Monday, November 23, 2009
Privatize Virginia's liquor stores
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Garrett Peck
Peck, a graduate of VMI, is the author of "The Prohibition Hangover: Alcohol in America from Demon Rum to Cult Cabernet" (www.prohibitionhangover.com). He lives in Arlington.
In an era where the term socialism is bandied about way too frequently, Virginia has its own little brand of socialism. Virginia, a conservative and free market-oriented commonwealth, has state control over liquor sales. Meaning: If you want to buy a bottle of Jack Daniel's Tennessee Whiskey, you have to buy it at one of 330 state-run Alcoholic Beverage Control stores. This raises a fundamental question: Are we citizens well served by having the state monopolize liquor sales?
What you don't hear anymore is people clamoring for state control because liquor is a sin. That may have been the case after Prohibition ended in 1933 and Virginia established the ABC system, but that's not relevant today. Demon Rum is no longer a tool of the devil. Clearly society has moved on from the era of alcohol abstinence: Two-thirds of adults now drink.
Governor-elect Bob McDonnell has promised to generate new sources of revenue for the state, and one of his proposals is to privatize the state's anachronistic ABC stores. It's about time.
The state has considered selling the stores before, including this last legislative session through a bill sponsored by Sen. Mark Obenshain, R-Harrisonburg, but the idea was sidetracked by an attitude of, "If it ain't broke, don't fix it."
After 75 years, Virginians have grown numb to mediocre ABC stores that lack choice and offer high prices. We buy only what the state offers -- and Virginia determines the price. The private sector can do this more efficiently, providing a better shopping experience and selection. Under privatization, ABC will still exist, but its role will shift from retailer to regulator and enforcer.
When I first framed this debate in an op-ed for The Washington Post recently, a legitimate question arose from many readers: Selling the liquor stores will indeed result in a one-time revenue bump for the state, but what then? How will Virginia replace the $103.4 million in annual profit (as of 2008) that the ABC stores contribute with new sources of recurring revenue? This isn't a huge part of the state's budget, but neither is it chump change.
Virginia will have to increase the number of liquor licenses, and combined with sales and payroll taxes (more stores mean more jobs, right?), the state can see a revenue increase. Virginia can certainly afford to open the market to more retail outlets. Most states have a ratio of one liquor store for every 2,500 to 3,000 residents, but Virginia's ratio is closer to one for every 25,000 people. An obvious option are grocery stores. Most consumers already buy beer and wine there, so why not buy distilled spirits as well?
It is incumbent on those who advocate privatization to demonstrate how the public will benefit -- both from greater consumer choice and more recurring revenue for the state. Given that Republicans are just as likely to drink as Democrats, this shouldn't be a political issue nor one centered on the state's urban/rural fault line. Privatizing the Virginia ABC stores is something that will benefit the residents of the entire state. The role of the government is to protect its citizens and provide vital services; selling liquor is not one of them.
