Steve Flowers: Privatization of ABC stores fails again
Alcohol was on the minds of many Alabama lawmakers this year as the legislature considered an abnormally high number of alcohol-related bills. Several of the bills passed. Most notable was legislation that made it possible for Alabama businesses to deliver beer, wine, and liquor to customers’ homes, and separate legislation that allows state residents to order wine directly from wineries, even if those producers are out of state. One piece of legislation that did not pass was Senator Arthur Orr’s perennial bill to privatize ABC liquor stores. There are a number of reasons for Alabamians to be thankful this legislation did not pass. First and foremost, the State’s General Fund Budget will benefit from the failure of this legislation. The proposed legislation would have resulted in higher prices, lost tax dollars, lost jobs, and less enforcement of alcohol laws. For example, last year alone, the Alabama Alcoholic Beverage Control Board contributed $314 million to the State General Fund and state agencies, according to information provided by the ABC Board. This is from taxes and the markup on liquor. If you privatize liquor sales and close the ABC stores, much of this revenue goes away, even after considering the taxes generated by private stores. An analysis of the ABC Board shows a net loss of $95 million a year. Another reason to be thankful the legislature refused to privatize liquor sales is the fact that hundreds of state jobs were saved by the failure of this legislation. The ABC stores and the state warehouse are run by more than 875 state employees. Most would have lost their jobs, their health insurance, and their retirement had the bill passed. These employees go through hours of training to keep stores safe and prevent the sale of liquor to minors. Dollars and cents aside, if you look at this from a health and safety standpoint, Alabama is better off with state-regulated ABC stores controlling liquor sales than private retailers. Speaking of private liquor stores, you can expect a big jump in their numbers. If you consider all the grocery stores, convenience stores, and other retail chains, such as Walmart and Target, along with the additional package stores that will pop up if liquor sales are privatized, liquor outlets in the state could increase from around 850 currently to more than 2,100. While there would not literally be a liquor store on every corner, it sure might feel like it. Furthermore, studies and common sense indicate that the more stores you have selling liquor, which will come with privatization, the more liquor you are going to sell. More sales mean more consumption, and more consumption means more health and safety problems. Alcohol is not just another commodity, and buying it should not be as easy as buying milk and bread. Data from the CDC says 95,000 people die annually due to excessive drinking. No drug kills as many people each year as alcohol. The good news is that under our current alcohol control system, Alabama fares much better than most states when it comes to alcohol consumption. As a state, we are among the lowest in liquor consumption and among the highest in revenue from liquor taxes. Lastly, even if you look at privatization from a consumer’s standpoint, it does not benefit Alabamians financially to privatize liquor sales. As anyone who has gone into an ABC store and a private package store knows, private store prices are much higher. If you close the ABC stores, Alabamians are only left with the higher prices of private stores. While the legislation to privatize liquor sales was well-intentioned from a philosophical standpoint, we should be thankful our legislature looked at the bigger picture. The state has little to gain but a lot to lose by closing ABC stores. The ABC Board is a valuable state agency, and the ABC stores provide a great benefit to our state in tax revenue, hundreds of state jobs, and lower prices for Alabamians. I have known ABC Board Administrator Mac Gipson a long time. I know he runs a tight ship and it would be a shame to wreck it, so let’s hope privatization of liquor sales is dead for good. See you next week. Steve Flowers is Alabama’s leading political columnist. His column appears in over 60 Alabama newspapers. He served 16 years in the state legislature. Steve may be reached at: www.steveflowers.us.
Craig Ford introduces bill to extend alcohol retail license to nonprofit special events
Gadsden-Democrat State Rep. Craig Ford has proposed a new bill to change the existing laws on beer, wine, and liquor sales at non-profit events. Currently, state laws allow a retail license for beer, wine, and liquor at special events, and allows manufacturers of those beverages to donate their product to charitable events, given that both they, and the event, receive the proper approval from the Alcoholic Beverage Control Board. Ford’s bill, HB414, seeks to change the law so that charitable events are not the only ones who have the opportunity to receive this benefit. HB414 would also allow non-profit organizations who hold special events to be able to receive the same benefits as charitable events. The bill will also authorize donations of beer, wine, and liquor by non-licensed persons to non-profits and their special events provided that they apply for license with the Alcoholic Beverage Control Board, and meet these requirements: a. Operates without profit to the organization’s members. b. Is exempt from taxation under Section 501 of the Internal Revenue Code. c. Satisfies at least one of the following requirements: 1. Has been continuously in existence in the state for a minimum of three years. 2. Is affiliated with a parent organization that has been in existence in the state for a minimum of three years. 3. Has reorganized and is continuing its mission under a new name on file with the Secretary of State and with a new tax identification number after having satisfied the requirements set forth in either subparagraph 1. or 2. HB414 is scheduled to be considered Thursday on the House special order calendar.
