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Breaking VA Law – A Differing Point of View

In these days of a catastrophic budget deficit, it behooves our legislators to review the operation of each state agency, commission and activity. We have an anachronism left over from the days of Prohibition and the WCTU – the Virginia Alcoholic Beverage Commission. The ABC Store is the local face for this commission.

For years, the ABC was a cost to the taxpayer and not only a cost but a convenient source of political patronage jobs. It has come to light that the ABC has now become a source of revenue. In short, it is a state-sponsored retail sales operation that is making a profit. While the ABC enjoys a monopoly by legislative fiat on the sale of hard liquor, it performs a function that can and should be performed by private enterprise.

There is a Virginia statute that requires a review of each function or action taken by the state government to be evaluated as to whether that action or activity can be more efficiently performed by private enterprise. This writer argues that the intent of the law is to preclude the state government from getting into and competing with the private sector. Here, we have a state agency doing just that. It should be a no-brainer that the continuance of the ABC is a violation of state law. It’s socialism, pure and simple.

The rationale for continuing the ABC operation is now based on its contribution to the state coffers. The markup from the wholesale distributors has yet to be disclosed. That markup pays for the leasing/rental of facilities, as well as paying for a large bureaucracy busily running a retail operation. The state sales tax of five percent is collected. In these times of budget deficits, the Kaine administration is looking for any contribution to lessen the $3 billion plus deficit. That issue can be addressed by the imposition of a state sales tax to make up for the loss of revenue. One might describe it as a sin tax, akin to the tax on cigarettes tax. Private enterprise can easily calculate a liquor tax within their point of sale systems and would do so in a heartbeat to gain the additional revenue and provide an additional service.

One must wonder how many persons are employed by the ABC and what liability these employees impose on the state retirement system. Here again, another, very successful, private enterprise technique can be used – a buyout to satisfy those obligations. It can be argued that many of the clerks in ABC outlets will be immediately employed by private enterprise given their experience in managing and selling retail alcoholic beverage operations.

Thus, on one hand the Governor and the General Assembly are maintaining a state agency competing with private enterprise while ignoring the very statues that they have imposed on the Commonwealth. Bottom line – while a strict interpretation of state law may hold that the operation is not a violation of law, it is morally corrupt for the governor and the General Assembly to allow this activity to continue to exist if for no other reason than to keep the state from competing with private enterprise. We need to protect and defend the state’s reputation for a business –friendly environment.

In times of catastrophic budget deficits, reviewing each and every state activity and measuring it against state core services is required. Let your local senator and delegate now sitting in the 2009 General Assembly session deliberating on the budget and facing a 10 plus percentage cut without imposing new taxes know how you view this conflicting state activity.

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