May 28, 1995 in Nation/World

Liquor Board Takes Some Shots Over Privitizing

By The Spokesman-Review
 

The agency that handles all hard-liquor sales in Idaho is at a crossroads.

Employee morale is at rock-bottom. People are scheming and plotting against each other. There’s a moratorium on new state liquor stores, while the governor sorts through fundamental questions about how sales should be handled in the state, including whether to allow a liquor store at The Coeur d’Alene Resort.

The blunt-talking politician who has headed the agency for the last four years leaves office this week, to be replaced by a softspoken man known as one of the nicest guys in Boise.

Outgoing superintendent Dean Summers said he didn’t try to win any popularity contests. He aimed to run the state Liquor Dispensary like a business. But liquor has always been a contentious issue in Idaho, clouded by conflicting concerns born in the church, the bar, and the pocketbook.

The Idaho Constitution calls on the state to promote temperance and sobriety. So Idaho’s liquor stores don’t advertise, they’re often in hard-to-find spots, and they close by early evening.

The state also makes millions from liquor sales, and nearly every town in the state has a little liquor outlet. “It’s a great source of income,” said Gov. Phil Batt.

Summers said that, as a believer in free enterprise, he’d just as soon see the state get out of retail liquor sales. Some other “control” states have done that, staying just in the wholesale business.

So he charged ahead with his own program to start privatizing the retail end of liquor sales in Idaho - over the protests of his own employees and state contractors and without any particular support.

“They’re mad at me because I want to run it like a business,” he said of critics, whom he terms “crybabies.”

“We made more money the last three years than we’ve ever made, and had almost a zero turnover. If it’s such a bad place to work, why don’t they all quit?”

By far, The Coeur d’Alene Re sort is the biggest buyer of liquor in the state, at more than $200,000 in the past year. It dislodged the Sun Valley Lodge from the top spot within the last few years.

So it’s not surprising that the Liquor: A question of control vs. profits “Nobody knew what you’re going to do, if you’re going to have a job tomorrow, who was going to ‘get’ who.” Dick Brower, manages Bonners Ferry state liquor store resort applied this year to open its own liquor store. Summers indicated the proposal looked good. Then the public comment period started.

Templin’s Resort requested application materials for a similar store, and a Coeur d’Alene pool hall also expressed interest. The liquor dispensary was flooded with calls from people asking if they, too, could start liquor stores.

Faced with the thought of many more liquor stores all over the state, Batt clamped down with a moratorium on all new liquor stores.

“We elected back in the ‘30s to be a control state,” said state Sen. Hal Bunderson, R-Meridian, who headed a task force that looked into problems in the liquor dispensary over the last year and a half.

“The state believes that temperance is what should be promoted, that alcohol should not be promoted or advertised. Those words are in the Constitution.”

State control over liquor is something of a mantra among liquor dispensary employees and associates.

“We need state control in some things. I believe liquor is one,” said Ray Moore, who runs Spirits Mini-Stop in Spirit Lake through a contract with the state. “The Legislature has voted on it several times, and they say no privatization, they want it controlled.”

Summers, a former state legislator, said no one wants to sell liquor to underage or intoxicated drinkers. As far as temperance and sobriety, “sure we want all that. But we make a lot of money for the state. People are going to drink.”

In 1994, the state made $23.4 million in liquor profits.

Summers’ moves toward privatization have focused on contractors who he thinks get a sweet deal. The state owns the inventory in contractors’ stores, and pays operators a commission. Summers wants contractors to buy their liquor inventory up front. Then, the state wouldn’t have millions of dollars tied up in liquor inventory.

Summers said he went first to the largest contract stores, which were making lots of money without ever having to make an investment. “I said everything’s the same, except you pay up front, you buy the insurance, and you gotta buy the booze.”

The “big guys” responded with “Geez, Dean, we wondered when the state was gonna wake up,” Summers said.

But that wasn’t the reaction at the dozens of smaller contract stores across the state. Summers told them they could continue until their stores changed hands; then they’d be converted to the new arrangement. The small contractors formed an association to fight the new program, which they saw as both compromising state control over liquor and threatening their livelihoods.

