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Posted at 12:30 PM ET, 11/13/2009

ABC Privatization: The numbers don't add up

By editors

By Kevin M. Raymond
Dale City

On the Nov. 8 Local Opinions page, Garrett Peck presented an interesting historical treatise on Virginia’s Alcoholic Beverage Control (ABC) laws. Supporting Gov.-elect Robert F. McDonnell’s campaign promise, Peck cited the reasons why the stores should be privatized.

However, both Peck and McDonnell seem to miss the biggest issue of all in the proposal: money. Privatization of the stores is not a new idea, and McDonnell was around the last time it was floated. ABC stores simply make too much profit for the state to sell them. The last time the idea was discussed in the Virginia General Assembly, some seven years ago, the stores were making an annual profit of $46 million. Last year, it was $103.4 million, according to the ABC Department annual report.

Of this total, $65 million went to the Department of Mental Health, Mental Retardation and Substance Abuse Services for its programs. This is a huge amount in the department’s meager budget; Virginia is already among the states with the lowest funding for mental health services. The balance of ABC profit in fiscal 2008 went to local governments ($4 million) and the general fund ($34 million).

The key to privatization is to find the revenue to replace the $103 million — and growing — profit that annually accrues to the state and local governments in Virginia. Before anyone takes off on the privatization theme, this needs to be taken into account. Two plus two never equals five.

By editors  | November 13, 2009; 12:30 PM ET
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