At a Simplifications and Operation meeting held on September 8, senior members of Governor Bob McDonnell’s staff revealed plans for ABC Privatization. $500 million in new funding for transportation is expected from the privatization of liquor sales. The Committee will vote on staff recommendations the week of September 27. The Commission will consider the proposal on October 4 before heading to the General Assembly for a special session after the November elections.
Highlights of the Current Privatization Plan:
- Privatization is expected to provide $500 million in new funding for transportation
- The money realized from privatization will be placed in a Virginia Transportation Infrastructure Bank
- This Bank will loan and grant funds to localities for transportation projects based on congestion relief and economic development
- 1,000 retail licenses will be auctioned off to the highest bidders
- The licenses will be broken into three categories: 600 licenses for large establishments such as grocery stores; 150 for smaller establishments such as package stores and wine and beer shops; 250 for convenience stores/retail pharmacies
- No one company will be allowed more than 25% of licenses within each level
- 1,000 licenses will still give Virginia 1.8 outlets per 10,000 adults, far below the private state average of 3.8 per 10,000 adults
- Majority of new license holders will be existing stores; Virginians will primarily see new shelves in retail establishments, not new establishments.
- 332 licenses will be guaranteed for areas currently served by an existing ABC outlet
- The additional 668 licenses will be granted based on population density
- The wholesale side will also be privatized, allowing the Commonwealth to completely focus on law enforcement and regulation of distilled spirits
- The FY 2011 budget projects $324.2 million to the General Fund from the sale of alcohol in the Commonwealth
- The staff privatization proposal keeps ongoing revenue to the state equivalent to this figure
- There is no tax increase in the privatization proposal
- The Commonwealth will also make an additional $33 million on the sale of the ABC warehouse in Richmond and 19 state owned outlets
- The number of ABC enforcement agents will be increased by 25%
- The Commonwealth, through the ABC board, will maintain health, safety, law enforcement and marketing regulatory authority over private distilled spirit sales and distribution
Virginia currently purchases liquor from manufacturers and then adds a government markup, a handling fee and a state excise tax before bottles reach store shelves. Under the proposed privatization plan, the state wouldn't be able to charge the markup or excise tax, though taxes on beer and wine would be unaltered.
Click on the links below to review presentations from the September 8, 2010 Simplification and Operations Committee Meeting.