By By JONATHAN CLAYBORNE
Staff Writer
Scandals leading to scrutiny of North Carolina’s Alcoholic Beverage Control system have spurred debate over whether the state should privatize liquor sales.
Official documents and interviews with local observers indicate that putting the state’s liquor business in private hands could be some time off, if it happens at all.
“It’s not something they could do in a few months and we’re all gone,” said JoKay Smith, supervisor/general manager of the Beaufort County ABC Board.
A proposal to privatize could grow out of studies set in motion by Gov. Beverly Perdue and leaders in the N.C. General Assembly.
Yet, there is no guarantee that analysis of the ABC system will automatically lead to privatization, advised Schorr Johnson, spokesman for state Sen. Marc Basnight.
“Sen. Basnight is concerned about, in the very short term, having more accountability and oversight over the local ABC boards,” Johnson said. “And any effort to change the structure of the ABC system would most likely be something that would happen in another year and not this year.”
Basnight and House Speaker Joe Hackney have appointed a study committee to examine issues with the ABC system, Johnson said.
The committee is due to report its findings May 12, the opening of the next legislative session, Johnson said.
There probably won’t be time to consider acting on those findings in the Legislature’s “short session,” when lawmakers deal primarily with budget matters, Johnson said.
Basnight “is waiting until the (legislative) study is concluded, and the study will look at privatization, uniformity issues” and an array of potential fixes, Johnson said.
Some county officials hope the state won’t sell its ABC assets and go private, no matter how long it takes.
Hangovers
Focus on the negatives of the ABC system is partly a product of questions about whether some local boards have mishandled operations.
Among the frequently cited examples of what’s wrong with the system are the following: a liquor company’s $9,000 fete for the Mecklenburg County ABC Board and questions about the pricey salary and bonus of the now-retired head of the New Hanover County ABC Board.
Yet, concerns about the state’s ABC system aren’t exactly new.
The system is “outdated and needs modernization” reads a Dec. 10, 2008, report from the Program Evaluation Division of the N.C. General Assembly.
The report was ordered by the Joint Legislative Program Evaluation Oversight Committee.
The division suggested that the Legislature “modernize” the system “by defining the mission of local boards, providing the ABC Commission with management tools for better oversight of local boards, modifying outdated statutes” and other measures.
That 2008 report was a starting point for the current legislative probe, Johnson said.
A local matter
There have been problems with ABC boards in other counties, but Beaufort County runs a clean operation, said Smith, the local ABC head.
“We pay our own bills, and we’re just a political subdivision of the state of North Carolina,” she said.
The Beaufort County commissioners have weighed in on a previous attempt to streamline the ABC system.
On June 1, 2009, the commissioners voted 4-3 to approve a resolution that favored retaining more local control over ABC stores. The resolution opposed “any state mandate to merge ABC Boards, (or) mandate the merger or closing of ABC stores.”
The resolution grew out of an N.C. Association of ABC Boards lobbying effort, according to Beaufort County Manager Paul Spruill.
The association “represents over 140 county and municipal ABC boards operating throughout North Carolina,” according to its Web site.
House and Senate bills that added fuel to the resolution weren’t approved last year. Those bills would have consolidated multiple ABC boards located in single counties, set performance standards for the local boards and allowed the ABC Commission to close underperforming stores.
The N.C. Association of County Commissioners supports keeping ABC boards under local control.
On its Web site, NCACC contends that privatization would result in the loss of millions in revenues to counties.
Some of the money reaped by local ABC boards gets passed down to county and municipal governments.
Beaufort County reaps around $90,000 a year in indirect revenues from local liquor sales, Spruill said. That amount comes to the county after towns like Belhaven and Washington get their cuts of the liquor money, he said.
“I’m not willing to say that liquor sales are recession-proof, but it is true that retail sales of liquor withstand economic downturns more effectively than other retail sales,” Spruill said.
The Beaufort County commissioners’ chairman thinks privatization would be a bad idea.
“It’ll make (liquor) cheaper and more accessible, and I’m not for that,” said Jerry Langley. “Competition always brings prices down.”
The county now plays host to a limited number of liquor stores, but privatization could lead to a proliferation of retail establishments selling alcohol, he said.
“Do we really want it where you can stop just about anywhere and buy liquor?” Langley asked.
One of Langley’s colleagues, Commissioner Hood Richardson, called the current ABC system “a good case of government taking on a monopoly for what was considered to be good purposes at the time.”
“The truth of the matter is the (state) government gets most of the revenues” from liquor sales, Richardson said.
Still, he expressed reservations about alcohol abuse and the ramifications of fixing the system.
Richardson added that any attempt to privatize the system should include “a serious regulatory effort.”
“Keep in mind abuse is a serious problem,” he said. “I’m really sitting on the fence as to what should be done about liquor.”
Governor weighs in
Perdue has ordered a review of the ABC system. She’s also directed state ABC Chairman Jon Williams to contract with Valuation Research Corp., an entity Perdue describes as “one of the country’s premier valuation firms.”
The firm will determine the value of the system, Perdue says in a Feb. 26 letter to state Sen. Jim Jacumin, R-Burke.
The state entered into the $175,000 contract last week.
“In this way, if we decide to privatize any part of the ABC system, we will know what it is worth before trying to sell it,” Perdue says in the letter.
The governor says that if she finds that privatization is in the best interest of the state’s residents she’ll submit an action plan to the General Assembly.
The plan would have to ensure “more stringent ethical standards” for ABC boards and their employees. The plan also would call for limited concession on liquor sales, if privatization were considered, she says.
“Any fees paid to the state from the sale of any part of the ABC system must be used to fund critical, long-term investments in our people and our state — not to fill current or near-term budget shortfalls,” Perdue says.