Local Politics

Perdue opposes privatizing liquor sales

Posted January 20, 2011 6:07 a.m. EST
Updated January 20, 2011 7:16 p.m. EST

— Gov. Bev Perdue announced Thursday that she opposes privatizing liquor sales in North Carolina, saying that it's "not the right business decision" for the state.

The current state-run liquor distribution system "has worked well, pretty well," Perdue said, adding that counties need to develop "broader standards for accountability and transparency."

The General Assembly, which convenes next week, must approve any changes to the Alcoholic Beverage Control system.

Perdue shared her opinion at a conference of the North Carolina Association of County Commissioners in Durham.

Rep. Thom Tillis, R-Mecklenburg, the House Speaker-designate, said he has not seen the data Perdue used in making her decision. However, Tillis said he will use that data and “complete our own assessment as we identify areas we may privatize."

Senate Republican leader Phil Berger, R-Rockingham, said he shares the governor's concerns regarding the sustainability of revenue derived from the ABC system.

"I believe that we should continue to look at opportunities for privatizing governmental functions and continue to consider privatizing the ABC system," Berger said. "However, the decision to privatize should be a carefully considered, long-term policy decision and not a short-term decision based on the state’s budget situation.”

In the past year, a consultant company studied the ABC system and looked at the state’s options. Following its initial report, Perdue said she decided "to only consider options that would protect local and state tax revenue, and keep North Carolina as a 'control state.'"

Additionally, she said, the value of the sale would have to significantly offset the risk involved to the state’s health and safety.

Independent revenue estimates for a one-time sale have been valued at about $300 million, according to Perdue.  

"The only way to raise enough money to make the sale practical for the state – $1 billion plus dollars – would be to open North Carolina up to liquor sales to a much broader range of stores, from neighborhood drug stores to large retailers," she said. 

“I don’t want to be the governor who has to hold my granddaughter’s hand as we walk past the liquor bottles on our way to the toy aisle in WalMart, or towards the cereal in Food Lion. That isn’t North Carolina. That isn’t who we are or what we want to become,” Perdue added. 

Calls for privatization have come from critics, including numerous state lawmakers, who argued that the state system got out of control with salaries and liquor industry gifts and junkets.

A WRAL News investigation in 2009 showed a lack of ethics rules for ABC boards and disclosed high salaries for the administrators of the New Hanover ABC system. Reform passed last year requires all ABC board members to undergo budgeting and ethics training.

Perdue said she needed to know about the effect on state costs and revenue before forming an opinion on privatizing the ABC system, in which more than 400 government-run stores sell liquor. 

Local governments and conservative groups have supported a system that they argue works well at controlling consumption while providing government revenues.

A recent audit by an outside consultant found that 24 of the 163 local ABC boards lost money in the 2010 fiscal year.

The state Association of ABC Boards says the current system is effective and generates more than $200 million in tax revenue annually. A lobbyist for the group said that North Carolina ranks 48th nationally in per capita alcohol consumption but third in the state revenue generated per gallon of liquor sold.