McDonnell stalls with ABC privatization

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October 29, 2010

12:11 AM

After months of campaigning, Virginia Gov. Bob McDonnell has conceded to political opposition to his plans to privatize Virginia’s government-owned liquor stores. Originally set to debate the issue at a November special session meeting, McDonnell has pushed back discussions for privatization until the regular session begins in January.

“We will privatize Virginia’s ABC stores,” McDonnell said in a press release issued last week. “The only question is one of timing.”

The change in plans is the result of a lack of General Assembly votes needed to pass the proposal. Moving deliberations to January gives McDonnell three additional months in which to gain support.

A special session meeting at this point would be a waste of taxpayer dollars, McDonnell said.

“As governor, I will not call a Special Session to debate; only to act,” he said. “Several recent Special Sessions ended without any positive action taken.”

McDonnell’s plan proposes to replace the pre-existing 332 government-owned ABC stores with 1,000 private retailers, effectively ending Virginia’s 76-year monopoly on liquor sales. If passed, Virginians would be able to purchase spirits from convenience stores, supermarkets and large retailers like Wal-Mart.

Such practices, unknown in Virginia since Prohibition, are allowed in most of the country.

“Thirty-two states rightly leave this function to the private sector,” he said. “Virginia is one of a minority of states that still retains a monopoly on the sale of this legal, commercial product.”

Retailers would be divided into three tiers based on store size and shelf space. Licenses would be auctioned off to retailers and raise an estimated one-time sum of $458 million, which would be used to cover state transportation costs without raising taxes.

Privatization has been one of McDonnell’s goals for months since he promised to tackle the issue on the campaign trail last fall.

McDonnell has received support from various transportation and retail coalitions, including the Retail Merchants Association and the Fraternal Order of Police.
However, critics of the plan point out that the proposal would result in the loss of $47 million per year in state funds used for services such as the police force and public schooling. McDonnell has said that the proposal is still open to suggestions.
“My sole goal is to eliminate an outdated government monopoly and to raise money for transportation,” he said. “All other details are flexible, as long as the plan makes business sense and is a good up for the loss in profits, McDonnell has promised to use dozens of proposals to cut back government spending, including altering the hours of government employees, eliminating the Rail Advisory Board and changing the manner through which transportation departments send mail.
“There are numerous other government reforms we are advocating simultaneously with ABC privatization and those reforms will make up much more than the $47 million,” McDonnell told the Washington Post earlier this month. “We will make up $47 million plus some.”
McDonnell’s plan has undergone some significant changes since its introduction in early September. The most notable change removed controversial wholesale and restaurant fees, which had prevented many conservatives from backing the proposition.
The General Assembly, which meets once a year, will reconvene in Richmond Jan. 12.

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