor’s staff has completed, and we will complete our own assessment as we identify areas we may privatize,” said Rep. Thom Tillis, R-Mecklenburg, who is expected to be elected House speaker next week. “It is imperative that we leverage public-private partnerships to put North Carolina on sound fiscal footing.”
But her position certainly would make selling the ABC system, whether the stores, wholesale operations, or both, more difficult to do. It builds confidence among a coalition of opponents that includes liberal advocacy groups and Christian conservatives concerned about excess alcohol’s effects on society, and cities and counties that benefited from $51 million in store profits last year.
North Carolina is one of nearly 20 states that directly controls wholesale and retail liquor distribution, but it’s the only one where local ABC boards sell spirits. More than 160 local ABC boards essentially independent from state government operate the stores, which generate more than $200 million in tax revenues. Beer and wine are sold by licensed conventional retailers.
A consultant the state ABC Commission hired calculated the state could receive up to $313 million on 30-year licenses sold to outside businesses that would operate the ABC warehouse and the current local stores, according to a Jan. 11 report presented to state officials and obtained by the Associated Press.
The one-time license revenue could rise to $452 million if there was a 25 percent increase in the availability and consumption of liquor, for example, if more retail stores got licenses, the report said. The amount would grow to $588 million if liquor availability and consumption grew by 50 percent. More tax revenues also would be generated through increased sales.
Perdue said the current system has worked reasonably well and has discouraged the societal ills associated with excessive drinking. She received applause from the commissioners when she said she didn’t want to have to go past aisles of liquor with her granddaughter in tow to buy a toy for her. “I simply don’t want to be the governor — I really don’t — who puts liquor into the big Target/Walmart stores or the local convenience stores,” Perdue said.
Perdue said she ultimately decided it’s essential for government to regulate liquor sales closely. “I actually believe that this is a core service for North Carolina,” Perdue said.

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