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Posted at 11:25 AM ET, 11/ 5/2010

McDonnell keeps flogging ABC sell-off

By Peter Galuszka

Virgina Gov. Robert F. McDonnell's foundering efforts to privatize state liquor stores could get a boost if he puts the idea in front of voters in a referendum rather than relying on a General Assembly whose attitudes about the idea run from lukewarm to hostile.

Even so, two referendums to privatize state-owned liquor stores in the state of Washington, including one backed by big box retailer Costco, were defeated by voters Nov. 2.

Although McDonnell has said that the Washington proposals were different from those in Virginia, since they would have involved creating more than three times as many private liquor stores, he still has not resolved the biggest problem with his plan -- that private stores would supply the state with less revenue than state-run ones do now.

McDonnell had wanted to use the proceeds from the initial sale of the state's 330 ABC stores to help shore up the state's transportation funds. So the effort lost some of its urgency when it was discovered that the Virginia Department of Transportation had about $1 billion more in its budget than was previously known.

Ultimately, Virginia could try a far simpler approach if the goal is to boost roads -- raise the state's gasoline tax.

As it is, Virginia has one of the lowest state taxes per gallon of gasoline -- 17.5 cents per gallon. That's a lot lower than the District, Maryland, North Carolina and West Virginia.

Virginia has stubbornly refused to budge on the gas tax, given the staunch anti-tax philosophy that is prevalent in the state. But at the end of the day, a change might be easier to manage than jumping through a lot of hoops to sell off ABC stores, even if McDonnell seems intent on trying.

Peter Galuszka blogs at Bacon's Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Peter Galuszka  | November 5, 2010; 11:25 AM ET
Categories:  HotTopic, Local blog network, Va. Politics, Virginia, economy, energy, environment, public health, taxes, transportation  
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Comments

Exactly. Why should we all pay for more roads by selling off a revenue producing asset, for a one-time cash infusion, when a gas tax increase would put the costs where they belong -- with the people who use those roads?

Another way of keeping taxes low, while still funding all of your pet projects -- auctioning off the people's assets. And the next administration is constrained because they have less revenue to play with, so they look for more stuff to sell.

Posted by: TheBoreaucrat | November 5, 2010 2:07 PM | Report abuse

Keep the ABC store system, not just for the impressive reliable ongoing state revenue, but also for its effect at reducing the damage and resulting public cost of alcohol abuse.

Could a higher gas tax be utilized for price signals to improve air quality? Higher tax if fueling during the heat of a code red ozone day?

Posted by: anonymousid | November 5, 2010 2:55 PM | Report abuse

I concur with your original blog from 9/30/2010 that Governor McDonnell’s plan to privatize ABC stores is getting stranger. The strangers are the Association of Distributors and the Virginia Beer Wholesalers that both contributed to his inauguration, and then Anheuser-Busch’s $20,000 contribution to his inaugural soiree.

A referendum should be added on next year’s ballot for the public to vote whether to even sell the stores. The annual revenue lost from the sale can be returned with McDonnell’s proposed 2.5% optional tax on alcohol sold in bars and restaurants, and his proposal to increase the excise tax on distilled spirits by $5 per gallon. A compromise would be to decrease the optional tax to 1.5% to equal the cigarette tax, or, increase the cigarette tax to 2.5%.

The bicameral-legislature should also consider applying limitations on contributions by lobbyists to elected state officials after the general election.

Posted by: KBrion | November 5, 2010 9:57 PM | Report abuse

The things that we have learned about Bob McDonnell are that he is decent man, a politician who will jump at political opportunities, a guy who really believes what he says, and someone who is seriously misled by his handlers (all of whom are consultants for big box stores and the multi-billion liquor boys).

He says private stores will reduce prices to get those (so they say) DC/MD sales. Then he says, "oops, prices won't go down." For the record, that takes his shortfall from ~$45mm to ~$70mm. But since he says that ~$25mm "isn't a big deal", then multiples of that aren't either, I guess.

Then "Bobs for Jobs", who said his plan would generate those nuggets (no health plan, no pension, hourly jobs), says grocery stores will just make more shelf space available, so what's the big deal. Well the big deal is that he thereby said that there are no jobs from his plan. Really, a reduction. Wow.

His plan had a little tax increase in it - a 4% pay at the bar tax (kinda like a "user fee" that he thinks is so bad about a gas tax). Oops, that's gone after his own people skewer him. Wow, again.

1,000 stores won't result in more consumption, he says. So 330 stores where we get 100% of the profit get replaced by 1,000 stores where at best you get 5% of the profit (actually half that) magically is better. Well, he went to law school instead of getting an MBA, so you figure that one out. You don't need a calculator - you can do it on a napkin. Wow X3.

So now it's the referendum. Let me promise you this: The House R's will kill that asap. Most of them are from rural, religious right, socially conservative Virginia. If this junk is on the ballot the D's will hurry to find good candidates to run against them and have the best fiscal, social and religious conservative arguments on their side. They'll take that any day.

Go for it, Bob!

And after you're chopped meat, your advisers will got back to their previous employ, maybe getting bonuses for trying.

Are Jobs his priority? Doesn't seem so.

Posted by: aclearview | November 9, 2010 1:52 AM | Report abuse

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