Meanwhile, things were anything but placid among dispensary employees, who staff the central distribution operation and the 46 state-run stores. Nineteen employees signed a grievance in 1993, objecting to the way a top administration job was filled. The grievance seemed to crystalize concerns people throughout the dispensary had about the management.

“There was an awful lot of rumor flying around,” said Dick Brower, who manages the Bonners Ferry state liquor store. “Nobody knew what you’re going to do, if you’re going to have a job tomorrow, who was going to ‘get’ who.”

After the grievance was filed, the state ordered a management audit of the dispensary. The accounting firm of Coopers & Lybrand completed its study in April 1994, at a cost to taxpayers of nearly $100,000. Its findings were sharply critical of the dispensary’s operations, from hiring practices to internal communication to inventory management.

While contractors worried Summers was trying to run them out of business, employees worried about their jobs and the agency’s future. They wrote letters to the governor complaining about the management of the dispensary, some with pages of signatures. Former Gov. Cecil Andrus passed those letters along to Summers, who kept them in files and fumed.

Summers was a powerful state legislator from Ada County in the 1970s, rising to chairman of the Senate State Affairs Committee. “I served seven terms ‘til I got indicted,” he said. “It’s pretty hard to get re-elected when you’re under a federal grand jury.”

Summers pleaded “no contest” to three federal income tax-evasion charges in 1977. He paid a $15,000 fine and received a suspended one-year prison sentence. The felony conviction meant he could no longer hold public office.

He makes no attempt to hide his record. “You’ve got to be honest with people,” he said.

Summers said he’s a businessman at heart. He’s owned two banks, was a partner in what became a highly successful ski shop, ran an insurance business, owned a glass company, a used car lot. “I’ve been in a lot of deals.”

He bought a drive-in burger joint while his kids were in high school “to teach them how to work,” he said.

Though a Republican, he became close to Democrat Andrus. A signed picture of Andrus hangs on his office wall, with the inscription, “Dean, with best regards from a friend. Cece.”

Andrus appointed Summers to the liquor job, and Summers has relished it. At age 67, he’d just as soon serve another term.

Amid complaints the dispensary had excessive inventory on hand, Summers started a program under which the liquor companies ship the booze into the state warehouse, but the state doesn’t pay for it or take ownership until it ships bottles out to its stores. That cut the state’s owned inventory way down, putting that burden on the liquor manufacturers.

Why would the companies go along with that? “We’re the only game in town. What’re they going to do, sell it to Albertsons?” Summers asked.

Summers is a jovial man, prone to greeting folks with a hearty, “Hello, my good friend!”

But he’s clearly embittered by the reaction he’s gotten from opponents to his changes at the liquor dispensary. Auditors from Coopers & Lybrand, he said, were “a bunch of idiots.”

The management audit and the legislative task force’s work led to three pieces of proposed legislation. All three died in the Legislature this past session.

One would have extended state nepotism laws to cover live-in lovers as well as spouses. Another would have eliminated the superintendent’s position in favor of a commission appointed by the governor. The commission would hire a manager. The third bill would have reformed outdated laws on how the dispensary’s profits are distributed to cities, counties, schools and alcohol treatment programs.

New versions of two of the bills may resurface, but Batt has little interest in the commission idea.

“I just hate to set up new layers of bureaucracy,” Batt said. “I don’t think it’s necessary.”

“There evidently have been some morale problems and some personnel problems in the dispensary,” Batt said. “Those need to be addressed, and I think a new director will do so.”

Dyke Nally, who takes over the top liquor job June 1, has spent his career making folks happy as the alumni director for Boise State University. An independent politically, he’s a longtime supporter of Andrus, and also worked on Republican Batt’s campaign.

“Dyke is a person who has a lot of administrative talents,” Batt said. “He also has a personality which tends to alleviate disgruntlement and dissatisfaction.”

It’s hard to find anyone in Boise who doesn’t like Dyke Nally. He’s been a smokejumper, a school bus driver and a ranch hand. He was student body president at Boise State University in 1968-69, and he loves to talk to people.

“We’re going to open communications up,” Nally said. “If there’s something that’s really unfair, I’m going to deal with it. I’m not going to say, ‘That’s the way it is.”’

