Gov. Bob McDonnell's plan to privatize liquor stores run by the Department of Alcoholic Beverage Control came one step closer to becoming law yesterday, when it was approved by the Governor's Government Reform Commission by a vote of 22 to 3.
Next the plan will be considered by the General Assembly, McDonnell Press Secretary Stacey Johnson said.
"The governor will announce his plan in the coming weeks with regards to that," Johnson said. "He said yesterday he will not call a special session unless he has the votes ... We're confident that the ABC can be privatized."
McDonnell's plan to privatize ABC stores will involve auctioning 1,000 licenses, according to a press release from the governor's office. Most of these licenses will go to existing stores rather than new establishments, with 332 licenses going to areas in which ABC stores are already present. The remaining 668 licenses will be auctioned to locations based on population density.
The proposal also calls to increase the number of ABC enforcement agents by 25 percent.
The original program included certain fees for businesses and incentives for stores that hire former ABC employees. The subcommittee voted against these provisions, however.
According to the press release, the plan is expected to raise about $500 million, which will be funneled into the Virginia Transportation Infrastructure Bank for transportation improvements. But Mike Thompson, special advisor to the commission, thinks the plan could raise even more.
"Personally, I think we're talking 6 or 700 million [dollars]," Thompson said.
He added that privatizing ABC stores would cost the state about $45 million in annual revenue but that the state could compensate for that loss.
"The government reform commission is going to be finding hundreds of millions of dollars," Thompson said. "It's going to far offset any difference by the privatization of the ABC. There are huge potential savings."
Those who oppose the plan, however, say the commonwealth will lose money if the proposal goes forth. The current organization of state-run liquor stores brings in $123 million of revenue each year, said Virginia Delegate Joe Morrissey, who serves the 74th District.
"We're not getting a good value for this asset," Morrissey said, calling the $500 million officials plan to raise from the new plan a "one-time estimate."
Morrissey also said the new plan will create additional social costs.
"The increase in the supply of any product is certainly going to have other associated costs with it. More consumption equals more social cost," he said, adding that a spike in liquor availability could lead to more alcohol-related car accidents and medical issues.
But Thompson downplayed concerns that private liquor stores could lead to dangerous behavior, citing data comparing U.S. states that own their liquor stores versus states with non-controlled liquor stores.
"There's no difference in any of the social issues that come up - drunk driving, beating your kids or the amount of liquor consumed," he said. "Studies, including the [Centers for Disease Control and Prevention], show there's no difference. So there's no downside there."
Thompson also said the plan would not affect current liquor prices. Morrissey disagreed, though, because private companies will be engaged in setting alcohol prices.\nMcDonnell has been working on ABC privatization since he campaigned for the issue last year.
"By privatizing ABC, Virginia will join the majority of states in the nation that have long recognized alcohol distribution is not a core function of government," McDonnell stated in a press release. "Transportation, on the other hand, is a core function and this plan will deliver immediate results for Virginians frustrated by long commutes and stalled construction sites."
If approved, the proposal could go into effect as soon as 2012, Thompson said.
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