Otter opposes new liquor stores in Idaho

BOISE – Idaho’s state liquor dispensary could serve a growing customer base better and make more profit if it opened three new stores, but Gov. Butch Otter opposes the move as growth in government.

Otter recommended against the three new stores – one of which would be in the Coeur d’Alene/Post Falls area – in his proposed state budget for next year, lawmakers learned Thursday.

“Why would we not be doing what we can to enhance our revenues through adding those stores?” asked Sen. Jim Hammond, R-Post Falls. “The stores don’t cost money – they add revenues. Let’s take advantage of that opportunity.”

Hammond said he doesn’t see adding the state liquor stores as growing state government. “We’re not putting any further restrictions on anybody; we’re not providing any more government activities,” he said. “We’re just providing a greater level of convenience to customers.”

Sen. Shawn Keough, R-Sandpoint, noted that the liquor dispensary has shown it bases new store openings on demographics and economic analysis, and as a result, it has made its new stores profitable within the first year of opening. Six new stores are opening statewide this year.

Sara Nye, a budget analyst for Otter’s Division of Financial Management, told the Joint Finance-Appropriations Committee, “The governor didn’t want the additional expansion at this time. … He had a vision for very small growth this year.”

That vision – which is showing up throughout Otter’s budgets for state agencies – has raised concerns as lawmakers now delving into agency budgets have pinpointed various state needs that Otter has declined to fund.

In this case, both Keough and Hammond said, it’s less a matter of spending money than actually making money for the state.

Opening the three liquor stores would cost $677,500 and require the equivalent of six additional full-time state employees, according to state budget documents. The other two would be in the Nampa/Caldwell and Idaho Falls/Ammon areas. No state general tax money would be spent; the liquor dispensary is entirely supported by liquor sales.

“We can justify ‘em and use ‘em,” said Liquor Dispensary Supervisor Dyke Nally. “It will pay for itself.”

The liquor dispensary has seen an 87 percent increase in sales since 2002, Nally told the joint committee, but that doesn’t mean Idahoans are necessarily drinking more. He attributed the sales growth to the growing population and a growing preference for higher-priced liquor.

Idaho is seeing new residents who are “more affluent consumers,” Nally said, “people from other areas who had experienced drinking higher-priced products.” So while sales are up 87 percent in dollars, they’re up 59 percent in bottles. Per capita consumption is generally flat and remains well below national averages.

As a sign of that high-end preference, Nally told lawmakers that the Liquor Dispensary ordered one bottle of 50-year-old Scotch that sells for $6,000, wondering if it would sell – and it did. “We had two people fighting over it,” he said.

Otter’s budget recommended funding most of the Liquor Dispensary’s other requests, including seven additional staffers and the next phase of a warehouse expansion.