Creech Warns Some Lawmakers Will Still Try to Privatize
By L.A. Williams
Christian Action League
Keeping revenue from alcohol sales high without encouraging excessive drinking —it’s the balancing act that North Carolina has been working on since the end of Prohibition via its Alcohol Beverage Control system. And an in depth study released this week shows no reason to abandon ABC for a switch to privatized sales.
Authored by the General Assembly’s Program Evaluation Division, the report says lawmakers could modernize the current system by merging ABC boards that are located in the same county, eliminating the purchase-transportation permit for liquor, monitoring the selection of a new ABC warehouse contract, and giving local ABC boards more flexibility to charge delivery fees, serve special-order customers, open stores on Sundays, and offer in-store liquor tastings.
One of 17 so-called “control states,” meaning it maintains direct control over the distribution and sale of liquor, North Carolina is further considered a “retail control” state and is unique in that it mandates local government control rather than state government control of retail sales. The state’s 170 local ABC boards operate 433 stores across North Carolina.
Most importantly, the PED found that the system is effectively controlling the sale of liquor.
“Among southeastern states, North Carolina collects the most public revenue per gallon of liquor sold, has the lowest liquor outlet density, and has the second lowest adult per capita liquor consumption,” stated the report, which was presented Monday to the Joint Legislative Program Evaluation Oversight Committee.
Further, the ABC system earned high marks for efficiency. Evaluators found that since the implementation of new performance standards in 2011, the overall profit percentage of the system has risen from 8.5 percent to 11.2 percent. The percentage of boards with profit margins of 5 percent or greater has gone from 44 percent to 72 percent, and the percentage of local ABC boards with operating margins that match or exceed private liquor retailers has doubled, going from 31 percent to 62 percent.
Rev. Mark Creech, executive director of the Christian Action League said, “The League contends that the primary purpose of the state’s ABC stores is regulation and control of liquor sales and not profitability. But for those who believe the stores must demonstrate profitability to justify their existence, what greater evidence could one need? We don’t see anything in the PED findings that should make lawmakers want to privatize.”
Similarly, upon hearing the PED report presentation, Rep. Pat Hurley (R-Randolph) said, “Why would we ever want to be like those other Southeastern states?”
In addition to showing the efficiency and effectiveness of the current system, the report analyzed some of the potential fallout should lawmakers choose to privatize sales, including the loss of income for nearly 2,900 current ABC board employees and an estimated $100 million in liability for boards, which are bound to provide pensions and post-employment benefits. Those local boards would also have to pay outstanding debts and deal with their current stock before closing. Further, the state would have to come up with a new funding stream for the ABC Commission and increase excise taxes to replace state and local government revenue. Currently, ABC is entirely self-funded.
“If it is working, if it is keeping dangerous consumption levels down and revenue up high for the state, why try to fix what’s working?” Creech asked the committee. “That overall question, with respect to privatization, was answered by the report.”
While he commended the PED’s Carol Shaw and others who worked on the report for being fair and objective, at the same time, the Rev. Creech spoke out against Sunday sales and liquor tastings as well as forced board mergers.
“Sunday sales, which have been approved in other places like Colorado and Connecticut, really haven’t proven to have resulted in any tax boon in those places. Research does show that any time you increase hours of sale by as little as two hours on a day like Sunday then you are increasing consumption levels and alcohol-related harms. In this case, we’re talking about increasing it for a whole day,” he said.
Creech challenged lawmakers to remember that “80 percent of people don’t drink or drink three or less drinks per week, 18 percent are moderate drinkers, and five percent are heavy drinkers.”
“What we know from the research is when you do something like Sunday sales, the people that you impact the worse are the heavy drinkers, that five percent,” Creech said. “So those people would be impacted the worst and that increases social costs for all of us.”
He said liquor tastings in ABC stores would signal a paradigm shift, with the ABC system exchanging its role of regulation and control for a promotional approach.
As for the mergers, Creech and others in the meeting expressed concern that consolidating several boards into one larger board would take away local control of ABC, one of the hallmarks of the system.
“The thing about the boards that have merged, they did it because they wanted to. They were not mandated. And according to this, it would be mandated,” Hurley said of the report. “We’re an 800 square mile county — Liberty, Ramseur, Asheboro and Randleman — and they are all very different. I don’t think they should be forced to merge if they don’t want to.”
Creech added that concerned citizen Christians shouldn’t drop their guard and think that because the PED didn’t recommend privatization that there won’t be any legislation introduced for it. “I spend my time working on the inside,” he said. “Legislation to privatize will still be introduced and pushed this year. And there are some powerful forces that are determined to make it happen. They are terribly misguided and wrong. Their arguments are rhetorical and not based in sound research on the ramifications of privatization. Faithful Christian voices from those who love their brothers as they love themselves must speak out on this issue.”
Creech urged the League’s supporters to find out who their lawmakers are in both the State House and Senate and be ready to urge them to reject privatization efforts, as well as Sunday sales, liquor tastings, and ABC Board mergers.
To find out who represent you in the NC House and Senate go here.