Four members of Robert Bentley staff get $73,000 raises despite lawmaker disapproval
Some legislators are criticizing Gov. Robert Bentley for raising salaries of his Cabinet members and staff, some by double-digit percentage increases. The sponsor of 2015 legislation that allowed the raises by abolishing old Cabinet salary caps called the size of the raises “indefensible” and said they were not what lawmakers had in mind when they approved the bill. “It’s outrageous,” Sen. Arthur Orr, R-Decatur, said in an interview Although many Cabinet members are making more money this year, four received raises of about $70,000, according to state pay records. The salaries of Alabama Department of Economic and Community Affairs Director Jim Byard, Alcoholic Beverage Control Board Administrator Mac Gipson, Revenue Commissioner Julie Magee and Insurance Commissioner Jim Ridling increased from $91,014 to about $164,000. The pay increases were first reported Monday by the blog Inside Alabama Politics. The law abolished old salary caps — largely considered outdated— and said Cabinet salaries should fall under a pay scale established by the Alabama Department of Personnel. The pay scale was created in August. Bentley, in a statement, said he would make “no apology” for the raises, saying they will help recruit and retain highly qualified people to run vital agencies. “This legislation was long overdue, and allows state government to be competitive with the private sector in getting highly qualified people to run important state agencies that provide vital services to our citizens. I make no apology for the salary increase for my Cabinet and staff. I appreciate their outstanding service to the people of our state,” Bentley said. Orr said lawmakers envisioned incremental increases at the lower end of the newly created pay scale. “It’s outrageous how high and how out of kilter we are now,” Orr said. For years it was not uncommon for governors to use personnel gymnastics to get around the salary cap for people who would supervise the largest state agencies. The acting director of transportation, for example, had been paid through the Alabama Law Enforcement Agency payroll. Republished with permission of The Associated Press
Alabama ABC Board: decision to close stores protects consumers, fiscally sound
The recent decision by the Alabama Alcoholic Beverage Control Board to close or consolidate 15 state-run liquor stores at the end of the year because of budget cuts has generated a great deal of discussion in the media – and commentaries critical of the decision. Unfortunately, some of the opinions expressed are based on misinformation or a lack of understanding of the ABC Board’s operations. As administrator of the ABC Board, I want to help clarify the issue. I will start by pointing out the Alabama ABC Board does not cost Alabama taxpayers one red cent. Through the operation of its liquor stores and warehouse, the ABC Board generates millions of dollars in badly needed revenue to not only pay for its functions, but to help fund other state agencies as well. Only those who purchase spirits pay anything to the state to help it or the ABC Board. Last year, the ABC Board contributed $215 million to the state – after paying for the costs of its operations. This year, that figure should top $225 million. This money supports the General Fund, Department of Human Resources, Department of Mental Health, the Alabama Law Enforcement Agency, public education, cities and counties. To get an idea of the size of the contribution the ABC Board makes to the General Fund, note that the General Fund budget passed by lawmakers in September totaled about $1.75 billion. The $215 million from the ABC Board accounted for nearly 13 percent of that amount. The decision to close or consolidate 15 stores came after the Legislature arbitrarily reduced the ABC Board’s spending authority by transferring $5.5 million from our budget to the General Fund. The Legislature appropriates nothing to the ABC Board, but sets the amount we are allowed to spend from the revenues we generate. The reduction left the ABC Board – similar to other state agencies facing decreases in their budgets – with difficult decisions to make in order to ensure that our costs do not exceed our spending authority. In making those decisions, the ABC Board had to balance the needs of the residents we serve against those cuts. Not every ABC liquor store makes money. Some operate to meet the needs of local residents, even if the operation of the store – say, in a rural community – does not result in a net profit. It would be unfair to rural residents to deny them a service that Alabamians who live in urban areas receive. That is why some stores which have not been profitable will remain open. It is true that some stores which have been profitable will be closed. Some of these stores will be consolidated with other stores or reopened in areas where traffic patterns and population centers have