NC governor wants more info on liquor privatizing

By GARY D. ROBERTSON

RALEIGH, N.C.

The state Alcoholic Beverage Control Commission has hired an outside group to conduct a financial appraisal of North Carolina's liquor system, Gov. Beverly Perdue said Monday in the strongest sign yet she's giving serious consideration to privatization.

The commission agreed late Friday to pay up to $175,000 to a Chicago-based firm to calculate the state-owned wholesale distribution system and hundreds of local ABC retail stores -- much like appraising a house before it's sold.

Valuation Research Corp. also will estimate how much North Carolina could generate if the wholesale and retail functions were sold to a single or multiple vendors for up to 10 years, according to the contract with the state ABC commission. Vendors could possibly own their own ABC stores, purchase current government-run stores or establish agency stores.

Perdue said she directed commission Chairman Jon Williams to enter the contract "in an effort to inform me about the complexities, the advantages and disadvantages of changing any part of North Carolina's current system of alcohol control."

The information will arrive by the end of April, as lawmakers studying alcohol issues make recommendations for the Legislature's session starting in May. An ABC study committee holds its first meeting next week. Perdue suggested that she had made no decisions.

"Important decisions that may fundamentally change how the state allows distribution and sales of spirits to citizens cannot be made in the absence of information about the costs and possible benefits of privatizing part or all of the system," Perdue wrote to legislators.

Interest in privatizing some or all of the current monopoly system has grown recently as local boards have been scrutinized following news the Wilmington-area board administrator made more than $250,000 annually and a liquor company treated Mecklenburg County board officials in November to a fancy dinner where the tab reached $12,700.

With Perdue's blessing, the state ABC commission this year already has pushed local ABC boards toward stronger ethics policies and closed a gift ban exemption.

North Carolina is among 18 "control" states where government directly controls wholesale and retail liquor distribution, but it's the only one where local ABC boards sell spirits and are essentially independent from state government. Other control states are evaluating privatization, such as Virginia and in Washington, where an audit found it could increase revenue by up to $277 million over five years by changing its current system.

Lawmakers and Perdue also would have to persuade supporters of the nearly 75-year-old ABC system, who argue it's worked well by generating $259 million for state and local governments last year while at the same time keeping liquor consumption low compared to other states.

Any recommendations also would be made based on examining the "human costs" of a privatized system, Perdue wrote, such as whether a private system could lead to more liquor consumption.

The Legislature would have to approve any changes, and leaders already sound interested in giving the state more control over the local boards should they keep selling liquor to ensure their profitability and ethical behavior. But lawmakers on the ABC study committee interviewed suggested any massive overhaul on what's considered a patchwork system likely couldn't be completed until 2011.

"It would need to be a slow, careful process. We would need some time to ensure that this was done correctly," said Rep. Ray Warren, D-Alexander, a committee co-chairman. "I think there is widespread support for increased oversight or reform."

Perdue said if she leans toward privatization, she would present a detailed plan that would keep tight reins on licensees while license fees would fund "critical long-term investments in our people and our state -- not to fill current or near-term budget shortfalls."

The state must have more direct control of local ABC boards should the current retail system remain, Perdue wrote.