Angi Stalnaker: The myth of privatization of state-run liquor stores

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It seems as though every few years, an idea takes hold that becomes the political issue fad of the Session. Such fad issues are championed by people who think the idea sounds good without delving into the consequences and facts behind the issue. This session, that issue is the privatization of ABC operated stores in Alabama. The problem with this and other tough issues is distinguishing the facts from the over-publicized myths.

MYTH: Privatizing ABC stores and getting the state of Alabama out of the retail liquor business will save the state money.

FACT: The ABC Board is actually one of the only agencies that generates money for the state’s ailing general fund budget. By eliminating revenue generated by the ABC-operated stores, the general fund will suffer. An analysis of other states that have divested their retail liquor operations have shown a negative economic result to their general fund if the revenue was not replaced by a tax increase. Washington state lost more than $2 million in the first year after liquidating its state-operated spirits stores.

MYTH: Employees of the ABC-operated stores will be hired by private retail stores.

FACT: There is no reason to think the 600-plus Alabamians who work at ABC-operated stores would be able to find other employment. Finding a job in these tough economic times is difficult, and it will be just as difficult for ABC store employees as it is for every other Alabamian. The majority of employees who were laid off after Washington state privatized its liquor stores were still underemployed or unemployed after a year.

Adding hundreds of people to our unemployment rolls will have direct and indirect costs. The costs associated with unemployment payments, food assistance and housing assistance are obvious. Indirect costs of slashing the income of 600-plus Alabama families could be much more devastating. Those families will no longer have as much money to put into the local economy. Retail stores, restaurants, and tax coffers will suffer because of the inability of those families to fully participate in their local retail environment. The total costs to the state of Alabama of pushing 600 employees into the unemployment line could exceed $6 million.

MYTH: Mom-and-pop package stores want the ABC out of the retail liquor business to eliminate competition with the State of Alabama.

FACT: The privatization movement is largely not supported by smaller, independent package store owners. Quite the opposite is true. The Alabama Beverage License Association (ABLA) is an organization composed of independent retailers of alcohol. They are firmly against closing ABC-operated retail stores. In a letter to legislators, Bobby Greenawalt, president of the ABLA and owner of an independent store, encouraged legislators to oppose the privatization bill and pointed out that support for legislation was actually from big box, out-of-state businesses and not from the majority of locally owned, independent package stores.

MYTH: Closing ABC Stores would not affect delivery of alcohol to local package stores.

FACT: Currently, package stores can drive just a few miles to ABC stores, which serve as distribution hubs, to purchase inventory for their stores. If those stores are closed, package store owners would be forced to buy inventory from the ABC warehouse in Montgomery. The only other option would be to start an ABC delivery service. The package stores then would have to pay an increased price per item in order to cover the costs of ABC delivering their inventory from Montgomery. Either way, the package stores will suffer and the cost of alcohol will increase, not decrease, as some have suggested.

Furthermore, no bill that has been put forth has had, in its contents, a mechanism for convenient alcohol distribution to independent package stores.

MYTH: Small government conservatives should philosophically oppose government-run retail stores.

FACT: Government operates businesses that are in competition with private industry in a variety of sectors. The United States Postal Service operates in the same realm as UPS and Fed-Ex. Most municipalities and counties operate garbage services that compete with privately owned waste management companies. Let’s be clear. There is not a single government service that could not be operated by a private company. The fact is, however, that some government-run operations are necessary and, in Alabama, ABC-operated liquor stores are among those necessary operations.

Angi Stalnaker is an Alabama native who, as a political consultant, has worked on numerous statewide, legislative and constitutional amendment races for conservative causes and candidates. 

Photo Credit: AP Photo/Ted S. Warren

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