Privatizing ABC stores to pay for roads
Republican gubernatorial* candidate Bob McDonnell has proposed an interesting alternative to a bill calling for a tax hike to pay for road improvements: placing 330 state-run ABC stores into the hands of private owners. He claims that this move, in addition to adding tolls along interstates 85 and 95 and pooling a portion of sales […]
Republican gubernatorial* candidate Bob McDonnell has proposed an interesting alternative to a bill calling for a tax hike to pay for road improvements: placing 330 state-run ABC stores into the hands of private owners. He claims that this move, in addition to adding tolls along interstates 85 and 95 and pooling a portion of sales tax collected in Northern Virginia, will yield about $1.5 billion over a 10-year period.
The Washington Post article brings up an interesting point:
But the plan was notable for what it lacked: a permanent new source of money big enough to pay for the state’s mounting transportation needs. McDonnell said his proposal is “outside the box” because Virginians aren’t warm to the idea of a tax increase during such troubling economic times.
Much of that money represents existing state revenue that currently pays for other services. For example, privatization of the liquor stores would generate at least $500 million in one-time payments to the state, plus income and property taxes over time, according to McDonnell. But about $100 million in annual earnings generated by the stores that goes to the state’s general fund would be lost.
Similarly, McDonnell’s proposal to divert a fraction of sales tax receipts collected in Northern Virginia to regional road projects would leave a $105 million annual hole in the state’s budget that pays for schools, public safety and other core services.
Read McDonnell’s transit plan here.
*”Gubernatorial” is the most ridiculous word ever. I can’t say it without shouting “GOOOOOOOOOOBER-natorial!” Perhaps another platform to be considered for the GOOOOOOOOOOBER-natorial election should be to adopt another word.
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Valerie Catrow
Valerie Catrow is editor of RVAFamily, mother to a mop-topped first grader, and always really excited to go to bed.
Notice: Comments that are not conducive to an interesting and thoughtful conversation may be removed at the editor’s discretion.
Consider this- as of the latest polls, McDonnell is up big; so this is a serious policy story.
Can’t say I support more tolls- they are a fairly annoying tax. The only thing nice about this tax is that it may be largely paid by out-of-staters.
I am a fan of privatizing just about anything sales-related. Virginia’s alcohol policies in general are just plain silly.
What impact would privatizing the stores have on the ‘look and feel’ of ABC stores? We live near one and it doesn’t really act as a value-add to the neighborhood. Good owners might make the stores feel more local and a better fit for each local neighborhood. But bad owners might further negative impact on neighborhoods.
I like this idea. Alcoholic Beverage Control is such a weird idea, and I would like to see Mom and Pop liquor stores that also sell beer and wine (not sure if that would break state policy if they were privatized). I’m NOT for tolls though, I hate slowing down on 95, I understand it would bring revenue, but they should just put them at the state borders on 95 just to catch the out-of-staters. While he’s at it, McDonnell should propose a plan to privatize the DMV.
The toll proposal will never fly. It is illegal to have a toll going only one way in or out on a federal highway. McD’s people should know this.
And while state controlled ABC is archaic, it does generate $100 million a year.
McD’s plan will generate a one time payment of $500 million for roads
The ABC generates $100 million a year.
So in McD’s plan after ten years, we will have only had $500 million in revenue.
After ten years under the current ABC system, we will have at least $1 billion for roads.
Hmmm. Why not keep ABC and put that revenue into the roads instead of the general fund?
In 20 years you would have at least $2 billion. If McD sells off the ABC, you would have only still $500 million.
if that math is correct, Alfonso, there shouldn’t be any debate as to what to do with ABC…
Given the crappy corner stores here in Church Hill, privatizing ABC sales seems destined to have a negative social impact.
“It is illegal to have a toll going only one way in or out on a federal highway. ”
Someone should inform the state of Maryland, then, because there’s a northbound-only toll on I-95 near the Susquehanna.
Regardless, though, throwing up toll booths at the border is a stupid way to avoid actually paying for transportation improvements in different parts of the state. The regional tax authorities were a much better idea, in abstract if not in execution.
And I can’t for the life of me see how privatizing the ABC stores will generate more revenue for the state than keeping them government-run. That’s completely counter-intuitive. It’s like saying, if you turn over management of the state parks to Cedar Fair, it will generate more revenue for the state than they do right now. Really? So if you get rid of a revenue-generating business, you’re going to gain revenue It defies logic, one-time payments be damned.
Also, if you privatize the ABC stores, what you’re going to get, as John M. already pointed out, are seedy crime-magnet liquor stores in poor areas and overpriced top-shelf spirit shoppes in rich areas.
You’re right Bopst. It’s selling a long-term cash-generating machine into a short-term lump sum to fix a gaping budget hole.