Holtzclaw closing the lid on the ABC’s liquor markup dumpster fire
If Alabama’s legislators want to raise taxes, they should cast a vote to do so. They shouldn’t be able to cut a deal between public employees and the state’s liquor bureaucracy to avoid accountability at the ballot box. Sadly, that’s exactly what happened in 2017, and State Sen. Bill Holtzclaw’s SB120 aims to stop it.
Last summer, the Alcoholic Beverage Control Board (ABC) approved a five percent “markup” on liquor. The markup didn’t have anything to with alcohol. When I asked ABC spokesman Dean Argo about it a year ago, he didn’t mince words. “Bottom line,” he said, “the only reason the 5% markup was ever suggested was to get rid of the individual county bills and to help the DAs.”
The county bills Argo references are efforts by certain lawmakers to levy a five percent tax on liquor to fund local district attorneys offices (DAs). Over the last several decades, only two of Alabama’s 67 counties–Marshall and Calhoun–successfully passed local bills imposing an additional five percent tax on liquor. Many other county delegations tried to pass similar measures and failed.
Nevertheless, the ABC feared that a patchwork of local measures would create huge price differences along county lines. The ABC met with the DAs and asked for a piece of legislation to increase taxes across the whole state. To be clear, pitching a tax hike to the Alabama Legislature to fund district attorneys wouldn’t have been scandalous, but it probably wouldn’t have been successful either.
The DAs didn’t go for it.
According to Argo, “The DAs were concerned that a statewide bill wouldn’t be supported by legislators.” Color me surprised. The DAs knew that their tax hike plan would be dead on arrival, so they crafted another plan with the ABC.
“The ABC Board would consider a 5% markup increase,” Argo said, “with the proceeds to be earmarked in the budget for the DAs.” The ABC can’t appropriate the money it collects, so legislators included a conditional appropriation in the 2017 general fund budget as part of the deal. After that, it was just up to the ABC Board to do the dirty work of pushing through the markup, and that’s just what they did.
Let’s just ignore the fact that the ABC’s own administrative code enumerates four market-related circumstances permitting markup adjustment. None of them involve helping the DAs or avoiding local tax differences. When I asked Argo to point to the relevant markup justification in the administrative code, he replied that he was “confident that all four of the reasons mentioned in the Code were taken into consideration by the Board.”
To put it graciously, the entire series of events was a back alley dumpster fire that nobody seems too eager to own. Don’t blame the DAs. They were dealing with a stingy legislature. Don’t blame the ABC. They were just trying to keep prices even across Alabama. Don’t blame the legislature. They were just playing along if the ABC raised the markup. It’s nobody’s fault, and we get to pay for it.
Ironically, the initial “problem” that ABC was trying to solve is that Alabamians might act like rational human beings in response to the same product being cheaper in another county. The ABC could have asked the legislature to repeal the two existing county liquor markups. Instead, they failed to solve the problem of higher prices in Marshall and Calhoun counties and made alcohol more expensive across Alabama. Only in a state bureaucracy will that kind of absurd logic prevail.
Holtzclaw’s bill seeks to address the mess rather than simply hoping Alabamians don’t notice the smoke and smell during an election year. SB120 simply prevents future ABC markups without a bill enacted by the Alabama Legislature. It’s not a complicated bill, but it absolutely restores accountability for revenue policy decisions to the people Alabamians actually elect.
Alabama is in the minority of states retaining a “control” model for liquor. Apparently the state’s “conservative” legislature would rather preserve a prohibition-era bureaucracy than fund the DAs properly, meet other spending needs or simply let Alabamians keep a little more of their hard-earned money.
But this is an election year. Hope for any real changes to Alabama’s liquor control system is little more than wishful thinking. Maybe the Alabama Legislature will at least take responsibility for the taxes we pay on alcohol. That would close the lid on the dumpster fire even if it doesn’t put it out right away.