The short session of the General Assembly will not privatize the state’s Alcoholic Beverage Control system. The array of special interests lining up to preserve North Carolina’s archaic status quo guarantees it. But Gov. Bev Perdue deserves a tip of the glass for suggesting that a legislative panel studying ABC reforms consider privatization.
Recent scandals involving county ABC boards may have prompted Perdue. Local boards face minimal public oversight — so long as they deliver plenty of tax revenues — and largely are free of state supervision.
This unstable brew of autonomy and secrecy invited abuse. ABC officials in New Hanover County pocketed six-figure salaries while getting hefty annual raises and bonuses. And in Mecklenburg County, liquor distributors spent thousands on lavish dinners and other goodies for ABC employees.
Sure, the ABC system generates hundreds of millions of dollars for state and local governments. But limited retail hours and product lines harm consumers. And inadequate oversight breeds corruption. The best way for the state to control alcohol sales effectively would leave the government in charge of enforcing the law while letting the professionals — entrepreneurs — handle the sales and marketing of beer, wine, and spirits.
Sad to say, that sentiment was nowhere to be found at legislative study committee meetings. Local officials touted the ABC system as a revenue machine. Substance abuse professionals and anti-alcohol activists offered horror stories claiming that privatization would increase underage drinking, drunken driving, and overall liquor consumption.
No one represented North Carolina consumers, the vast majority of whom imbibe legally and responsibly.
Privatization would not starve government coffers. The state would continue to both tax alcohol and divide revenues among state and local governments and law enforcement agencies. A well-designed system of tax rates and revenue sharing could deliver at least as much if not more money to government. Private liquor merchants would pay property taxes that county-owned ABC stores do not. And the state could generate additional money — including a one-time windfall when private stores first opened — with the fees it charged for licenses on retail outlets.
Meantime, a 2007 Reason Foundation study comparing states centrally controlling alcohol sales and distribution vs. those that licensed private sales found little difference between “control” and “license” states in the rates of underage alcohol consumption and binge drinking, DUI arrests, and fatal crashes involving alcohol.
This makes sense. Private alcohol retailers are in much greater legal jeopardy than government employees. An entrepreneur who is caught selling booze to a minor can lose his license (and his livelihood) and face civil or criminal penalties. An ABC clerk doing the same might not even lose his job; and the county he works for would keep selling liquor.
Selling liquor is not a core function of government. More than 30 states safely, efficiently, and effectively regulate alcohol consumption through a private system of marketing and distribution. The Tar Heel State should join them.