By L.A. Williams, Correspondent
Christian Action League
RALEIGH — Legislators hoping to be served some straight answers on how to improve the state’s Alcoholic Beverage Control system may be handed watered-down recommendations instead after a Joint Study Committee on Wednesday finished drafting a bill to modernize ABC.
The proposal would give the state ABC Commission more authority to set standards for efficiency, store appearance and customer service and would require a new level of budget reporting and financial transparency for local ABC boards. However, it would not make those boards subject to the state ethics requirements nor improve funding for Alcohol Law Enforcement — two of the reasons Sen. Dan Clodfelter (D-Mecklenburg), the only committee member to vote against it, did so.
“I hope we will put some of these provisions back in,” Clodfelter said Thursday in anticipation of the legislative session set to begin May 12. During Wednesday’s meeting he said the amendment to remove the ethics requirement reminded him of another bill he had nicknamed the “toothless wonder.”
“We had a bill that required local governments to have ethical standards but we didn’t have any substance or content to it or any minimum requirements … ,” he told others on the committee. “… I thought that was a pointless exercise and I wouldn’t want to copy that here.”
But Sen. Dan Blue (D-Wake) said putting local ABC boards under the State Government Ethics Act and not doing the same to comparable entities would send “mixed messages.” He pointed out that, unlike many local boards that receive thousands of dollars in state funding, the ABC boards channel locally generated funds into state coffers.
The ethics issue was one of several differences between the Joint Study Committee’s recommendations and those released the same day by Gov. Bev Perdue’s Budget Reform and Accountability Commission. BRAC suggestions included increasing the amount of regulatory control the ABC Commission has over local boards as well as limiting the compensation of local ABC board members and store operators.
The Joint Study Committee had considered a plan to keep ABC general managers’ salaries at or below those of the local Clerk of Court, whose pay is based on county population, and to limit board member compensation to $150 per meeting. But an amendment supported by the ABC boards, the N.C. League of Municipalities and the N.C. Association of County Commissioners, would allow salaries above those caps as long as they are approved by the local appointing authority and reported to the Commission.
Concerns about exorbitant salaries and unethical gifts from liquor companies helped put the ABC system under intense scrutiny late last year and led to calls for privatization. But early in its process, the Joint Study Committee heard testimony from dozens of speakers from across the state affirming that the system, with only a few exceptions, has worked well for North Carolina, keeping consumption low and profits high.
Taking cues also from a 2008 Program Evaluation Division study that declared the system outdated and in need of modernization, both BRAC and the JSC begin mapping out improvements. At the same time, at the Governor’s request, the ABC Commission hired a Chicago firm to evaluate the system’s assets. Last month, the firm’s work was suspended as it became clearer that privatization was not the recommended route.
“We are clearly glad that the JSC bill nor the BRAC report included privatization or agency stores,” said the Rev. Mark Creech, executive director of the Christian Action League. “But, like Sen. Clodfelter, we were concerned the bill proposal stopped short of addressing some crucial issues.”
Initially the bill called for increasing the voter threshold for an ABC store referendum from 500 to 5,000, a move that would have helped assure that towns too small to support the stores wouldn’t be allowed to vote them in and that already successful systems wouldn’t have their profits siphoned off by a plethora of new stores popping up nearby. But Rep. Pryor Gibson (D-Anson) insisted that increasing the threshold would be telling small towns that they are worth less than their larger counterparts.
Rep. Edgar Starnes, (R-Caldwell) argued unsuccessfully for the higher threshold, which had been a key recommendation from the PED.
“One of the problems that this committee has grappled with is the viability and profitability of some of the smaller ABC stores …” he said. “Not every town of 500 or 1,000 people has a Wal-Mart because they can’t support it. They don’t have a Food Lion because they don’t have the population to support it. … To say that you have to have 5,000 people to have an ABC store is just economic sense.”
Rev. Creech agreed.
“Already North Carolina has more than 160 boards with more being added all the time,” he said. “If we don’t do something to keep small boards from opening stores that are destined for failure, they will continue to be a drain on the system and, in the long run, lend credibility to the argument for privatization.”
Creech said Starnes was also on target in his support of provisions in the bill that would have given the ABC Commission a larger role in ensuring that local boards follow through on year-long performance improvement plans when standards are not being met. The bill would have given the Commission a number of options — from closing a store or stores or merging the board with another board all the way to seizing and liquidating board assets to satisfy debt and maintain solvency. In this case, Gibson offered an amendment that assigned this role to the local appointing authority instead.
As it stands, the Commission still has the power to shut down a poor performing board, but doesn’t have authority to enact less-sweeping measures to help salvage it.
“We certainly believe in local control, but shouldn’t there be some accountability and oversight of the locals,” Creech asked.
Starnes said that when problems arise, appointing boards are too close to the situation to be objective.
“You need someone with an arm’s length away that has a better perspective on it,” he said, explaining that appointing officials choose people that they go to church with, see at Rotary Club or otherwise are close to and find it difficult, if not impossible, to hold them accountable when they fail to do a good job.
On a more positive note, the bill would require local ABC Boards to be much more thorough and transparent in their financial operations. The boards would have to present an annual balanced budget to their appointing authorities and the state Commission, hold a public hearing on the spending plan, report any amendments throughout the year and track expenses and maintain a detailed accounting system.
It also includes a mission statement for ABC that puts an emphasis on control and efficiency rather than profitability.
“There are definitely some good aspects about this proposal,” said Rev. Creech. “As it heads to the Legislature, the Christian Action League will further analyze the bill and its potential ramifications. Stay tuned.”