Local problems improve chances for NC liquor system changes, but ending ‘control’ unlikely

Big meals, salaries boost NC liquor reform chances

RALEIGH, N.C. — Crab cakes, creme brulee and Crown Royal combined with charges of cronyism are carrying the critics of North Carolina’s nearly 75-year-old liquor sales system when a 75-page legislative report alone did not.

News that a liquor company picked up the tab for a $12,700 dinner attended by Mecklenburg County Alcoholic Beverage Control leaders and that the New Hanover County father-and-son store administrators get paid more than $400,000 combined has reinvigorated calls for ABC reform.

Many ideas now being tossed around originate from a 2008 study by the Legislature’s agency watchdog office. Gov. Beverly Perdue also has ordered a review of local store administrator salaries, and her budget reform commission is slated to look at the ABC system when it meets later this week.

“The ABC system has been a target for change — and nothing is off the table,” Perdue spokeswoman Chrissy Pearson said.

Legislators in both parties also have called for closer scrutiny — some tougher than others.

“There’s a lack of accountability and there’s no oversight,” said Rep. Danny McComas, R-New Hanover, who suggests that local governments should stop running stores in favor of private retailers.

That deep an overhaul remains unlikely now. Liquor regulations remain a passionate issue for some constituents and policies perceived as encouraging alcohol sales generate voter opposition for incumbents.

With North Carolina ranking sixth among the states for generating liquor revenue and 48th for per capita liquor consumption, supporters of the current “control” system in place since the 1930s say it’s hard to justify dramatic change.

“North Carolina’s control system has really served the state well for three-quarters of a century,” said the Rev. Mark Creech with the Christian Action League of North Carolina.

The likely path to reform would be lawmakers returning in the spring to approve tougher operational rules for local stores and other restrictions to reduce the chances situations like Mecklenburg and New Hanover County happen again.

“There’s just a lot of things going on with the local systems that need to be tightened up,” said Norris Tolson, a former lawmaker and now co-chairman of Perdue’s budget reform panel.

North Carolina is one of 18 states that directly control wholesale and retail liquor distribution, but it’s the only one where local ABC boards sell spirits, as long as voters in a city or county agree in a referendum to allow liquor sales.

More than 160 local ABC boards — its members appointed by local government leaders — operate over 400 stores, hire and fire workers and set salaries. Liquor outlets generated $259 million for state and local governments last year, according to state ABC Commission data.

The report by the Legislature’s Program Evaluation Division suggested the state ABC Commission needs more oversight over local stores.

State ABC laws don’t give the state commission the ability to set performance standards for local stores nor require poorly performing stores to close or merge with other ABC boards. The report also said the system is outdated but gave no opinion whether systems in other states were better.

Like many legislative reports, the recommendations generated bills but failed to generate big changes in 2009. And while Perdue had expressed interest in ABC reform months ago, there’s nothing like negative publicity to build momentum.

Employees of the Mecklenburg County ABC Board last month reimbursed Diageo North America more than $9,300 for their portion of a November dinner put on by the liquor distiller for ABC employees and guests.

They ate lobster, crab cakes and steak and the alcohol bill included Crown Royal and Dom Perignon, according to a report by state alcohol agents, who cited Diageo and the board for violating gift ban rules.

Last week, New Hanover County ABC board members resigned as scrutiny increased about their approval of a $232,200 salary for the local administrator and a $115,500 salary for his son as assistant administrator. Add bonuses and longevity pay and their combined compensation exceeds $400,000.

Former Charlotte Mayor Pat McCrory, who lost to Perdue for governor in 2008, said the meals and salaries show there’s favoritism in the ABC system and the state should license private retailers to sell liquor, like what’s done for beer and wine.

“The government should be hiring teachers, not store clerks that sell booze,” McCrory said.

Rep. Pryor Gibson, D-Anson, a House ABC committee leader, said the ABC system should be scrutinized, but the overwhelming majority of boards do a great job generating revenue while selling liquor responsibly.

“If somebody wants to make changes because people are just spending too much money in New Hanover … that’s no indictment of the (statewide) ABC system,” Gibson said.

State ABC Commission Chairman Jon Williams is wary about endorsing changes to place more authority on the state’s three-member panel without seeing details. Local boards already are under the charge of county commissions and town councils, he said.

Williams said he’s concerned that the increase in operating expenses has outpaced profits for stores statewide.

“It’s a good time to take a good look at this system as a whole,” he said.