March 24 meeting will allow for public comments
By L.A. Williams, Correspondent
Christian Action League
RALEIGH — North Carolinians wishing to speak out about how the state handles liquor sales will have a chance to do so March 24 during the second meeting of the Joint Legislative Study Committee on Alcohol Beverage Control.
“Anyone able should plan to attend to urge committee members to put the health of our state’s people and communities first as they take up this issue. The push for profit, profit, profit is already strong. We need to remind them of the role the state must play in maintaining some measure of control over this dangerous commodity,” said the Rev. Mark Creech, executive director of the Christian Action League. “We can’t keep any significant control if we give way to privatization.”
Comments, limited to three minutes per speaker, will be taken during the second half of the March 24 meeting set for 2 p.m. in the Legislative Office Building. Chaired by Sen. Don Vaughan (D-Guilford) and Rep. Ray Warren (D-Alexander), the committee appointed last month and charged with studying no fewer than nine ABC issues —including privatization — met for the first time Tuesday to get a briefing from Carol Shaw of the General Assembly’s Program Evaluation Division.
Lead evaluator in the PED’s 2008 study of ABC, Shaw walked the group through much of the 36-page report that deemed the current set-up “outdated” and in need of “modernization.” She told members that the state liquor monopoly, established in 1937 shortly after the end of Prohibition, had not kept pace with demographic and economic changes in the state, that state statutes limit the ABC Commission’s effectiveness in managing the system, and that North Carolina, whose arrangement is unique even among the 18 control states, has not defined the mission of its local ABC boards.
“Why is it important to evaluate the ABC system?” Shaw asked. “Frankly because the ABC system is important to North Carolina’s economy. It generated $750 million worth of business in 2008-2009 without any support from the state’s General Fund. … A total of $262 million went to state and local government.”
She said the efficiency and effectiveness of the system effects how much money goes into government coffers and that a 1 percent increase in liquor sales would generate $1.7 million in state excise taxes.
Shaw said North Carolina has 414 ABC stores, nine more since the PED report was completed late in 2008, and that those stores employ close to 2,400 workers. She said that her evaluation team looked at how the ABC system could be improved as well as how it compares to both control and licensure states. All local ABC boards (158 at the time) were surveyed and 54 stores were visited. The team pored over fiscal and operational data for local ABC boards and examined data from other states as well. She said they also looked at the history of Alcohol Beverage Control in North Carolina, identifying three major themes: local option, which allows voters to decide whether alcohol should be sold in their communities; Prohibition, which made manufacture and sale of liquor illegal between 1908 and 1933; and Control, which empowers local boards to control how, when and where liquor is sold.
Maps and charts helped the new committee, set to complete its own report by May 12, to see how the ABC system’s 49 county boards and 107 municipal boards acquire alcohol for their stores from manufacturers via the state ABC Warehouse and sell it to the public at state-set prices. They learned how population shifts and changes in shopping patterns had led to “retail surpluses and leakages,” meaning that some ABC stores had strong sales while others were barely staying afloat and how new stores opening too close to existing outlets often siphoned off their sales rather than generating new income.
Shifting from findings to recommendations, Shaw said the mission of local ABC boards should be defined and that a mission statement should emphasize “profitability through efficient store operations, distributing revenues back to the community, providing access to conveniently located ABC stores, providing excellent customer service and, of course, assuring appropriate control of the sale of liquor.”
The Rev. Creech said the boards’ mission statement should be written a bit differently.
“Appropriate control should be the top priority. That is why the state is involved in alcohol distribution to begin with. Just as Shaw reported on the historical themes: local option and control should be the state’s goals. When they are the first concerns, the result has been relatively low consumption rates with high revenues,” he said. “To put profitability first would drive consumption up and endanger the public’s health.”
According to the North Carolina Association of ABC Boards, “under the control system, the profit incentive is removed thus reducing the chance of overzealous clerks or owners selling alcohol to underage persons.” In control systems, the association says “alcohol advertising is more restrictive thus reducing the exposure of alcoholic beverage products to youth.”
In addition to a profit-first mission statement for local boards, the PED study also called for the ABC Commission to have more power over the boards including the ability to force mergers and set minimum operating standards and for changes in law that would eliminate purchase-transportation permits.
Like the PED, the Joint Legislative Study Committee has been asked to examine the possibilities for privatization, which could take on a variety of forms. Some states currently use agency stores to sell liquor while others keep the wholesale function for the state, but license certain private businesses to handle the retail. Interestingly enough, according to the PED report, “although several control states have changed how they control the sale of alcoholic beverages, no control state has converted to a state licensing system.” The report goes further to say that “states may not convert from control to licensure because reduction in state revenues from liquor is likely.”
Among a dozen states that resemble North Carolina’s method of control by limiting liquor sales to privately-owned package stores, North Carolina has by far the highest revenue per gallon at $28.63 and the lowest per capita consumption, the report shows.
“That consumption statistic is truly more important than the bottom line,” said the Rev. Creech. “But even with that said, the stats show that North Carolina has been served well by an ABC system that keeps revenue high and consumption relatively low.”
In addition to eyeing the PED report, the Joint Legislative Committee will consider the need for statewide consistency in ABC structures, rules and ethics standards and also look at the compensation structure for state and local board members and employees. A look at the oversight and accountability of ABC boards and whether the governor should have more authority, including the power to remove employees, is also on the committee agenda. Many of these issues were raised after ABC officials in Charlotte were illegally wined and dined by a liquor company last Christmas and wound up resigning after paying back part of the $9,000 tab. Diageo was fined $6,000. Other questions arose following reports of exorbitant ABC salaries in New Hanover County, where the entire board resigned.
While in the midst of their research, the committee may bump into yet another organization examining the ABC system at the request of the Governor. Chicago-based Valuation Research Corporation has been contracted for up to $175,000 to put a price tag on the entire ABC system in case the state decides to sell it. Gov. Bev Perdue has vowed that before any decisions are made, North Carolina will “consider and evaluate the human costs that may be associated with a privatized system.”
“As we have said before, even if liquor revenues increased exponentially, alcohol will never ‘pay its way’ in society. Its health and social costs always bring communities more harm than good,” the Rev. Creech said. “That’s why it is a responsibility of government to protect the interest of the public against the abuse of alcohol.”
“We hope people from across the state will come forward to help the Joint Legislative Study Committee look beyond profit to see the personal toll that alcohol would take if control is cast aside,” he said.
The March 24 public hearing before the Joint Legislative Committee on Alcohol Beverage Control will be in room 643 of the Legislative Office Building in Raleigh. The meeting begins at 2 p.m. with comments set for the second hour.
