The plan to privatize ABC stores gets stranger as the days pass.
Gov. Robert F. McDonnell is facing criticism that his plan unfairly puts a 2.5 percent optional tax on alcohol sales in bars and restaurants and ledgers that show that the plan still won’t raise as much money annually than keeping ABC stores in state hands.
So, the governor is considering making the plan go down a little easier by eliminating the 2,5 percent tax and helping small retailers deal with the cost of buying licenses by offering state financing.
Bids for small retailers in rural areas would be at least $102,844 and $154,266 for convenience stores. The plan now is to auction 1,000 licenses with 600 going to big retailers such as Wal-Mart and Costco, 250 for convenience stores and 150 for smaller retailers. Currently, the state ABC operates 332 liquor stores.
To help the little guys, the governor might let them pay for their licenses over a two to four year period, which is much like a state loan.
But that kind of messes up the whole idea of privatization. Advocates, notably Republicans like McDonnell, aspire to dogma that wants to get to limit government and get it out of the booze business, which pays the state more than $200 million each year. The current ABC plan, however, is becoming so unwieldy that the state may end up as a lender, which is so far from the original intent of privatization that it approaches the realm of the absurd.
Numbers for the plan don’t add up, which is a more fundamental flaw. It is still $20 million short of providing what state-owned ABC stores do. McDonnell could raise the excise tax on distilled spirits to $22.50 a gallon from $17.50 a gallon proposed now. As noteworthy a no-tax advocate as Grover Norquist, founder of Americans for Tax Reform and infamous for his K Street project of Republican-only lobbyists, says the idea is to lower taxes, not raise them.
Another problem is that McDonnell says he wants to use the proceeds from selling off ABC stores to give more funding to the Virginia Department of Transportation which is shy about $20 billion to meet coming road needs. VDOT, however, has already shed thousands of positions under previous, Democratic governors. A recent McDonnell audit of VDOT has found about $1 billion in its budget that had been squirreled away for maintenance.
That, again, raises questions about why McDonnell’s making the state go through this ABC exercise. If VDOT is so drastically short of funds, how does he explain the billion dollar windfall?
As McDonnell stumbles from one idea to the other, it is clear who is really calling the plays on this one — the liquor, beer and wine industry. Virginia Public Access Project files show that the Association of Distributors gave McDonnell $38,600 for his inauguration. The Virginia Beer Wholesalers chucked in $15,000 and the wine lobby put in $10,000. Anheuser Busch opened its taps by $20,000 for the governor’s inaugural soiree.
Bob, this Bud’s for you.
Peter Galuszka
