‘I think its time to prepare for what could be the fight of our lives in the North Carolina General Assembly,’ says Executive Director
By L.A. Williams, Correspondent
Christian Action League
RALEIGH — Start with a $3 billion state budget shortfall, add a shot of controversy surrounding a few ABC boards and stir in promises of efficiency via the elimination of some government functions, and what you’ve got is a possible Bev Perdue cocktail — a plan for privatized liquor sales served up with an entree of disregard for the health and welfare of the people.
That’s because the concoction, which would end current state controls on liquor distribution, is also a recipe for disaster in the form of increased alcohol consumption, soaring social costs and decreased revenues.
While the governor hasn’t announced a specific scheme to put alcohol sales in the private sector, she said this week that plans are in the works to consolidate state agencies and sell government assets to help bridge the budget gap. In the past she’s mentioned privatizing through the sale of a concession for a limited but renewable time period. In regards to the state’s Alcohol Beverage Control system this week, she said only “I’ve had an outside evaluator who is almost done with the estimate of the value to sell or consolidate or change the system that exists.”
That $175,000 study by Chicago-based Valuation Research Corporation was ordered in the spring to help the Governor’s Budget Reform and Accountability Commission (BRAC) and lawmakers craft recommendations to improve how alcohol sales are handled. But when, after several days of testimony, the Legislative Joint Study Committee on ABC began work in earnest to improve on what they learned was an already working system, the study was halted. But even months later as the governor signed historic ABC legislation to improve local board accountability and financial transparency, she let it be known that ABC was still in her crosshairs.
Since then, the evaluation study has resumed with requests for the company to explore additional scenarios. Due in August, there is still no written report. According to officials at the state ABC Commission, VRC “provided an in-person briefing and some of the Governor’s policy folks asked for some additional financial analysis.” It could be that whatever the report, Perdue may charge ahead with plans to privatize despite recommendations to the contrary.
“We’re not troubled by the governor ordering an outside evaluation of ABC,” said the Rev. Mark Creech, executive director of the Christian Action League. “What’s troubling is this idea of sending the company back again and again for more scenarios despite the body of evidence that already exist that clearly demonstrates the advantages of a control system, both from a financial and a health and welfare standpoint.”
The governor had said in a Feb. 26 letter to lawmakers that “costs that must be evaluated are not simply financial,” and that in considering privatization, she would look at the experiences of other states as well as “whether there is a correlation between increases in consumption and a less restrictive system of distribution or sales.” She had also promised any fees resulting from privatization should be used for “critical, long-term investments in our people and state” rather than to cover current or upcoming budget shortfalls.
Now, according to her remarks we can anticipate consolidations and changes in state agencies, including the possibility of ABC privatization, as a direct effort to deal with the projected budget gap.
“It makes no sense, even if you just look at the issue financially, to exchange a system that is seventh in the nation in revenue per gallon, according to ABC’s 2009 Annual Report, for a system that studies show would increase alcohol prices and decrease revenue,” Creech said. “Even a one-time cash infusion from selling off the system wouldn’t make it a smart move financially.”
A 1993 Price Waterhouse study of potential effects of full privatization in Virginia predicted a loss of $61 million in revenues there. A decade after privatizing, Alberta, Canada, tallied its losses at $500 million. Further, the N.C. General Assembly’s own Program Evaluation Department completed a study in 2008 that did not recommend privatization.
Add to these findings studies that show alcohol consumption is higher in license states than in control states. Already the cost of irresponsible use of alcohol in North Carolina is estimated at $6.9 billion per year according the Bowles Center for Alcohol Studies. More outlets open more hours with more advertising — all guaranteed to accompany privatized sales — will, without doubt, increase consumption.
“Not only would local governments lose the funding they now receive as a percentage of ABC store sales, some $66 million across the state, but they would be faced with the fallout from increased drinking,” said the Rev. Creech.
Perhaps most disingenuous would be any attempt to link ABC privatization with increased government efficiency.
“We’re not saying that ABC is perfect or perfectly efficient, but if cutting government costs is your top concern why would you start by targeting an agency that is totally self-supportive and brings in more than $228,000 to state and local coffers each year?” Creech asked.
Whatever the motive, he said anyone concerned with the health and well-being of North Carolinians should know that privatization is not the right choice for the Tar Heel state.
“I would not be surprised to see the governor roll out a plan to put liquor sales in the hands of retailers and I expect she may very well be planning to do so after the November elections,” Creech said. “I think its time to prepare for what could be the fight of our lives in the North Carolina General Assembly. This is not a threat, but it shouldn’t be taken lightly. If the Governor does recommend privatization in any form, she will face stiff opposition from the religious community over this matter.”