MONTGOMERY, Ala. — As a result of the General Fund budget cuts passed this year by the Alabama Legislature, the state’s Alcoholic Beverage Control Board (ABC) announced it would close 15 state-run liquor stores.
Of those closing 10 were profitable in 2014, while 24 other ABC store locations remaining open across the state were in the red.
Some of the liquor stores losing taxpayer money every year are only a few hundred dollars in the red, while others are tens of thousands of dollars away from being profitable.
ABC Board director Mac Gipson told the Montgomery Advertiser that it’s difficult for the state to close the rural stores that aren’t making money. “They’re losing more money,” said Gipson, “but (closings) make the customer constituents have to drive further to get a bottle.”
All told, the 29 unprofitable stores—which are a mix of rural and urban locations—lost $830,213.98 in FY 2014 according to state data obtained by Yellowhammer.
The ABC retail system as a whole turns a profit. Between a 30 percent markup and some of the nation’s largest excise taxes, the ABC contributed $15.9 million in 2014 on sales of over $400 million to the annual budget in FY2014.
Troy University economist Dr. Daniel Smith, however, says the state would profit even more if they got out of the retail business all together.
“Not only would shedding rental costs for more than 170 ABC stores and personnel costs for more than 600 state employees save the state money, the revenue generated by liquor stores could readily be generated from taxes collected by private liquor stores,” wrote Smith in a recent op-ed for Yellowhammer.
“If Alabama’s government is genuine about cutting operating costs, leaving liquor sales to the private sector — often, small, locally owned shops — is a great place to start,” said Smith. “Not only would this move get government out of the business of hawking liquor in low-income areas — a business it shouldn’t be doing in the first place — it would save the state millions in operating costs including rents, wages, and pension contributions.”
Dr. Smith, among others, have contrasted the state’s decision to keep open non-profitable ABC stores with the decision to close for 29 days a month Drivers’ License locations.
“In the face of ongoing budget concerns, the state of Alabama released a list of 31 driver’s license offices it plans to close in an effort to cut government spending,” Smith wrote. “Of those 31 cities losing a driver’s license office, 21 of them — 68% — currently have an ABC liquor store, operated by the state. How is it that our elected officials decided that their role in selling liquor is more important than making sure people have access to a driver’s license?”
The stores will remain open through the Holiday season, which is historically when sales are highest. The 15 stores are slated to be closed January 1st.
Why are we closing ABC stores that are profitable, and keeping open many that aren’t? https://t.co/bSoymEzyCx
— Elizabeth BeShears (@LizTBeShears) October 27, 2015
