Flashback: Some Policies on the Rocks

On this, the Little Conqueror‘s 10th birthday, I have been otherwise engaged, so no new DJ. However, while delving back into the Carolina Journal Online archives for a different purpose, I ran across a couple of DJs from five years ago on the subject of state government and alcohol.

Anyway, seems like a good time to revisit the issue.

Incoherence and Alcohol
March 12, 2002

RALEIGH – Having written about North Carolina politics for nearly 15 years now, I have certainly heard my share of incoherent babbling. If consistency is, as Ralph Waldo Emerson once wrote, the “hobgoblin of small minds,” then the average politico is about as far removed from the ranks of hobgoblins as one can be.

The small-minds part still applies, though.

Case in point: there are local elected officials and political appointees across the state who are panicked about a legislative study commission approved last year to examine the issue of privatizing liquor sales. North Carolina is a so-called “control” state, meaning that only government-run Alcoholic Beverage Control stores can sell hard liquor. The proceeds of these liquor sales (after taxes to the state) primarily go to local governments. It’s a source of revenue that local leaders tend to hoard like pots of gold — even though the purported purpose of the government’s ABC monopoly is to discourage hard-liquor consumption.

Oh, now I get it. Inconsistent politicians are small-minded leprechauns, not hobgoblins.

The Perquimans Weekly of Hertford quoted one Cecil Winslow, chairman of the Hertford ABC Board, on the subject of privatization. He told the newspaper that selling off ABC stores to the private sector (which would, by the way, generate a significant one-time windfall) would hurt the community because there would be less “control” of alcoholic beverage sales.

Besides, he added, privatization would cost the local government in foregone annual revenues. “The current sales figures for the county’s ABC stores are the best we have ever had,” he bragged.

So which is it? Do we want to control liquor sales or increase them? Do we want ABC stores to succeed as businesses, by maximizing revenues and profits, or do we want them to succeed as regulators of liquor consumption, by dampening revenues and profits?

You know, it’s this kind of confused public policy that can drive one to drink.

Drunk on ABC Revenues
April 8, 2002

RALEIGH — Those who control the current government-run Alcoholic Beverage Control (ABC) system are among the most potent lobbying forces in North Carolina. Over the past dozen years or so, I have seen them turn back numerous efforts to consider privatizing ABC stores.

Now, the ABC clique – comprising local government officials and those who serve on local ABC boards – is flexing its political muscle against the idea of even studying the privatization issue. Sen. Howard Lee (D-Orange) sponsored a bill last year to create a study commission on ABC privatization, but judging by some of the most extreme comments you’d think Lee had proposed to simultaneously 1) reinstate prohibition and 2) cater to winos and gangsters.

Several county commissions, prompted by their local ABC bureaucrats, have passed resolutions against privatization in the past couple of months. In Nash County, commissioners passed its resolution by citing the argument that privatization would eliminate a source of revenue worth $191,125 a year. They also argued, however, that privatization would increase the number of places people could purchase hard liquor. OK, if purchases go up, revenue goes up, right? Or am I missing something?

Collectively, cities and counties collect more than $31 million a year from ABC stores. But if Lee is right, selling the state’s 400 stores could generate many more times that amount in one-time proceeds plus hundreds of millions in additional taxes, most of which would flow to local governments. It would take money years for the current system to pay out that much; besides, if opponents are correct that the number of stores selling liquor would multiply 10-fold, thus resulting in many more sales, annual tax collections would grow at a healthy rate.

About the fact that 20 ABC boards have approached their local governments for anti-privatization resolutions, Lee was blunt in a recent Fayetteville Observer Times story: “It’s irresponsible for any local official to oppose something in concept before work can be done to lay out what the plan might be.”

That pretty much sums it up.

Hood is president of the John Locke Foundation.