Mont­gomery is stay­ing in the booze busi­ness

The Washington Post Sunday - - LOCAL OPINIONS - GOR­DON BRENNE The writer is vice pres­i­dent of the Mont­gomery County Taxpayers League.

In a move that should be dis­ap­point­ing to taxpayers, Mont­gomery County is stay­ing in the liquor busi­ness.

The county coun­cil’s Ad Hoc Com­mit­tee on Liquor Con­trol will rec­om­mend that the county limit pri­va­ti­za­tion of al­co­hol sales to whole­sale dis­tri­bu­tion of spe­cialty beer and wine.

That was the fourth of five op­tions pro­vided in an Of­fice of Leg­isla­tive Over­sight re­port and just one step up from do­ing noth­ing. Ac­cord­ing to the of­fice’s es­ti­mates, full pri­va­ti­za­tion would be more than rev­enue neu­tral; it would gen­er­ate an ad­di­tional $8 mil­lion an­nu­ally for the gen­eral fund.

No one be­lieves the county’s mo­nop­oly will ever serve our res­i­dents as ef­fi­ciently and ef­fec­tively as pri­vate busi­nesses would. Chief Ad­min­is­tra­tive Of­fi­cer Ti­mothy L. Fires­tine cor­rectly noted that the county will con­tinue to com­pete with pri­vate beer and wine sellers (who pay taxes) and has high op­er­at­ing costs and low prof­its com­pared with other con­trol states, in­clud­ing Vir­ginia and Penn­syl­va­nia, for which he of­fered no reme­dies.

Sev­eral years ago, I did an anal­y­sis of the Depart­ment of Liquor Con­trol’s bal­ance sheet and found high in­ven­tory costs. I re­ported my find­ings to County Ex­ec­u­tive Isiah Leggett’s (D) Re­form Com­mis­sion and the Depart­ment of Liquor Con­trol. Not much has changed.

I didn’t know then that these high in­ven­tory costs were in part be­cause of poor in­ven­tory con­trols that let driv­ers fraud­u­lently sell beer off the back of their trucks. That was dis­cov­ered just a month af­ter an in­ter­nal au­dit gave the Depart­ment of Liquor Con­trol a clean bill of health on its in­ter­nal con­trols. The Of­fice of Leg­isla­tive Over­sight re­port noted that li­censees have prob­lems with whole­sale oper­a­tions, prod­uct avail­abil­ity, high whole­sale prices and the con­trol struc­ture. The Ad­Hoc Com­mit­tee on Liquor Con­trol’s pro­posed so­lu­tion only par­tially ad­dresses these is­sues.

Fur­ther, as long as the county stays in the booze busi­ness, its reg­u­la­tion and en­force­ment of liquor laws will be seen as a con­flict of in­ter­est by li­censees and the public.

Taxpayers have another beef: We’ve been bankrolling this en­ter­prise’s above-av­er­age salaries and ben­e­fits. In re­turn, we get sub­stan­dard prof­its, ac­cord­ing to Fires­tine ($21 mil­lion last year).

Even that’s a stretch. The prof­its seem to be over­stated be­cause some costs are not in­cluded.

The Of­fice of Leg­isla­tive Over­sight es­ti­mates that pri­va­ti­za­tion would yield one-time pro­ceeds of $66 mil­lion to $76 mil­lion. That’s enough to avoid bust­ing the char­ter limit on prop­erty tax in­creases next year.

For­give the cliche, but this has to be the last drink that’s on the taxpayers’ house.

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