States consider getting out of the liquor business

Some lawmakers here want to sell the distribution center - bringing the state a one-time boost of about $33 million - and let the private sector step in to sell liquor, which some say will reap long-term cost benefits.

“To me this isn’t a core function of government,’’ said Senator Rodney Tom, a Medina Democrat who is a chief budget writer for the Senate. “It’s a retail operation. Private companies can do it as good or better.’’

Tom has introduced a bill that would have Washington get completely out of the liquor business, allowing an unlimited number of people to buy licenses to sell liquor, as is done in California. Other lawmakers have introduced measures taking smaller steps toward privatization, including bills that would auction off franchise agreements for stores like Costco, or which would allow a limited number of smaller contract stores to sell booze.

“When states are struggling around revenue, the idea of privatization often rises,’’ said Steven Schmidt, spokesman for the National Alcohol Beverage Control Association, the Alexandria, Va. group that represents states directly involved in the sale of liquor. “This year we’re seeing more efforts to privatize than we have in the recent past.’’

In Virginia, which is facing a $2 billion shortfall this year, recently elected Republican Governor Bob McDonnell ran, in part, on a pledge to privatize liquor stores as a way to raise transportation money.

While privatization bills have been introduced by lawmakers in the current session that runs until March, McDonnell is working on putting together a commission on government reform and restructuring that will look at liquor privatization. His staff said that while McDonnell isn’t opposed to the current bills, the issue is most likely to come up later this year, possibly in a special session.

“Liquor sales just don’t fall under the category of top government functions to be providing to the taxpayers,’’ said McDonnell’s policy director, Eric Finkbeiner.