Last call for Alabama’s state-run retail liquor operations

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In the 21st century, why does the State of Alabama need to be in the liquor business? Frankly, that is the question state legislators need to consider, and Sen. Arthur Orr, R-Decatur, believes that removing the state from the retail liquor business is the answer.

Conservative officials in the state constantly repeat the refrain of limiting the role of government to its legitimate functions. Phasing out many aspects of Alabama’s Alcoholic Beverage Control Board brings that ideal to life.

To be clear, Alabama’s ABC Board is one of the better-run government agencies in the state. ABC Administrator Mac Gipson and his team run a complex system that, among other responsibilities, operates 176 ABC stores and oversees licensing and compliance for more than 550 privately operated package stores.

Gipson proudly points to the fact that the ABC Board pays for itself and alcohol sales generate important revenues for the State of Alabama. All that is true.

Oddly, it would probably still be true even if Orr were successful at phasing Alabama out of the liquor-retail business.

Alabama’s taxes on liquor are almost identical regardless of whether a bottle is sold by a private package store or a public ABC store. Currently ABC assesses an additional 30 percent markup on the cost of the liquor sold at ABC stores. Of that amount, 25 percent goes to operate ABC and 5 percent goes to Alabama’s General Fund.

Orr’s bill would eliminate the cost of more than 600 employees and the expense of leasing ABC stores from the ABC Board’s operational cost. While the move would undoubtedly incur one-time costs associated with eliminating those positions, those costs are far less expensive than the ongoing salaries and benefits of those state employees.

While nobody should relish the idea of eliminating anyone’s job, state employees should not be immune from the same type of industry changes that routinely occur in the private sector.

If the ABC Board reduces its operational costs, it should be able to preserve its 5 percent allocation to the General Fund, cover its distribution and compliance responsibilities and possibly even reduce its markup. If the markup is preserved and sales remain consistent, there should be even more revenues to distribute to state and local priorities.

In the alternative, Gipson has argued that the social costs of ending ABC’s retail operations would hurt Alabama. “Increased availability (that would come with privatization) would lead to increased consumption, especially among underage and problem drinkers,” he writes.

Under Orr’s bill, ABC’s compliance operations would be preserved. Alabama law enforcement routinely combats unlawful sales to minors, intoxicated driving and any number of other negative activities related to alcohol. Thankfully, they do a good job, and the ABC Board’s annual reports highlight successful enforcement activities over the past several years.

The social impacts of closing the 176 state-run stores are also less significant given the fact that Alabama already licenses around three times more private package stores where consumers can purchase alcohol outside of ABC store hours. The fact that Alabama already has so many more private stores than public ABC stores suggests that the ABC Board, which issues the licenses, is not terribly concerned that private stores are the hotbeds of unlawful and dangerous alcohol-related activity they now suggest.

Frankly, Alabama should revisit a number of aspects of its policies toward liquor. A move to a gallonage tax, as opposed to assessing tax on the cost of the liquor, could have positive revenue implications and address some concerns about consumption.

At the end of the day, the fundamental question remains: Should Alabama be in the retail liquor business? The answer should be a resounding “No.”

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