Senate Democrats and others want to ensure that the more than $200 million per year the ABC stores return to the state in profits are replaced. Liquor taxes alone won’t do that.
The sentiment is captured in this Roanoke Times editorial (and recall that the paper generally supports the idea of privatization):
So where will the money come from? McDonnell, who is ideologically opposed to tax increases, remains vague.
While the Governor’s ideological opposition to tax increases is open to debate, the answer to where the money will come from is right under their noses…or rather it would be, if they gave Virginia’s online budget transparency portal, Commonwealth Data Point, a quick look.
What can this handy site tell us about the ABC stores?
The Department of Alcoholic Beverage Control has a budget of $514 million. Through the third quarter of 2010, the Agency had spent more than $237 million on “supplies and materials.” Of that, $232 million was spent on alcoholic beverages….meaning the commonwealth, in the interest of restocking the shelves at its ABC stores, was cutting checks to distilleries, wineries and importers across the country (Virginia has a thirst for rum, if the $1.7 million check cut to Bacardi is any indication).
If Virginia leaves the liquor business, and only collects taxes on beverage sales, it will no longer be issuing such payments out of monies appropriated by the General Assembly. Looking over the VABC’s 2009 annual report, we find millions in other savings…like the more than $80 million spent on “store expenses” and the more than $41 million spent on “general & administrative expenses.”
Those are yearly costs…costs that would not be incurred if the state left the liquor business and savings that could either be applied elsewhere in the budget or returned to taxpayers. Combine these yearly savings with the taxes already in place and the commonwealth comes out just fine…though it will lose its ability to raise prices on spirits to close budget shortfalls (as it did in the last legislative session, when the General Assembly raised the mark-up on liquor by two percent, the 12th such increase since 1979).
The question “where will the money come from?” is entirely misplaced.
The money is there, waiting to be saved. All that’s needed is the political will to grab it.
