A report from the Virginia General Assembly’s investigative arm says Gov. Bob McDonnell may have overestimated how much money the state could make by privatizing its state-run liquor stores.
At the request of Sen. Ed Houck, D-Spotsylvania, the Joint Legislative Audit and Review Commission reviewed the proposal approved by the governor’s reform commission in September that estimated a one-time windfall of $458 million from closing the 332 state-run liquor stores and auctioning off about 1,000 retail licenses.
If all the licenses aren’t sold and if bids are accepted below a pre-set minimum, for example, revenue could end up lower than projected, the report said.
The report acknowledges that tweaks to the plan are being considered; a private consulting firm has been hired to help weigh alternatives to privatizing both retail and wholesale liquor sales.
“According to the Governor’s office, significantly different proposals are now being considered,” the report reads.
The report also notes that under the administration’s assumptions of a 20 percent markup at the wholesale level and a 25 percent markup at the retail level, prices could increase by 26 percent, reducing consumer demand.
