By Karissa Minn
kminn@salisburypost.com
SALISBURY — The Rowan-Kannapolis ABC Board unanimously passed its first balanced budget after a public hearing Thursday morning.
According to a North Carolina law that went into effect last summer, each local Alcoholic Beverage Control board is now required to keep a detailed, balanced budget and make it available to the public.
The fiscal year 2011-12 budget projects that the local ABC system will bring in $9.3 million in revenue and spend $4.9 million in inventory purchases and $4.4 million for other expenses.
The board plans to give $169,000 to local governments in distributions for the coming fiscal year. That works out to an average of slightly more than $42,000 per quarter.
Board member Ken Argo said an alcohol excise tax increase in September 2009 has more than halved the system’s profits. Excise tax accounts for $2 million of the $2.2 million total budgeted for taxes from sales in the coming year.
“Had that tax not been sent directly to the state … we could have added $250,000 to that distribution for a total of $419,000,” Argo said. “That’s sad. I just wonder how many of our appointing authorities realize what happened to them on that excise tax change.”
Linda Lowman, board chair, said the three local appointing authorities — Rowan County and the cities of Salisbury and Kannapolis — might not know unless the board spreads the word.
Another of the board’s top expenses is group insurance, which is expected to go up by 11 percent over last year to $141,000.
There are no scheduled wage increases for the 20 full-time employees and various part-time employees. Their retirement rate contribution requirement is increasing from 6.5 percent of wages to 7 percent.
Operating expenses should see minimum increases, Osborne said. Fees paid by the stores for debit and credit card transactions are expected to total nearly $93,000, which is an increase of 9 percent from last year.
“That credit card expense really knocks your eyes out,” Argo said.
Board member David McCoy said the cost of accepting credit cards is probably a blow worth taking.
“From the studies I’ve looked at, your sales usually increase by quite a bit more than it’s costing you,” McCoy said.
Julie Eller, the board’s finance officer, said there are more credit sales than cash sales now at two of the stores, and the rest are almost evenly split.
The budget also includes a $50,000 gain in assets from the expected sale of the former Spencer ABC store, and it adjusts the budgeted lease income to zero.
Terri Burnham, the only member of the public to speak at the hearing Thursday, asked the board why that store was closed in the first place.
“It serviced the High Rock Lake area off Long Ferry and Bringle Ferry roads, and it was convenient,” she said. “Living at the lake, it’s inconvenient to drive to the Ketner Center store.”
Lowman said there was just not enough business at the Spencer store to keep it open. Osborne added that it went several years without positive revenue.
Burnham then asked if the board has considered leasing buildings to open other stores in the northern and western parts of the county, where she said they could generate revenue because of new development.
Osborne said the board already attempted to locate a store in the Cleveland area, but local residents opposed it. He said it’s possible one could be located in the High Rock Lake area, but the idea needs to be studied.
Locations with the highest budgeted sales are Salisbury’s Jake Alexander Boulevard store with $2.4 million and the Ketner Center with $2 million in revenues.
Of the system’s seven stores, sales are expected to be lowest at the Renaissance Square in Kannapolis with $661,000 and Gateway Center with $635,000.
In other business
The Rowan-Kannapolis ABC Board also:
Adopted the state’s travel policy in place of its own, resulting in minor changes. Each local board now is required by law to either adopt that policy or that of its appointing authority. The Rowan-Kannapolis board has three appointing authorities — Rowan County and the cities of Salisbury and Kannapolis — so the board opted to follow the state’s lead.
Discussed a state statute directing ABC boards to make distributions to local governments before working capital is retained. Board members asked for more information about what happens when it has no money to distribute or wants to make up for losses from the previous quarter.
Passed a resolution to receive sealed bids for the sale of the former Spencer ABC store.
Discussed an employee opinion survey during a closed session.
Received a finance report for the previous month. Total system sales in May were $756,000. They dropped 4 percent — or about $29,000 — from $785,000 in May 2010. Bottled liquor sales decreased by 3 percent compared to May 2010, from about $714,000 to $691,000. Liquor by the drink sales also decreased by 10 percent from about $71,000 to $64,000.
Contact reporter Karissa Minn at 704-797-4222.