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Boards oppose ABC privatization

December 20, 2010

How liquor is sold in North Carolina could change in light of recent discussions about privatization of the state's Alcoholic Beverage and Control system.

Privatization, however, won't happen if area governance boards have their way.

The Catawba County Board of Commissioners adopted a resolution to support the continuance of the current ABC system, and it opposed efforts to privatize the system.

Catawba County received about $1 million for fiscal year 2010-11 from the ABC system. Privatization of the system could eliminate that funding, which is the equivalent of about two-thirds of a cent on the tax rate, said Lee Worsley, Catawba County assistant manager.

More than $275 million was distributed into North Carolina's general fund and state counties and cities from state ABC boards in 2009, according to the N.C. ABC Commission.

Currently, Catawba County's ABC system is controlled by a local board that maintains control on decisions for the county's ABC stores, including hiring and firing ABC employees and adopting local system rules. System privatization will allow non-government entities, like private businesses, to sell liquor.

"If you go into privatization, you lose the local control," Worsley said.

North Carolina has 167 local ABC boards that control the state's 422 retail ABC stores, according to the N.C. ABC commission.

The North Carolina Budget Reform and Accountability discussed the state's ABC system during several of its recent meetings. The commission is designed to make state government more effective and efficient, and in light of North Carolina's projected $3.2-billion shortfall, the state could turn to the ABC system as a way to close the gap.

"I have believed for a long time there has to be a real examination of privatization," Gov. Bev Perdue told the Greensboro News & Record on Dec. 16. "I'm not quite there yet. I need to know what it's worth to the taxpayers. I need to know what kind of damage it would do to local governments and how you protect them."

Perdue said she will wait several weeks to make a decision about privatization until after she receives a consultant's report about the system.

The state ABC system came under scrutiny in recent years, with claims of corruption and mismanagement at boards in Guilford and Mecklenburg counties.

Catawba County Board of Commissioners chairwoman Kitty Barnes said she has a good working relationship with the county's ABC board.

"I would say that we have a very healthy relationship, and (the county ABC board) operates above board compliance," Barnes said.

Barnes receives monthly minutes from the county's ABC meetings.

N.C. Association of ABC Boards lobbyist Jon P. Carr wrote a letter Dec. 14 on behalf of the commission, announcing its opposition to privatization efforts.

"Studies have shown that privatization will result in a marked increase in the number of outlets ... longer hours of sale, greater advertising and more promotion and significantly more consumption," Carr said in his letter addressed to N.C. Speaker of the House Joe Hackney. "Greater consumption results in greater harms and greater costs to society."

Barnes said another potential complication in the privatization of the ABC system lies in the system's facilities. County revenue built the facilities that house ABC stores, and privatization makes it difficult to determine how the ownership is transferred on those buildings.

The Joint Study Committee on Alcoholic Beverage Control presented a report to the N.C. General Assembly in May outlining its findings after researching the state's current ABC system.

The report made two recommendations, including providing for the statewide consistency and uniformity in ABC system rules and ethics standards, as well as the continued review of the state's ABC system.

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