Dan River Region legislators iffy on privatizing ABC

Local legislators are still undecided on Gov. Bob McDonnell’s plan to privatize liquor sales in Virginia, weighing revenue concerns with philosophical ones.

McDonnell revealed his proposal Wednesday, which he said would provide $500 million in new funding for transportation if the state auctions off 1,000 private liquor licenses to merchants.

But McDonnell projects annual state revenue from liquor sales would be about $22 million less than the current state monopoly — leading Delegates Danny Marshall, R-Danville, and Don Merricks, R-Pittsylvania County, to question whether the proposal is in the state’s best interest during a rough economy.

However, the two Republicans are also balancing that concern with whether the state should even be in the alcohol business.

“The control part of me thinks, I just don’t like the idea of having children and teenagers going into a grocery store and having controlled spirits next to beer and wine,” Merricks said.

“From a business standpoint and from a free enterprise standpoint, is that really what the state ought to be doing? I’m still out.”

Beyond the philosophical issue, Marshall said he would like to see more numbers from McDonnell.

“If we can get the numbers that he says, then I think it’s certainly something we ought to consider,” he said. “… (But) I don’t know how they came up with those numbers. What did he use to base it on? That’s one of the things I would like to look at.”

Under the proposal, the state would auction 600 licenses for large establishments such as grocery stores, 150 for package stores and wine and beer shops and 250 for convenience stores or retail pharmacies.

No one company would be allowed more than 25 percent of licenses within each level, according to a news release.

The Associated Press reported that Virginia’s wine wholesalers oppose the plan and beer wholesalers have concerns with it. John Hamlin, operations manager at Danville Distributing Company, declined to comment on the proposal before the state association he belongs to meets Tuesday to discuss the measure.

Another state group, the Virginia Retail Merchants Association, endorsed ABC privatization Friday because of the boost to the private sector, allowing “the government to focus on other core services.”

The Danville Pittsylvania County Chamber of Commerce has not taken a position on privatization yet, according to Chamber President Laurie Moran. She said the legislative committee would discuss the issue at its next meeting later this month.

“I think what we’ll be analyzing are the benefits and the potential pitfalls of privatization,” Moran said. “… Financially, does it make sense for the state to privatize?”

Addressing some concerns of liquor stores popping up on every corner, McDonnell’s proposal noted the majority of the licenses would be for existing stores rather than new ones. The state would also increase its ABC enforcement agents by 25 percent.

The Richmond Times-Dispatch reported this week that McDonnell’s original plan included a 4 percent excise tax on restaurants serving cocktails. But after opposition from Republicans, that was eliminated in place of a 2.5 percent optional “convenience fee” for restaurants to have hard liquor delivered from private wholesalers, rather than buying it from retailers.

Merricks said some had accused privatization of being a tax increase, but he disagreed, adding that otherwise “you’d be getting a lot more money to the general fund than before.”

The Governor’s Commission on Government Reform and Restructuring will hear the proposal in October before the General Assembly convenes in November for a special session.

Both Marshall and Merricks said they would like to hear more feedback from constituents before making any decisions.

“This is not one of those cut-and-dry questions,” Merricks said. “I know the governor would very much like me to be on his side. But he didn’t elect me, the people did. I’ve got to figure out what’s the best for my district.”