When American novelist Charles Dudley Warner first coined the phrase “politics makes strange bedfellows” in 1870, chances are he didn't have the Alabama legislature in mind.
But no clearer example of the veracity of Warner's words came recently when SB 115, which proposed to phase out retail alcohol sales by the State of Alabama, died in the Senate General Fund Committee.
That committee, comprised of a majority of Republican senators, seemed a friendly venue for legislation that would take the state out of the retail liquor business. The bill, sponsored by Sen. Arthur Orr (R-Decatur), could have saved more than $18 million from the state budget annually. While the ABC Board would still control wholesale sales to private liquor store owners, the agency's retail arm would cease by October of 2016 had the bill passed.
Less government intrusion and a quick way to save Alabama taxpayers $18 million each year. A Republican 'no-brainer' you might think.
Think again.
What Warner said almost 150 years ago rang true in the pooling of opposition to SB 115. Its major opponents, the Alabama State Employees Association (ASEA), the ABC Board, private individuals who own retail locations leased to ABC stores and the Alabama Citizens Action Program (self-described as “an international ministry that, working together with the churches of Alabama, serves as Alabama's 'moral compass'") comprised an unexpected voice against Orr's legislation, with enough political clout to sway three Republican senators to vote against the bill.
Sen. Larry Stutts (R-Tuscumbia) was one of six Republican senators to support the bill in committee.
“It's probably one of the most if not the most disappointing thing so far about this legislative session for me,” Stutts said last Friday. “It looked to me like a no-brainer. The fiscal policy statement on the bill showed it would save the state millions per year.”
Opposition from the ASEA was predictable. According to the ASEA, 618 people are employed as clerks in ABC package stores around the state. Understandably, these employees turned to their association for help in keeping their jobs. The brass of the Alabama Beverage Control Board also predictably lobbied against SB 115. Ditto for private developers with existing lease agreements for ABC retail locations.
Apparent motivation for ALCAP's opposition comes from a 2014 Auburn University Montgomery report, commissioned by the ABC Board, that concluded states that controlled their retail alcohol sales, like Alabama, saw lower rates of per capita liquor consumption.
Stutts, though, said that study was just one piece of a much broader pool of research.
“Several other studies concluded that consumption declines when alcohol sales are privatized,” Stutts said. “All the studies showed that the price of alcohol goes up with privatization. There's no other commodity you could pick and say the price goes up and consumption goes up. So if you look at the studies collectively, there's no clear-cut data [indicating that] consumption increases."
For Stutts, SB 115 was only a much-needed first step toward the ultimate divorce of alcohol and Alabama.
“Granted, my personal philosophy is to get the state completely out of the alcohol wholesale business. That would be the next move after getting the state out of the liquor retail business,” Stutts said. “The ABC should be about alcoholic beverage control. It's a regulatory agency charged with enforcing and supervising regulations relating to alcohol.”
Approximately 550 private liquor stores operate in Alabama. Each must purchase its liquor inventory exclusively from the ABC. Thereafter, those same liquor stores must compete with retail package stores owned by the State of Alabama, which sold them their inventory to begin with.
“The bottom line is it would save the state millions of dollars each year," Stutts said. "Yes, more than 600 clerks work at ABC stores and would lose their jobs. But if liquor stores don't go away and these people have experience in that type of work, they can get a job in the private sector. We're not running an employment agency. We're running a state.”
Gov. Robert Bentley, who opposed the legislation, said his reasoning was based on the belief that privatization would make alcohol enforcement by the ABC more difficult.
One local package store owner, who did not want to be identified, said he was not surprised by the failed legislation.
“I knew it wouldn't make it. It's tried every year, but I don't know if it will ever happen. Alabama will certainly be one of the last states to privatize,” the owner said.
ABC retail sales are based on a 30-percent markup from state cost. When licensed package store operators buy liquor from the ABC, they receive a 10-percent discount. That discount is conditioned on a minimum purchase of one case of each liquor. Otherwise, no discount is offered.
“Sometimes, with newer products especially, it takes a good while to sell a case,” the owner said. “We pay all these taxes, licenses and fees already with private alcohol sales, so I feel we should be able to get the 10-percent discount whether we buy one bottle or a hundred.”
Stutts questioned the motivation of senators who shot down the proposed legislation in committee.
“With a tight budget in Alabama, we're going to have to streamline government and ask, 'What are essential government functions?' You'd have to go way down the list to find retail liquor sales as an essential function,” Stutts said. “I'm very disappointed we didn't get SB115 out of committee. And it really disappoints me three of my Republican colleagues voted against it in committee."
As he listened to testimony at the public hearing on SB115, Stutts must have been reminded of Warner's prophetic words.
“It was a very unusual firestorm of state employees, mid-level bureaucrats, liquor store investors and pastors,” Stutts said. “How would you ever think those four groups would be together and we'd see a Baptist preacher testify at a public hearing for the state to stay in the liquor business?"