shifted, thereby reducing costs and making them even more profitable. Unfortunately, some writers compared the decision by ALEA to close some driver licenses offices in rural counties to the ABC Board’s decision to close some of its stores and keep some open. They noted that some counties without a driver license office will continue to have a state liquor store. The operation of ABC stores has nothing to do with the operation of driver license offices. The decision by the ABC Board and the decision by ALEA were made independently of each other. The decision about what stores to close and what stores to keep open was based on sound business practices and our responsibility to meet the needs of residents, wherever they live. That decision was made by the ABC Board. In other words, the State of Alabama didn’t “choose liquor over driver licenses.” Each agency made difficult decisions based on its needs and finances. Finally, I want to address the matter of taxes and the price of liquor. Much has been made of the fact that Alabama’s liquor taxes are high compared to those of other states. It is true, Alabama’s liquor tax of $18.23 per gallon is higher than neighboring Georgia’s $3.79 per gallon, Tennessee’s $4.46, Florida’s $6.50 and Mississippi’s $7.41 (Tax Foundation figures). But it is the Alabama Legislature, not the ABC Board that sets tax rates. The Legislature can lower the rates, if it chooses to do so. Of course, that would reduce revenue to the already challenged state General Fund. I realize some of the negative commentaries directed toward the ABC Board are from those who want to see all ABC stores closed. Some have even suggested that the private sector would do a better job with price, quality and selection. Anyone who has shopped at ABC stores and private package stores knows that is simply not the case. ABC stores are well known for providing competitive prices, premier service and greater selection. And, ABC stores’ well-trained employees do an extraordinary job of not selling to underage buyers and those who already have had too much to drink. The Alabama Legislature created the ABC Board in 1937, after the repeal of Prohibition, to regulate the sale of alcoholic beverages, promote temperance and protect public safety and health. It is doing just that, while at the same time generating much needed revenue for the state and helping keep Alabamians’ overall tax burden low. Mac Gipson is administrator of the Alabama Alcoholic Beverage Control Board, which controls the sale of alcoholic beverages in the state through distribution, licensing, compliance enforcement and education.
“Beloved Pappy Van Winkle Bourbon in Short Supply” actual state agency headline
As stated in a previous Alabama Today editorial, I have strong feelings about getting the state out of the liquor business – we need to do it. Alas, the legislature did not pass the bill, sponsored by state Senator Arthur Orr, which would have allowed for the privatization of them. So here we are with the state Alcoholic Beverage Control Board releasing a press release about the sale of Pappy, an impossible to get ahold of Bourbon. Beloved Pappy Van Winkle Bourbon in Short Supply Finding and purchasing a bottle of Pappy Van Winkle Bourbon has just moved from difficult to darn near impossible. The Alabama ABC Board has been informed that this year’s Pappy Van Winkle allocations have been reduced worldwide. Buffalo Trace Distillery, makers of the highly sought-after spirit, released information this week that discusses the unanticipated issues the distillery is having with the reduction of product during the aging process. According to Buffalo Trace, Alabama’s share has been reduced by 30 percent this year alone. The majority of the loss was in the higher year expressions. Based on this announcement, the ABC Board is reviewing its anticipated allocation and sales practices to mitigate this issue. Alabama’s reduced allocation means that fewer bottles will be available for retail purchase. Due to the limited offerings, the ABC Board will be releasing several of the highly allocated bourbons and whiskeys, including the Buffalo Trace Antique Collection and similar expressions, on the same date. In order to facilitate an orderly and fair retail sale of the Van Winkle and Buffalo Trace Antique Collection lines, purchases will be restricted to one bottle, per person. The coveted products will be made available in limited quantities on November 9, 2015 beginning at 9:00 a.m., in the following six stores: Store #58 – 3232 Galleria Circle, Hoover, AL Store #67 – 160 Baldwin Square, Fairhope, AL Store #72 – 7413 EastChase Parkway, Montgomery, AL Store #108 – 2371 Murphy Mill Road, Dothan, AL Store #145 – 354 Hollywood Boulevard, Birmingham, AL Store #151 – 6790 University Drive, NW, Huntsville, AL Additional information about the popular Pappy Van Winkle’s reduced yield and availability can be found in the official media release from the Old Rip Van Winkle Distillery.
