Conservatives should embrace Virginia ABC privatization

Virginia Attorney General Ken Cuccinelli is not exactly a liberal.

Over the weekend, Cuccinelli, who is never shy about applauding steps to limit government, released a statement regarding the proposed privatization of ABC stores:

“ABC privatization is a complex issue with many elements that will be debated and likely adjusted before the final legislative bill is written. This step toward privatizing government functions that should generally be within the purview of the private sector and the free market is a step in the right direction (emphasis added). I commend the governor for starting the ball rolling, and I am pleased that monies raised from auctioning licenses and selling ABC real estate will go toward transportation needs.

“For those Virginians who are concerned that alcohol-related problems, such as under-aged drinking and drunk driving fatalities, will increase under privatization, they can be assured that the research has shown there is no greater incidence of alcohol-related problems in states with private ownership of liquor stores than in states with government ownership.” (Study: “Impaired Judgment,” the Virginia Institute for Public Policy)

I am not an advocate for higher taxes; however, I am also not like some who buckle at every mention of a fee, license, or toll. I recognize the need to limit government, but I also recognize there is a need to fund government for core services.

When we look at our transportation needs, the bill that comes due is truly monstrous. Funding is going to have to come from somewhere.

Right now, Democrats argue that by eliminating the government’s monopoly over the sale of alcohol that a much-needed source of revenue for state spending is going to vanish. This is why Governor McDonnell’s proposal takes great pains to ensure that the transition to the private market is relatively revenue neutral.

When it all is said and done, the governor’s plan collects $303 million a year, compared to the current $324 million – a difference of 6.3% (when looking at the nearly $38 billion annual budget that is a difference of .054%).

There are some fees – such as the optional 2.5% fee for the right to buy liquor wholesale and have on-site delivery to your bar or store. And, some retailers will pay this voluntary convenience fee, others will continue as they do now to drive up to the store and go to the cash register like everyone else. Either way, the state gets revenue.

It’s not rocket science that some retailers will try to pass this convenience fee onto consumers, but they may end up paying for that approach at their own sales counter.

The Virginia Retail Merchants Association, who are perhaps most impacted by this plan, recognizes that there is a trade-off with McDonnell’s proposal, but agree that it’s a good one. They realize that government should not be selling alcohol:

VRMA believes that the retail sale of all products is best served by the private sector, which will allow the government to focus on other core services. It is clear that the government sale of alcohol is a decades-old policy that needs to change. To that end, we support the plan announced this week by the administration to privatize ABC stores in the Commonwealth. We also support the dedication of up-front revenue to transportation. While this initiative is only one piece of a long-term solution to transportation funding, we should not turn our backs on $500 million in revenue that can help relieve congestion across the Commonwealth. ABC stores should be privatized as a matter of principle because there is no compelling policy reason to distinguish sales of distilled spirits from other alcohol products.”

As conservatives, we should be jumping up and down with joy that we’re trimming down government, not expanding it.

Of course, while conservatives debate whether the governor’s plan contains a hidden tax or not, Democrats have seized upon the discussion to actually advocate raising taxes to pay for transportation.

The state Senate, out of ideas and clearly out of touch with the ongoing debate across the country, is advocating a gas tax hike:

Democrats in the Senate, particularly, have questioned the plan, preferring, instead, a gasoline-tax increase. McDonnell opposes a gas-tax hike. Every penny a gallon increase in the gas tax would generate about $50 million a year, according to estimates.

In the end, the governor’s plan generates $500 million directly for transportation and gets government out of the booze business – clearly a conservative approach; liberals want to keep government as is and raise taxes higher.

Republicans and conservatives need not sit “on the fence” about the governor’s proposal. The choice is obvious: privatize ABC today!