One of the issues Gov. Bob McDonnell used to woo November’s voters was the privatization of liquor sales in Virginia. A bill that would accomplish that very feat, Senate Bill 443, was offered on Jan. 13, 2010. On Jan. 22 it passed, 15-0, in the Rehabilitation and Social Services Committee and was referred to the Finance Committee.
Last year a similar bill to privatize Virginia’s package liquor sales was killed in committee by senators from both political parties.
2010’s SB 443 begins with this: "Whereas, the sale of liquor and wine at retail should no longer be performed by the Commonwealth, but rather by private retail licensees…"
The on-premise purchase and consumption of alcohol in restaurants wouldn’t be affected, as this maneuver seems to focus only on the off-premise sale of bottled distilled spirits. What is being called for is the end of state-run Alcoholic Beverage Control stores, which have been in operation since 1934.
State Sen. Mark Obenshain (R-Harrisonburg) is the patron of this year’s SB 443, which seeks to make good on the new governor’s campaign promise to put the Commonwealth of Virginia out of the retail end of the alcohol business.
According to the governor’s 2009 campaign Web site (still available online), "[Virginia] is one of only 18 states that does not permit the private retail sale" of distilled spirits. The campaign language there goes on to tout a study commission’s report. Chaired by former Gov. Doug Wilder during former Gov. Mark Warner’s term on office, the commission projected that if ABC sold licenses to retailers statewide, something like $500 million could be raised from the process.
Other estimates since have put the revenue figure from license sales at much less.
Of course, a windfall of cash would certainly come in handy. But according to a Jan. 26 article at Richmond BizSense, the closing of Virginia’s some 330 ABC stores would "eliminate about 600 full-time jobs and 1,500 part-time jobs."
While Gov. McDonnell talks cheerfully about creating jobs, he is facing a brutal challenge to cut spending. And laying off state employees is one of the ways to do it. At this writing, ABC workers aren’t the only ones worried about their jobs disappearing. After all, Republicans have been talking about reducing the size of government for a long time.
Then there’s the problem of reduced revenues from the profits of liquor sales. Under the Obenshain-proposed plan, Virginia would still collect taxes on sales but the profits would be retained by the retailers.
According to ABC, last year it set a new record for gross sales at $665.6 million and it has "contributed more than $1.5 billion to Virginia's general fund in the last five years." Furthermore, ABC has kicked in more than $6 billion since 1934.
At Richmond Sunlight its summary of SB 443 includes this sentence: "The bill requires the ABC Board to set a fixed number of licenses for all localities, which shall be at a minimum one license for each locality of the Commonwealth and shall not exceed one license per 10,000 residents of the locality."
There are currently 12 ABC stores operating in Richmond. With the city’s population at approximately 200,000, doing the math says that would mean up to 20 licenses would be granted to retailers within the city limits.
So, buying liquor may become more convenient.
This bill apparently does nothing to address the problems many citizens, especially restaurant owners, have with ABC, stemming from its sometimes overly enthusiastic enforcement practices. Some Richmonders question the need to have a busy ABC police force running parallel to state, county and city police departments.
If SB 443 passes, it could mean the prices and selection of product available could change. Currently Virginia buys in large quantities from its liquor sources. Individual private retailers may not have the same leverage to keep prices down. Or, they may be more creative.
Politically, if this sweeping change is passed by the entire General Assembly, it will be a nice feather in the GOP cap. It will not only mean a big change, it will also mean the forces behind the strategy worked across the aisle to sooth widespread worries about reduced revenues down the road.
Asked about the progress of the bill to eliminate ABC stores, McDonnell’s press secretary, Stacey Johnson, said, "The administration is meeting with stakeholders and subject matter experts to develop the most effective approach to ABC privatization."
Attempts to get a more thorough characterization on the matter at hand from the governor's office were not successful.
However, with the recession’s hounds of doubt nipping at our state legislators’ heels, rolling the dice on tampering with a large and dependable revenue stream from ABC may need another year before it can happen.
If it fails, the privatization idea certainly isn’t going away. Eventually, the reform of how ABC does its business is bound to happen.
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