Gov. Bob McDonnell's proposal to privatize Virginia liquor stores took another kick in the teeth last week when the state's Department of Alcoholic Beverage Control reported that it made a record $121 million last year. Revenues at the state's 130 liquor stores have been rising for 13 consecutive years to last fiscal year's record $693 million.
"Our industry is such that sometimes people drink when they're sad and sometimes people drink when they're happy, so there's all kinds of things that go into it. We're also one of the first industries that starts to come back a little bit when the economy turns around," said Curtis Coleburn, the agency's chief operating officer.
McDonnell tried to privatize during the 2011 session, but the effort fizzled when it became obvious that the ABC stores would generate more revenue for the state than it would likely collect in liquor taxes if sales were privatized. The proposal couldn't even find a Republican sponsor in the GOP-ruled House, so Delegate Bob Brink, D-Arlington, took it up for them. Republicans were not amused.
But people seem to be asking the wrong questions. Instead of, "What will generate the most money for the state?" citizens ought to be asking themselves, "What's the most efficient way to run an economy?" and "What's the role of government in a free society?"
It's no surprise that state-run liquor stores generate more money for the state than a privately-owned industry. The state possesses a self-created monopoly. It can make as much money as it wants just by raising prices. It need have no regard for whether the ABC stores operate efficiently. Perhaps they do, but it seems unlikely they can be as efficient as private stores would be in a free and competitive market.
"Record profits" at ABC are not necessarily good news for the state. A $121 million profit on $693 million in revenues means that a single government department sucked $571 million out of the economy to support itself, with the excess going to some other government department. In essence, by supporting the continued existence of ABC stores, Virginians are agreeing that those who purchase alcohol should pay extra taxes, in the form of higher prices, to support bigger government.
But, say ABC supporters, government-run liquor stores means that we get fair prices because it removes the profit motive. And that $121 million--wait, what should we call it again?
As someone who doesn't drink, I wouldn't mind other people volunteering to pay extra taxes, except that I prefer my state government to confine itself to those things we all agree it should be doing-administering the justice system, maintaining transportation systems, and the like. I don't think that running liquor stores qualifies as an "essential government service." Why not let private individuals have a crack at earning that two-thirds of a billion dollars?
Moreover, when the liquor market operates efficiently, Virginians have more money to spend on other things that do add wealth to our state economy, from building up their own small businesses to paying college tuition.
The unwillingness among Republicans to support privatization suggests that they haven't really grasped the issues, or maybe they just don't think they can explain them to voters. Granted, the state needs to fund itself, but here's a chance to reduce the size and reach of government, if only a little, and make a good conservative statement while also helping consumers pay less for products they want.
I'll drink to that.
The Associated Press contributed to this report.