It's a debate that's nearly as old as the end of Prohibition in Alabama. But a conversation on whether the state should be in the retail liquor business is one worth having again, one north Alabama lawmaker said.
In fact, he said it's worth about $45 million a year.
That's how much state Sen. Arthur Orr, R-Decatur, said could be saved by eliminating the state's 172 Alcoholic Beverage Control Board-run stores and allowing independent business to take over all liquor sales.
"What we are looking at is a bill to remove the state from the retail sales business and bid out licenses for the private sector," Orr said. He chairs the Senate committee that oversees the state's General Fund.
By eliminating the rent on those 172 buildings, wages for about 600 employees and other overhead associated with the stores, the state could save about $45.5 million a year, Orr said. That money could instead go toward the General Fund, which supports non-education agencies.
But Democrats say if it were that simple, they would have done it years ago.
"(The idea) comes up every four or five years when you have a new administration," said state Sen. Roger Bedford, D-Russellville.
The Senate Minority Leader said he's studied the costs and revenues of ABC stores and believes closing them would lose money for the state.
State Rep. Johnny Mack Morrow, D-Red Bay, said privatization was being discussed 22 years ago when he joined the Legislature.
"And it was old news then," he said.
Morrow, a retired business and economics instructor at Northwest-Shoals Community College, said private business cannot operate the stores — or generate revenue for the state — any better than ABC does.
"We're getting the revenue, and unless someone tells me different, with some numbers, I'd be opposed to any changes," Morrow said. "It comes down to one thing: Show me the money. Just to get rid of all these employees and say we are going to be better off is not necessarily the case."
Other Republicans say it's a plan worth talking about.
Rep. Lynn Greer, R-Rogersville, said the biggest argument against privatization is the number of employees who would lose their jobs, but he said he'd be in favor of the switch.
"There is a tremendous amount of money that comes into the state, and I think there would be even more if it were privatized," Greer said. "A majority of the states can't be wrong."
Alabama is one of eight states still in the retail liquor business, Orr said. Until 2011, there were 18 states that had a hand in the wholesale or retail booze business.
Washington was the first state since Prohibition to fully extricate itself from retail and wholesale liquor, said Leonard Gilroy, director of government reform at the Reason Foundation, a nonprofit that promotes free markets.
Gilroy said states that operate wholesale or retail alcohol distribution are called "control" states, but he said the title is a misnomer.
"Whether or not you own and operate your own retail, all states control alcohol," he said, adding they set the rules and they can punish the private businesses that break them.
"At the end of day, regulation is a component in all 50 states," he said.
Orr said his bill would not change the ABC's enforcement or alcohol warehousing functions. It would create a state commission to determine how many retail liquor licenses would be granted per municipality, "to address the liquor-store-on-every-corner concern."
Orr said the commission also would consider the hundreds of ABC store employees who could be put out of work. An official at ABC said a starting store clerk earns about $10 an hour plus benefits.
They could receive severance pay or a preference if they wanted to become a private licensee, Orr said.
He said he foresees an open, transparent bidding process, and the licenses wouldn't be issued in perpetuity.
"You're not getting a license forever," he said.
Gov. Robert Bentley is considering ABC store privatization, but hasn't made up his mind as to whether he favors it, spokeswoman Jennifer Ardis said.
"He hasn't really decided if it's an option for us right now," Ardis said. "He's looking at the pros and cons, and then we'll make a decision."
Based on the Alabama Alcoholic Control Board's most recent annual report, its ABC stores put a 30 percent markup on each bottle of liquor it sells, 5 percent of which goes to the state's General Fund with the rest going back to the ABC board for expenses.
In addition, a 56 percent state tax is charged.
In budget year 2011, alcohol sales generated about $200 million for the General Fund, the Education Trust Fund and the state's human resources and mental health departments, said William Thigpen, assistant administrator to the control board.
Thigpen said that number would be significantly lower if private industry were running all liquor sales.
"There is no way that privatization can give them that consistent of a revenue stream," Thigpen said. "This is a very unusually efficiently run business."
It's also growing. Six or seven ABC stores have opened within the past 18 months, he said.
Orr argues that the tax revenue the state receives should not change just because private business is making the sales. His bill will not include a tax increase or changes to the existing tax structure.
There are about 525 private-owned package stores handling about 25 percent of liquor sold in the state, according to the board's annual report. They buy the liquor from the state and their sales contribute to that $200 million a year, Thigpen said.
That $200 million figure includes money generated through beer and wine sales, which are not available in ABC stores.
While prices at ABC stores are fixed — a bottle of Jim Beam costs the same whether bought in Florence or Decatur — the board does not have control over private stores' markups.
Since the state already has more private stores than state-run ones, total privatization isn't a radical idea, according to Gilroy, a free market proponent. Meanwhile, most of the alcoholic drinks Alabamians are buying — beer and wine — are coming from grocery stores. Beer account for more than 50 percent of alcohol sales in the nation, Gibson said. Throw in wine, and those two are the "vast majority."
"So, what are you really controlling (with ABC stores)?" he said. "A tiny piece of that market ... Moving forward with any type of privatization is not a loss of control. What are you losing? A big bureaucracy."
Beyond the cost savings that Orr said privatization would bring, he said there's another question.
"Should the state be in the liquor distribution business in the 21st century? I think the answer is no," he said.
The fact that three dozen states are not in the business speaks volumes, Gilroy said.
"It is really hard to make the case that government can run a business better than private industry," he said. "If that were the case, why doesn't the government run all the grocery stores?"
Thigpen balks at that comparison.
"Groceries and alcohol are two different things," he said. "Alcohol is a drug, a very strong drug, and it needs to be regulated.
"I'm not going to tell anyone how much toilet tissue they can buy."
Mary Sell can be reached at mary.sell@TimesDaily.com.
There are 172 ABC liquor stores in the state. Following is a list of expenses related to operating the state-run stores:
Source: Alabama Alcoholic Beverage Control Board