Gov. Beverly Perdue won’t pursue selling the state’s liquor operations, saying Thursday that the one-time windfall from privatizing government-run stores would hardly quench North Carolina’s fiscal needs unless alcohol regulations were loosened.
A consultant hired by the state Alcoholic Beverage Control Commission said the state would gain roughly $300 million in one-time money by selling licenses for private businesses to run the state warehouse and stores at a profit. The amount is little more than what state and local governments gain annually through the system.
Perdue said if the state wanted more money — such as $1 billion or more — it would have to ease the controls placed on liquor for more than 70 years at the more than 400 ABC stores statewide, and she’s unwilling to do that.
Easing regulations could mean expanding greatly the number of stores, lengthening their hours or allowing store advertising.
“I do not believe that the privatization of our ABC system is the right business decision for North Carolina,” Perdue said at a meeting of the North Carolina Association of County Commissioners — a privatization opponent and recipient of local store profits. “The juice just is not worth the squeeze for the people of this state.”
The Democrat’s decision doesn’t prevent the new Republican majority at the Legislature from considering privatizing the state’s Alcoholic Beverage Control system. Top GOP leaders said soon after her announcement they still would examine the possibility as part of a larger effort to make government more efficient and trim a $3.7 billion budget gap expected this summer.
“We will begin with the analysis the governor’s staff has completed, and we will complete our own assessment as we identify areas we may privatize,” said Rep. Thom Tillis, R-Mecklenburg, who is expected to be elected House speaker next week. “It is imperative that we leverage public-private partnerships to put North Carolina on sound fiscal footing.”
But her position certainly would make selling the ABC system, whether the stores, wholesale operations, or both, more difficult to do. It builds confidence among a coalition of opponents that includes liberal advocacy groups and Christian conservatives concerned about excess alcohol’s effects on society, and cities and counties that benefited from $51 million in store profits last year.
“I think the governor has made a wise decision,” said Rep. Edgar Starnes, R-Caldwell, an incoming House Finance Committee co-chairman and supporter of the current system. Starnes said House Republicans are likely divided on the alcohol privatization issue.
“Alcohol is a unique product and it has to be handled differently than Pepsi, milk or bottled water.”
North Carolina is one of nearly 20 states that directly controls wholesale and retail liquor distribution, but it’s the only one where local ABC boards sell spirits. More than 160 local ABC boards essentially independent from state government operate the stores, which generate more than $200 million in tax revenues. Beer and wine are sold by licensed conventional retailers.
A consultant the state ABC Commission hired calculated the state could receive up to $313 million on 30-year licenses sold to outside businesses that would operate the ABC warehouse and the current local stores, according to a Jan. 11 report presented to state officials and obtained by The Associated Press.
The one-time license revenue could rise to $452 million if there was a 25 percent increase in the availability and consumption of liquor, for example, if more retail stores got licenses, the report said. The amount would grow to $588 million if liquor availability and consumption grew by 50 percent. More tax revenues also would be generated through increased sales.
Perdue said the current system has worked reasonably well and has discouraged the societal ills associated with excessive drinking. She received applause from the commissioners when she said she didn’t want to have to go past aisles of liquor with her granddaughter in tow to buy a toy for her.
“I simply don’t want to be the governor — I really don’t — who puts liquor into the big Target/Walmart stores or the local convenience stores,” Perdue said.
Sen. Bob Rucho, R-Mecklenburg, an incoming Senate Finance Committee co-chairman, said liquor would still be highly regulated under privatization and suggested Perdue hadn’t calculated all the revenue options. For example, he said, selling real estate where local ABC stores stand would generate money and place the locations back on the local property tax rolls.
“The real question you ask yourself is whether this is the proper role of government,” Rucho said. “Has she done her proper due diligence?”
Perdue first broached the subject of privatizing the system last year as a way to find new state revenues during difficult budget times while attempting to focus state government on necessary functions, and had mentioned it often over the months. But she said she ultimately decided it’s essential for government to regulate liquor sales closely.
“I actually believe that this is a core service for North Carolina,” Perdue said.
By GARY D. ROBERTSON
DURHAM, N.C.
