Alcoholic beverage control; privatization of ABC stores. (SB443)

Introduced By

Sen. Mark Obenshain (R-Harrisonburg)


Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law


Alcoholic beverage control; privatization of ABC stores.  Provides for the auction of "package store" licenses to authorize the retail sale of alcoholic beverages for off-premises consumption. The bill also requires the ABC Board to sell or transfer all interest in real property utilized in the wholesale and retail sale of alcoholic beverages. The bill requires the ABC Board to set a fixed number of licenses for all localities, which shall be at a minimum one license for each locality of the Commonwealth and shall not exceed one license per 10,000 residents of the locality. The initial issuance of licenses by the Board would be through regional auctions beginning July 1, 2011, which may also be conducted through the Department's publicly accessible website. The annual state license tax on package store licenses would be the initial purchase price at auction plus an annual inflation adjustment based on the Consumer Price Index. The tax levied on spirits sold in package stores would be 25 percent of the price charged. This bill contains numerous technical amendments. Read the Bill »


Bill Has Failed


01/13/2010Prefiled and ordered printed; offered 01/13/10 10100625D
01/13/2010Referred to Committee on Rehabilitation and Social Services
01/22/2010Rereferred from Rehabilitation and Social Services (15-Y 0-N) (see vote tally)
01/22/2010Rereferred to Finance
02/16/2010Left in Finance


John Reeves writes:

Must ensure that all Pros & Cons are summarized and considered here, beyond the ideology &/or "Jim Gilmore" tactics. About $200 million /yr. of ABC revenues are refunded to all the counties/ cities of Va. Can every locality be *sure they will continue to receive at least these amounts, or will it mess-up like the Jim Gilmore car-tax repeal? Our research so far finds very *few counties or cities that are in favor of this initiative. It's comparable to "Jack And The Beanstalk"- where Jack's mom instructs him to sell their last milk cow, but he gets only 5 "mystery" beans. In this ABC case, any "mystery" beans might include unreliable amounts per year of fees into the Treasury, how the G.A. might allocate these fees each year and how much "gas" is given each locality over lost revenue that now the locality *must raise. As anyone talked to localities about recent unfunded mandates from the State and Feds?

Waldo Jaquith writes:

That's really interesting, John—I didn't know that any of the money from ABC revenues were refunded to localities. I favor Obenshain's bill, or at least I did until you mentioned that.

Perhaps the solution here is to goose that 1% of the sales tax that is refunded locally in the case of alcohol sales? Whatever the percentage is that would allow this to be revenue-neutral.

Lloyd Snook writes:

I have other concerns about this bill. To start, the license fee will not increase if sales increase. The fee will be set in the summer of 2011, and will increase thereafter only for the cost of living. In most states that do licensing, the licensees compete at an auction for a, say, 10-year license. The cost is then re-figured when it is resold every 10 years. But under this statute, once the amount is set by auction in the summer of 2011, that's it -- the licensee has a vested interest that cannot be changed by a subsequent statute if the state decides that it is getting screwed. Or suppose we decide that the economy in 2011 is still not great, and that the price being paid in 2011 is significantly less than what it would likely be in 2012, or 2013? Tough noogies.

The ABC gives a net of about $103 million (in 2007) to the state general fund, but that is something of a misnomer because the money is the source for paying for programs like ASAP (alcohol treatment for DUI'ers). The money is not available for filling potholes, as Bob McDonnell implied during the campaign.

I am perfectly comfortable with the notion that we might sell the ABC stores -- I don't have a philosophical attachment to having them be state-run. But if it is going to be a purely economic matter rather than a moral matter, let's make sure that the state maximizes its income.

robert legge writes:

I don't know about other counties, but the county where I live (Madison) gets back about $7k from ABC. Hardly enough to pay for the extra public safety costs due to alcohol-fueled fights.

Mechtelde Glick writes:

We should have MORE control over alcohol use, not less. I couldn't believe Obenshain, moral arbiter, would agree to a bill like this. Find something else to privatize, like school lunches.

John Reeves writes:

Some updates to my comments 27 days ago.
1)Should review the 2009 Annual Report from Va. ABC- their 75th year.
This report and their web site had useful info, especially on history and the professional way they are running things. 2)For fiscal year 2009, the Va. ABC made and gave to Va. government a total of $322.3 Million; with $111.8 Million being profit transfers, after all expenses paid.
The Va. ABC has contributed over $1.5 Billion to the Commonwealth in the last 5 years!
3)In 2008, the General Assembly changed the law and *stopped the ABC payments to localities; thus hampering local law enforcement w/alcohol cases.
4)Today, Sen. Obenshain announced *withdrawal of privatization bill and probable kill this year.
5)If any prudent manager thought it a good deal (economically)for Va. to soon sell these licenses off--for now & ever--during poor economic times, without adequate plans for reaping at least $112 Million/year for Va. (with a ~CPI growth rate), then we've got some swamp land to sell you too.
6)Again, we have not found any local government body that's in favor--please help if you know?
7)Of course, there's lots of other Cons that should be detailed and studied well, especially by the localities, professionals, pastors and law enforcement people who see alcohol disasters, deaths, heart-ache and addicitons daily.