- Associated Press - Monday, October 4, 2010

RICHMOND, Va. | A government reform commission on Monday endorsed a $500 million plan to sell Virginia’s 76-year-old liquor monopoly, leaving Gov. Bob McDonnell with a tougher sales job ahead: the General Assembly.

McDonnell said he’ll talk to legislative leaders before deciding whether to call a special session this year or wait until 2011 to build a consensus.

“The bottom line is this: I have planned all along to have the special session on all of the government reform initiatives,” McDonnell said after the vote by the Government Reform and Restructuring Commission.

“At the same time, I’ve told people I’m not going to waste their money. We’re not going to have a failed session,” he added.

McDonnell didn’t have to count votes on Monday, as only three of about 25 members of his commission voted against a privatization plan.

Under the administration’s plan, the state would realize nearly $500 million from selling Virginia’s state-owned liquor stores. The money would be invested in a “Transportation Infrastructure Bank” to make loans and grants for projects designed to ease traffic congestion and spur economic development.

After the one-time bonanza, however, annual receipts from taxes on private-sector liquor sales will be at least $47 million short of the $260 million in tax receipts and sales profits that ABC stores are projected to generate.

Eric Finkbeiner, McDonnell’s top policy adviser on the issue, said the proposal would downsize state government and “get the state out of a business it never should have been in.”

Sen. Mary Margaret Whipple, D-Arlington, said she was fearful that private alcohol sales would result in more underage drinking.

“It’s an old-fashioned system but it’s our old-fashioned system,” Whipple said.

The other dissenting commission members were Sen. Louise Lucas, D-Portsmouth, and Del. Robert Brink, D-Arlington.

Finkbeiner said after the meeting that the plan commission members approved is a framework for future legislation.

“Those are all the key components, but there’s a lot of details that have to be worked out when it comes to an actual piece of legislation,” he said.

Asked if the $47 million decline in annual receipts will be a hurdle, he said, “Certainly that’s going to be an issue.” He added, though, “We believe we’re going to be able to do more than make up those dollars through other government reforms.”

Rob Shinn of the ABC Privatization Coalition, representing a group of large and smaller retailers supporting the sale, agreed the annual revenue estimate will be a tough sell in the legislature.

“I think we’re still in a place where there’s going to be some sorting of the details,” he said. “Usually where there’s a will, there’s a way.”

McDonnell, a Republican, acknowledged the proposal will take some selling to win over the General Assembly. Democrats control the Senate, while Republicans have the majority in the House of Delegates.

“We’re trying to undo a 76-year-old government monopoly with one bill, with one commission. I know that takes a little work for people to get their arms around,” he said.

“Governments are supposed to do a lot of things well,” McDonnell added. “Selling Grey Goose and Jack Daniels isn’t one of them, in my opinion.”

Other aspects of the ABC privatization plan:

— Licenses would be sold into perpetuity, but could be sold, transferred or leased.

— No single company could control more than 25 percent of its licenses within any of the three levels.

— While the 667 current state ABC jobs would be in jeopardy, private retailers would be given incentives to retain workers.

The reform panel also endorsed proposals to expand teleworking options for state workers; eliminate the Rail Advisory Board; and creation of a “first and only stop” website to get a business up and running.

The commission will submit its full slate of recommendations to the governor on Oct. 15.

 

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