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McDonnell says sale of liquor stores will provide 'windfall' for state

Anita Kumar

Gov. Bob McDonnell said Tuesday that he is pushing to privatize the state's 332 liquor stores because it can provide a "windfall" for Virginia's transportation needs.

"I want to ask for public support on that because ... licensing the stores will generate a lot of money that I can put right upfront into transportation maintenance,'' McDonnell said on his monthly call-in radio show on WTOP this morning.

McDonnell (R) is considering four ways to privatize the stores: selling all of the state's alcohol assets to a single company; having firms take over the state's existing stores; offering licenses to the businesses that sell beer and wine; and auctioning an undetermined number of licenses to the highest bidder.

The governor said today that the proposal could bring in $300 million to $500 million (though he and his staff have previously mentioned higher estimates) while continuing to bring in as much as $220 million a year which the state collects in taxes and profit.

"If we can create the windfall for transportation and have an equivalent amount of money coming into the general fund and still have all the same regulatory aspects from the state and make sure we don't have crime and other things related to alcohol, it should be a win-win for the citizens and that's why we're pushing it," he said.

McDonnell said the proceeds from the auction sale of ABC licenses will go entirely for road maintenance.

"One of the reasons we don't have enough money for construction is we're robbing the transportation trust fund, which is the construction money, and putting it into road maintenance,'' he said.

McDonnell's government reform commission is likely to approve one of the proposals at its next meeting Aug. 26, after which McDonnell expects to call legislators back to Richmond for a special session on privatization and other cost-cutting issues.

"I don't think selling alcohol is a core function of government -- neither do most people,'' he said. "I don't think it's a core function of government to do it and I think the private sector can run the stores more efficiently. There are free market incentives to do it."

McDonnell also said he will present the General Assembly with a set of other proposals for transportation during the next regular meeting in January that will include bonds and public-private partnerships.

By Anita Kumar  |  July 27, 2010; 12:35 PM ET
Categories:  Anita Kumar , Robert F. McDonnell  
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Comments

While I do not oppose the privatizing of the liquor stores, I would like to see the governor's math. Liquor in Virginia stores is not cheap at present, so the state reaps the profits. If the state sells the stores, that is a one-time gain. Unless it is expected that Virginians are going to drink more after privatization, where are the increased revenues going to come from. Seems like some smoke and mirrors.

Posted by: tradeczar | July 27, 2010 2:14 PM | Report abuse

I'm opposed to advertising in liquor stores. I've seen Maryland and DC liquor stores that permit in-store displays and window displays and it just looks down-scale and terrible.

Posted by: blasmaic | July 27, 2010 3:37 PM | Report abuse

I second a check on the governor's math.

How exactly is killing the cow going to better than the annual milk production?

Posted by: Anglo_Rider | July 27, 2010 5:00 PM | Report abuse

In California, one can get liquor at Costco, Ralphs's (i.e. Safeway), Trader Joes...its really not a big deal. If VA wants to generate longstanding revenue, just tax liquor sales.

Posted by: 123cartoon | July 27, 2010 5:01 PM | Report abuse

While I do not oppose the privatizing of the liquor stores, I would like to see the governor's math. Liquor in Virginia stores is not cheap at present, so the state reaps the profits. If the state sells the stores, that is a one-time gain. Unless it is expected that Virginians are going to drink more after privatization, where are the increased revenues going to come from. Seems like some smoke and mirrors.

Posted by: tradeczar | July 27, 2010 2:14 PM
========================
The MOST profitable arm is the distribution system (where do restaurants have 2 get their liquor & beer from?). The other biggest gain is from the reduced expenses (payroll,income taxes, ss taxes,health care, etc) the state spends. Likewise, the new stores will have everything in one spot instead of having to go to 2-4 stores to find what you need.

West Virginia has seen a windfall in the hundreds of millions of dollars annually as well as Iowa which are the last two states to privatize.

Posted by: LeeHinAlexandria | July 27, 2010 5:44 PM | Report abuse

McDonnell's plan will benefit consumers in Northern Va., as well as state revenues.

The current ABC monopoly and high liquor prices simply drive N.Va. consumers to shop at private liquor stores in DC.

If Va. allows private liquor stores, that will mean more competition, less diversion of sales to DC, and more tax revenue for Va.

Va. currently allows beer and wine sales in private stores, and that works just fine. Why should liquor be treated differently?

Posted by: jrmil | July 28, 2010 8:16 AM | Report abuse

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