Nally recalled a hunting expedition when he was confronted by an angry landowner with a .30-.30 rifle. He talked to the man, discovered he’d once worked on a hay crew with the man’s brother, and ended up getting invited in for lunch.

“I don’t know if I’ll get in trouble for it some day, but I just kinda walk into things,” Nally said.

He said he sees a role for the kind of private stores Summers envisioned, with privately owned liquor inventory. New rules being developed by the legislative task force, along with Nally and the governor, call for Idaho to have all three kinds of liquor stores: state-run, contract and private.

But Nally said he thinks private stores probably will be reserved for special circumstances, like remote locations where the state can’t justify the cost of delivering liquor. Big, busy locations probably should be state-run stores.

That doesn’t fit in with the new private store opening at Ross Point between Post Falls and Coeur d’Alene. That store, to be a combination gas station, deli and liquor store at a high-traffic intersection, squeaked in before the moratorium.

“There’s been enough promises made that I didn’t think we could successfully challenge it,” Batt said.

The governor and Nally have kicked around an idea on The Coeur d’Alene Resort request.

The resort expressed interest in carrying only high-end, high-priced liquor that state stores don’t carry.

Both Batt and Nally suggested that kind of store might be feasible at the resort and elsewhere.

If the resort bought the liquor up-front from the state, and it didn’t compete with the products in nearby state or contract stores, the state could hardly lose. Batt said that idea might work for him, though he’d like some input from the Legislature.

He isn’t comfortable with the thought of liquor stores sprouting up in every hotel and tavern.

“If you get into that kind of situation, you might as well get the state out of the business.”

MEMO: This sidebar appeared with the story: Top liquor buyers The top buyers from the Idaho State Liquor Dispensary in the past year were: 1. The Coeur d’Alene Resort, 26,482 bottles. 2. Casino, Ketchum, Idaho, 13,713 bottles. 3. Sun Valley Lodge, 11,322 bottles. 4. Gem Stop, Middleton, Idaho, 19,114 bottles. (A private liquor store.) 5. Whisky Jacque’s, Ketchum, 8,431 bottles

Other top North Idaho buyers included: 15. Holiday Inn, Coeur d’Alene, 5,098 bottles. 23. Beta’s Place, Coeur d’Alene, 7,824 bottles. 28. Iron Horse, Coeur d’Alene, 5,129 bottles. 30. Atrium, Coeur d’Alene, 3,975 bottles. 31. Sunset Bar, Coeur d’Alene, 6,558 bottles. 44. Chelsea’s, Coeur d’Alene, 3,917 bottles. The bottles may be any size. The ranking is by sales in dollars.

Liquor profits By Idaho law, profits from the Liquor Dispensary go to cities, counties, schools and alcohol treatment. 1994: $23.4 million 1993: $12.8 million 1992: $12.9 million The profits in 1994 reflect a one-time increase due to a change in handling the liquor inventory. -Idaho State Liquor Dispensary

This sidebar appeared with the story: Top liquor buyers The top buyers from the Idaho State Liquor Dispensary in the past year were: 1. The Coeur d’Alene Resort, 26,482 bottles. 2. Casino, Ketchum, Idaho, 13,713 bottles. 3. Sun Valley Lodge, 11,322 bottles. 4. Gem Stop, Middleton, Idaho, 19,114 bottles. (A private liquor store.) 5. Whisky Jacque’s, Ketchum, 8,431 bottles

Other top North Idaho buyers included: 15. Holiday Inn, Coeur d’Alene, 5,098 bottles. 23. Beta’s Place, Coeur d’Alene, 7,824 bottles. 28. Iron Horse, Coeur d’Alene, 5,129 bottles. 30. Atrium, Coeur d’Alene, 3,975 bottles. 31. Sunset Bar, Coeur d’Alene, 6,558 bottles. 44. Chelsea’s, Coeur d’Alene, 3,917 bottles. The bottles may be any size. The ranking is by sales in dollars.

Liquor profits By Idaho law, profits from the Liquor Dispensary go to cities, counties, schools and alcohol treatment. 1994: $23.4 million 1993: $12.8 million 1992: $12.9 million The profits in 1994 reflect a one-time increase due to a change in handling the liquor inventory. -Idaho State Liquor Dispensary


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email