By Rep. Craig Ford
It doesn’t claim to be a $250 million tax increase, but that’s exactly what would happen if the State Legislature passes a proposed bill to privatize the state’s ABC stores.
Though it may seem like a reasonable, pro-private sector bill that would decrease government bureaucracy and expenses, in reality this bill would hurt small businesses, cost the taxpayers $250 million (or more) a year and worsen the “wild west” situation we already have with private liquor stores.
Simply put, this bill is a “wolf in sheep’s clothing” that has managed to draw opposition even from ALCAP (the Southern Baptist organization that identifies itself as “Alabama’s Moral Compass”), who fear it would lead to more liquor sales and alcoholism.
Even if it doesn’t lead to more liquor sales, this legislation repeals Alabama’s liquor laws, which will only worsen the “wild west” system we already have, and make it more difficult to track sales and tax collections, as well as allowing direct shipments of spirits.
We already have a serious problem in this State with private retailers not paying taxes, which is why the legislature is taking on other legislation this year to better track retailers. But with the ABC stores, we know what their sales are and that all of their “profits” are going directly to the State’s General Fund Budget.
Privatizing our ABC stores will only result in more tax fraud and tax evasion, and more sales to underage people, since you don’t have to prove your age for a direct shipment or if the store simply doesn’t report that it sold liquor to an underage person.
Moral and public safety arguments aside, this bill is a bad deal for the taxpayers and small businesses.
Supporters of this bill are making several assumptions that are not exactly safe bets. The first is that the closed ABC stores will be replaced by private stores that will fill the void and hire former ABC employees.
In reality, what will happen is that the “Big Box” stores and chains, such as Walmart, Costco, Sam’s, Dollar General, most grocery stores, and everyone else who sells beer or wine, will now get into the liquor business. When that happens, those small mom and pop liquor stores will have far more competition, and many will go out of business.
This also means that the profits these big box stores and chains make will be going out-of-state instead of coming back into the State’s General Fund Budget.
And don’t count on those jobs coming back, either. Since the state of Washington privatized their public liquor stores in 2011, half of their former employees are still unemployed. But even if every single employee is able to find another job, there’s no guarantee that their new jobs will pay anything above minimum wage or include any kind of benefits.
Now, you may be thinking, “Ok, so some people may lose their jobs or take a big pay cut. And maybe a lot of the mom and pop liquor stores will go out of business when Walmart starts selling the same liquor for a better price. But at least it will save the taxpayers’ money to close down these ABC stores and not have to pay for all these employees and their benefits.”
The problem with that argument is that the taxpayers aren’t paying for these stores or the employees and their benefits. In fact, instead of taking money from the State, the ABC stores are making money for the State.
Last year, the ABC stores generated $250 million in revenue for the state – and that’s after paying their employees salaries and benefits, as well as paying all of their overhead costs.
If we privatize our ABC stores, the State of Alabama will lose $250 million out of our State budget, and I don’t know a single legislator who will tell you we can cut $250 million out of our budgets to make up for the lost revenue.
So while this bill might look like it’s saving the taxpayers money, it’s actually going to cost the taxpayers an additional $250 million a year (or more, if sales go up and private retailers continue failing to accurately pay their taxes).
If this bill passes, the only option will be to raise taxes by $250 million or more over the next five years to make up the difference.
Privatizing the ABC stores may sound like a good idea, but the end result would be more people out of a job, more private stores going out of business and more taxes on the working families of Alabama.
Rep. Craig Ford represents Gadsden and Etowah County in the Alabama House of Representatives. He served as the House Minority Leader from 2010-2016.