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Idaho could privatize liquor sales, but likely won’t

Mon., Jan. 31, 2011, 4:27 p.m.

BOISE - It’d be entirely feasible to privatize liquor sales in Idaho, according to a new state-commissioned report - but that doesn’t mean the state would do it.

“Usually we’re all about privatization,” said Rep. Maxine Bell, R-Jerome, who requested the study by the state Legislature’s office of performance evaluations. But, she said, “Every issue has an exception, and this is it.”

The study found that Idaho could make just as much each year by having privatized liquor sales and imposing an excise tax on liquor as it makes now through state sales; last year, that figure was $47 million, and it’s been growing each year.

Plus, in the first year of privatization, the state could garner tens of millions in one-time funds by selling off its liquor, stores, warehouse and other assets. That would hold true even if it just privatized retail sales, and kept the state warehouse, distribution and pricing system.

“I’m all for privatizing whatever we can,” said Sen. Jim Hammond, R-Post Falls. “It’s the same way I feel about golf courses and other such functions - if the private side can do it, government oughta be out of it.”

But asked if that’s likely to happen in Idaho, Hammond said, “I wouldn’t put any money on it. That just seems to be something that’s held dear to a lot of legislators, so I would be very surprised if that got any traction.”

Hammond and Bell both sit on the Joint Legislative Oversight Committee, which released the new study on Monday. It included a response from Gov. Butch Otter, in which he said he appreciated the report, but wants to stick with Idaho’s control-state liquor system.

Otter noted that Idaho’s state constitution requires the state to further “temperance and morality,” and said that makes state liquor sales a “proper role of government for Idaho.” Plus, he noted that the state has lower consumption levels than states where liquor is more widely available, and said Idaho’s state liquor division is “a stable and reliable source of ongoing revenue for the benefit of all Idahoans.”

Idaho currently has 66 state-operated liquor stores and 100 mostly smaller contract stores, where private operators sell liquor for the state in exchange for a percentage of the sales. The state could save about $700,000 a year by converting 13 of the state liquor stores to contract stores, the report found.

The money from liquor sales in Idaho goes mostly to the state’s general fund, cities and counties. A slice also goes to courts, substance abuse treatment, schools and community colleges.

The report, while outlining options including partial and full privatization, acknowledged that either change would be “a major policy decision,” and left that to lawmakers. It listed questions to consider, including whether selling liquor is “a core function of state government,” and whether direct state involvement in liquor sales curtails the “intemperate use of alcohol.”

Data is inconclusive on that point, the report found. That’s partly because the state division controls only sales of hard liquor; beer and wine sales already are privatized and are more widely available, and beer is the most-consumed alcoholic beverage in Idaho.

Mark Warbis, an aide to Otter, told the legislative committee, “If privatization were to occur, there would be enormous costs associated with enforcement of private liquor sales in the state … and much of that would be pushed down to the local level.” He said privatizing could lead to more access to liquor, and “we’d be abandoning our temperance mission that’s in the Constitution.”

Jeff Anderson, current head of Idaho’s state liquor division, told the lawmakers it’s “not broken.”

Dyke Nally, who headed the division for 15 years before he retired last April, said no control state has ever decided to privatize, though many have considered it.

“This not an ordinary product,” Nally said.”We’re not selling shoes. We’re selling something that needs to have regulation.”

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