Study Shows Profits From Va. Liquor Sale Overstated - NBC4 Washington

Study Shows Profits From Va. Liquor Sale Overstated

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    The McDonnell administration plans to push forward with privatizing Virginia's liquor business despite a legislative review that suggests revenue projections were overestimated.

    The Joint Legislative Audit and Review Commission posted a 20-page report Tuesday that analyzed the liquor proposal adopted by Gov. Bob McDonnell's Commission on Government Reform and Restructuring on Sept. 30.

    Auditors reviewed the proposal's assumptions on revenue raised by auctioning off 1,001 retail licenses and the sale of wholesale liquor licenses and ABC-owned real estate. They also looked at revenue projections from proposed changes in Virginia's liquor taxes.

    Based on that review, the report said license sales could fall $24.3 million below projections. Also, excluding sales to restaurants, bars and others could mean a loss of $57 million, and wholesale license sales would raise $89.1 million instead of the administration's $161 million.

    The report also said the projected $33 million raised from the sale of ABC stores and a Richmond warehouse was optimistic given the current real estate climate.

    McDonnell spokesman Tucker Martin said the legislative review is based on one of many plans being considered to end Virginia's 76-year monopoly on liquor sales. Also, PFM Group was recently hired to review the administration's revenue projections. The administration plans to share that review with lawmakers.

    “While this report is based on one plan, the Administration is considering multiple privatization models and proposals,” Martin said Wednesday in an e-mail to The Associated Press. “We will continue to work with legislators and others to determine the best means by which to move forward in the upcoming session.”

    The administration is reviewing the sale of just the retail operation, while maintaining control of the wholesale operation.

    Administration officials also questioned what they called several “discrepancies” in the legislative report's revenue figures. Officials plan to follow up with legislative auditors to discuss how the administration's numbers were developed.

    “The Governor is committed to ending this outdated government monopoly, and making state government smaller; however, he is not wed to any specific proposal,” Martin said.

    Auditors also concluded the tax proposal could increase liquor prices by as much as 26 percent. Such an increase could curb consumption and reduce tax revenues. The report also said the administration overestimated how much liquor Virginians would purchase because of the expansion in the number of retail outlets.

    Virginia Democrats say McDonnell should give up the idea of privatizing the state liquor stores.