Weekly Wrap: States Could Hand Off Liquor Stores

By: - January 15, 2010 12:00 am

Eyeing the potential for saving money, officials in North Carolina, Virginia and Washington are considering eliminating state-run liquor stores, turning over the sale of booze to the private sector. Nineteen states control their liquor sales.

Republican Robert McDonnell, who will be sworn in as Virginia’s governor on Saturday (Jan. 16), made privatization of the state’s 300 liquor stores a central theme of his winning campaign last fall. He said it would raise about $500 million in one-time money for transportation, but critics say it will never pass the General Assembly because the state would have to give up about $100 million a year in revenue that helps pay for public schools, human services, prisons and other services.

Washington lawmakers held a hearing Thursday (Jan. 14) on a bipartisan bill privatizing liquor sales. Scrapping the current system would cost the state $322 million a year, but the money would be recouped through taxes collected from the privately-run liquor stores. “Is it a core function of the state to be selling alcohol? I don’t think so,” Washington state auditor Brian Sonntag told KING 5 news. Sonntag issued a report in December saying Washington could increase revenue from liquor sales by up to $350 million over five years with a privately operated system.

In North Carolina, privatization is as much a matter of accountability as it is a fiscal issue. Gov. Beverly Perdue (D) named a budget reform panel to examine the state-run liquor system after ordering North Carolina’s 163 local Alcoholic Beverage Control boards to go along with a ban on gifts and other ethics rules she imposed on other state agencies, according to the Charlotte Observer. Of the 19 states that control their liquor sales, North Carolina is the only one with local boards instead of a single state board.

Pennsylvania lawmakers considered privatizing the 619 state-owned liquor stores in 2008, but the legislation never came up for a vote.

After two years of wrenching spending cuts, some state lawmakers are moving to limit the number of days they meet each year, in part, to cut costs.

GOP leaders in Kansas announced Jan. 11 that they would take Fridays off this month.   A Democratic state representative in Idaho has offered a bill limiting each yearly session to 90 days; the state currently has no restriction on length.   And a Republican lawmaker in Washington introduced legislation requiring the Legislature to meet every two years instead of each year.  

Fridays historically have been light work days in Kansas; the Senate and House officially convenes and then adjourns so they can get paid even though they do no real work.

Under the new plan, lawmakers won’t collect their $88.66 per diem on Fridays, or the -a-day they receive for expenses. The GOP leaders also said they would ask lawmakers to approve a proposal to cut their pay by 5 percent and cancel a recent plan to raise the $109 daily allowance to $116.

“These calendar changes and cuts in legislative compensation are part of our overall approach to reduce costs at this time of severe stress on the state budget. Legislators want to do their part,” Senate President Stephen Morris told the Wichita Eagle .

Idaho is somewhat unusual in that it is one of 11 states that do not set limits on the length of their sessions.   Citing last year’s 117-day session and its estimated $30,000 daily cost, the second longest in Idaho’s history, Rep. Grant Burgoyne (D) said sessions should be set at 90 days.

Washington Rep. Bill Hinkle (R) said state lawmakers need to meet only in odd-numbered years. The Washington constitution would have to be changed to implement the plan. 

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.