By L.A. Williams, Correspondent
Christian Action League
RALEIGH — The House ABC Committee gave its stamp of approval Tuesday to a bill aimed at modernizing the state Alcohol Beverage Control System but one that does little to address the problem of unsustainable stores.
“The bill is good, but fails to raise the voter threshold to stop ‘leakage’ caused by the approval of stores that don’t have enough clientele to support them,” explained the Rev. Mark Creech, executive director of the Christian Action League. “If lawmakers don’t address this issue effectively, then the ABC system is left vulnerable to those who will later argue for agency stores — a form of privatization.”
A proposed committee substitute for House Bill 1717, introduced by Representatives Ray Warren (D-Alexander), Larry Bell (D-Sampson) and Marvin Lucas (D-Cumberland), addresses a number of concerns — from general manager salaries to nepotism and ethics — in the ABC system that has been intently scrutinized by no fewer than three organizations over the past two years.
Against the backdrop of a 2008 Program Evaluation Division (PED) report, both the Governor’s Budget Reform and Accountability Commission (BRAC) and the Joint Study Committee on ABC (JSCABC) issued recommendations this spring, many of which were incorporated in the proposed legislation, which gives the state ABC Commission more authority and all ABC boards more accountability.
The 15-page bill would require the local boards, appointed by counties or municipalities in which voters have approved alcohol sales, to prepare explicit budgets, hold budget hearings and maintain detailed accounting systems. It would make the state ABC Commission subject to the Ethical Standards of the State Ethics Act and address conflicts of interest at the local level.
Under the bill, the state ABC Commission could set performance standards for local boards regarding enforcement of ABC laws, store appearance, operating efficiency and customer service as well as setting mandatory training requirements. Local boards could not pay their general managers more than corresponding clerks of superior court are paid without approval from their appointing authority and notification of the state Commission. They would be required to increase the bond amount for managers, finance officers and board members from $5,000 to at least $50,000.
The bill, a companion to Senate Bill 1112, introduced by Sen. Don Vaughan (D-Guilford) and currently in Senate Judiciary II, also outlines procedures by which the state Commission can address boards that fail to meet performance standards, giving them up to 18 months to show improvement or else risk having stores shut down, boards merged or closed and assets seized to satisfy debt.
Though the ABC system, with more than 160 local boards, raises some $259 million a year for state and local governments, some individual ABC stores and boards struggle to break even, a situation exacerbated by store proximity and the low voter threshold — 500 registered voters — for holding an ABC store election.
“The 500 registered voter limit is based on the dispersed urbanism pattern that once dominated North Carolina geography,” asserted the PED report. “The low threshold was intended to offer small communities access to an ABC store; instead the low threshold encourages too many boards and ABC stores in dry counties.”
As a result, the unsustainable stores siphon customers from successful ones, reducing their profit margins in the process.
Although the PED report and the initial study committee proposal recommended increasing the voter threshold from 500 to 5,000 to better guarantee enough customers to keep a store afloat, legislators failed to include it in the latest version of the bill. Rep. Edgar Starnes (R-Caldwell) argued for the increase both in the joint committee and in Tuesday’s ABC Committee meeting, during which he offered an amendment, after talks with the N.C. League of Municipalities, to raise it to at least 1,500.
“For the same reason that a Wal-Mart or a Food Lion or a CVS doesn’t open up in every town with 500 people, it takes a certain amount of population to support an ABC store,” Starnes said, citing an example from Buncombe County where a store opened in Woodfin (population 4,819) drawing business away from the nearby Asheville ABC store.
The vote in committee was close, but it was a voice vote and the Chair — Rep. Lucas — ruled with the “Nos.”
“This was very disappointing, as this threshold must be raised if we are to stop exacerbating the problem of unsustainable stores,” said the Rev. Creech.
“Requiring a voter threshold of at least 5,000 is necessary to give stores a shot at survival,” the Rev. Creech said. “While no one wants to tell leaders of smaller towns that they cannot have an ABC store referendum, what good are we doing them if we set them up for failure? And though the Christian Action League has no love for liquor stores, we do care about the ABC system, which is the best means of control for protecting the public’s health. If stores continue to be established that don’t have enough clientele to support them, that’s a drag on the whole ABC system and will leave us vulnerable for arguments to privatize, partially or otherwise.”
A 2004 threshold analysis study in Oklahoma showed more than 13,000 were required to support a beer, wine and liquor store. A South Dakota study in 2008 put the figure at just under 4,000.
With a favorable recommendation from the ABC Committee, the new House Bill 1717 is headed to the Committee on State Government/State Personnel, where it may be heard as early as Tuesday (June 15).