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Initial vote on McDonnell's ABC privatization proposal delayed

Anita Kumar

Gov. Bob McDonnell's proposal to privatize the state's liquor system had been expected to face its first vote Wednesday afternoon, but the vote was postponed late Tuesday.

A committee of McDonnell's government reform commission will meet at 1 p.m. to receive the proposal, but chairman Del. G. Glenn Oder (R-Newport News) delayed the vote because members did not receive details about the plan far enough in advance of the meeting. Oder did not return a call seeking comment.

"It's a very sensible thing,'' said Sen. Mary Margaret Whipple (D-Arlington), a member of the committee who had said last week it would be "virtually impossible" to vote for the proposal if she did not receive details before the meeting.

Richmond lawyer Howard Estes, who also serves on the committee, said he would have been surprised if the panel had been forced to vote on the proposal. He said the committee typically discusses proposals before voting on them.

As we reported Wednesday morning, McDonnell (R) will unveil a proposal to impose a 4 percent tax on restaurants and bars as he tries to make up the $260 million the state could lose if its liquor system is privatized, according to several sources familiar with the plan. Included in the 4 percent is a 2.5 percent tax imposed solely on restaurants' annual liquor receipts and a 1.5 percent tax imposed on restaurants and all stores that sell alcohol, including grocery stores. Together, they would bring in about $40 million.

UPDATE 1:17 p.m.: Presentations from the governor's office indicate his proposal includes a 2.5 percent tax on restaurant receipts imposed on eateries that choose to get liquor discounts by buying their stock from wholesalers. Though multiple sources, including state Sen. Mary Margaret Whipple (D-Arlington) said they were briefed late yesterday on an additional 1.5 percent fee to be imposed both on restaurants and retail establishments, the fee appears to have dropped out of the governor's proposal and is not reflected in the presentation documents.

McDonnell's proposal also includes other fees, including a $17.50-per-gallon excise tax and a 1 percent tax on gross receipts, both charged to wholesalers.

The governor is expected to announce that he wants to auction 1,000 licenses to the highest bidders. Licenses would be divided into three categories: big-box stores, such as grocery stores and Wal-Mart (600 licenses), package stores (150 licenses) and convenience stores or drug stores (250 licenses).

Minimum bids for retail stores would be based on profits that ABC stores are earning in localities by each tier. A company would be limited to holding 25 percent of the licenses in any one tier. Some licenses would be set aside for small, women- or minority-owned businesses.

The nine members of the Government Simplification and Operations Committee were briefed by phone late Tuesday by Eric Finkbeiner, McDonnell's senior policy adviser, but received nothing in writing despite assurances they would, according to several members of the committee.

Wednesday afternoon's meeting is expected to include various presentations, including those from Finkbeiner, planning and budget officials on how the fees and taxes would work; ABC officials and Sean Connaughton, secretary of transportation, on how the upfront money would be spent.

The committee is expected to meet again the week of Sept. 27 for a vote. The full government reform commission will vote on the proposal Oct. 4.

McDonnell plans to call legislators back for a special session this year to address privatization of liquor stores and other government reform measures.

He told lawmakers to prepare for a special legislative session on government reform between the Nov. 2 Election and Thanksgiving, which is Nov. 25.

By Anita Kumar  |  September 8, 2010; 9:15 AM ET
Categories:  Anita Kumar , General Assembly 2010 , House of Delegates , Liquor privatization , Robert F. McDonnell , State Senate , Transportation  
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