McDonnell Promotes ABC Store Privatization

Brent Finnegan -- August 26th, 2010

Gov. Bob McDonnell visited Harrisonburg Thursday evening to promote his plan to get Virginia out of the liquor business. The governor told the audience of several hundred assembled in JMU’s Festival building that it’s high time that the state government sell off its ABC stores, and put money from liquor store licenses toward transportation needs.

“There are 332 state-run ABC stores in Virginia under our monopoly-controlled system,” McDonnell said, noting that there are far more stores per capita in states without state-run liquor stores. “Under our proposal, we think it ought to go to maybe anywhere from 800 to 1,000 stores to maximize the amount of money we make on the licensing fees.”

McDonnell insisted that having more liquor stores does not equal a rise in alcohol-related crime. “There’s no material difference [between privatized and state-run liquor store states] in rates of binge drinking or DUIs.”

McDonnell ABC Privatization Town Hall Meeting

Scott Wawner, VP of sales for Eagle Distributing, a local beer distributor, spoke out against the plan. “There is an important distinction between beer and wine and hard liquor. Spirit alcohol is much more potent and it takes much less to cause serious intoxication and impairment,” Wawner told McDonnell during the Q&A portion of the evening. “You’ve said that selling alcohol is not a core responsibility of government. I would argue that safeguarding our quality of life and public safety are core responsibilities of government.”

“We do have a good system,” McDonnell responded. “The question is; can we do it just as well and just as safely without having any of those [negative aspects] in a private-sector system? The answer is clearly yes.”

The governor produced quotes from former Governors Warner and Kaine that seemed to support divesting the state of its ABC stores. McDonnell asserted that the move could add more than $500 million to Virginia’s transportation coffers at the point of sale, and more than $100 million per year after the sale. However, Warner himself has called McDonnell’s estimates for privatization “wildly optimistic.”

Earlier this month, the Washington Post reported ABC stores currently contribute $248 million in profits and taxes to the state. Some experts are skeptical that privatization could improve on that figure.

According to an analysis by the [Distilled Spirits Council of the United States], overall government collections on a gallon of liquor would have to reach $25 in Virginia to match the state’s current revenue. That would make taxes in Virginia five times the average in other privatized states.

McDonnell did not claim that ABC privatization would fully or even mostly fund the state’s transportation needs. “This is just one idea that will in part help us find transportation,” he said. “We’re going to have a lot of other ideas in the next session of General Assembly that I’m going to ask the legislators to consider.”

McDonnell is expected to officially unveil his ABC plan in more detail on September 8.

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