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Virginia ponders losing ABC stores; studies conflict on privatizing liquor sales

By Rosalind S. Helderman
Washington Post Staff Writer
Sunday, August 29, 2010; C01

RICHMOND -- As Gov. Robert F. McDonnell pushes a proposal to privatize state-owned liquor stores, he has reassured the public that problems associated with drinking would be unlikely to worsen if the state government relinquished control over distilled spirits.

"All the data shows there is no difference in drunken driving or crime whatsoever between control states and between privatized states," McDonnell said in a recent radio appearance.

The governor can point to several studies that found little difference in binge drinking, alcohol-related fatalities or drunken-driving deaths between the 18 states that retain some control over the sale of alcohol and the other 32 states and the District, which do not.

But McDonnell did not acknowledge other studies, completed by researchers across the country, that found public health differences between the two situations.

"If you make it easier to drink, people drink more. And if people drink more, we have more alcohol-related problems. It's as simple and basic as that," said Alexander C. Wagenaar, an epidemiologist at the University of Florida's medical school who has conducted studies that found consumption rose after privatization in Iowa and West Virginia.

McDonnell is traveling the state conducting town hall meetings, including a stop in Herndon on Wednesday night, to sell Virginians on his plan. He is expected to unveil a detailed proposal Sept. 8 for breaking up the state's 76-year monopoly on the wholesale and retail distribution of distilled spirits.

Philosophically, the Republican governor believes that selling liquor shouldn't be a government enterprise. He contends that the state could reap an upfront windfall of $300 million to $800 million that could go to fixing roads. He also contends that privatization would result in more conveniently located stores with better selections for consumers.

McDonnell plans to call a special session of the General Assembly this year to consider the plan. To prevail, he will probably have to win a debate about the public health and safety implications of the change.

To address the concerns, McDonnell and his aides have pointed to studies concluding that states with private systems don't experience greater alcohol problems.

One such study, written by a George Mason University economist and published in June by the Virginia Institute for Public Policy -- a think tank that advocates limited government -- found that the number of alcohol-related deaths per 100,000 residents is virtually identical in control states and private states. It also showed little difference in binge drinking or drunken-driving fatalities.

A much broader study in Pennsylvania examined 36 years of data from 48 states with varying degrees of alcohol control. It found that private states have lower per-capita alcohol consumption and lower drunken-driving fatalities than states where government controls segments of the industry. It found no significant difference in underage drinking between the two models.

Like the recent Virginia report, it was funded by a foundation that advocates smaller government. But its author has submitted the findings to an academic journal for review, and he defended the results as unbiased.

"The fact is, we can play that game, who gets funded by whom," said Antony Davies, the Duquesne University economist who wrote the report.

"What happens is, we all have to go home, and nobody asks any questions at all. Everybody gets funded by someone," he said. "The better thing to do is to give researchers the benefit of the doubt that they're trying to find truth, and then look at the data and the studies."

Taking stands

But researchers stake out positions on the issue, and each side says the other's studies are flawed.

Wagenaar and other researchers contend that privatization does lead to increased consumption, and he cast doubt on studies -- some of them funded by think tanks or liquor interests -- that say the opposite.

A 2006 study published in the journal Accident Analysis and Prevention, for instance, found that states with a monopoly on retail alcohol sales had fewer high school students who reported drinking alcohol within the previous 30 days and fewer who reported binge drinking, compared with states without a retail monopoly.

The study also found that alcohol-related driving fatalities among young people were reduced by more than 9 percent in government monopoly states.

Ted Miller, author of the 2006 study, said research that groups states that control wholesaling with those that control retail sales are flawed. State control of retailing is key, he said, because the cashiers are state employees whose first duty is to uphold the law rather than boost profits.

Based on his research, Miller estimated that Virginia would see 220 more alcohol-related deaths a year if it gave up its retail monopoly and $40 million a year in additional costs related to criminal justice and substance abuse.

"Don't get suckered by the alcohol industry," said Miller, a researcher at the Pacific Institute for Research and Evaluation, a Maryland-based nonprofit that is largely government-funded. "This is neither fiscally responsible nor responsible from a public health standpoint."

McDonnell has promised that his plan will include a robust strategy for enforcing alcoholic beverage control laws, including ensuring that retailers don't sell to underage customers.

Although his plan assumes that Virginia liquor sales would rise after privatization, he contends that doesn't necessarily mean that consumption would rise. For one thing, some people would buy in Virginia what they had been buying in Maryland or the District. For another, beer and wine have long been sold in grocery and convenience stores in Virginia. Adding liquor to their shelves might simply shift some sales to distilled spirits.

Proponents of privatization also say the increase in the number of outlets selling liquor -- from 332 to 800 or more -- might not cause a big jump in the total number of stores that sell some kind of alcoholic beverage. Many licenses to sell distilled spirits, McDonnell said, would go to some of the 3,000 stores that already sell beer and wine.

"What can't be lost in this is we would still have a very active ABC Board and enforcement arm that would be enforcing all those laws," said McDonnell, referring to the three-member Alcoholic Beverage Control Board that oversees enforcement in the state.

But in a report released last week, the Virginia Interfaith Center for Public Policy, using data from the Virginia Department of Health, presented the following statistics to make its case against privatization:

From 2004 to 2006, in 25.8 percent of all deaths in Virginia resulting from injury, one of the parties involved had a blood-alcohol level of 0.01 or greater. In more than 30 percent of homicides, one of the parties had a blood-alcohol level of 0.01 or greater. And more than 27 percent of all motor vehicle fatalities were alcohol-related.

"If we truly believe that encouraging family values begins with valuing families, we need to ensure communities are given every chance to thrive," said C. Douglas Smith, the interfaith center's executive director. "We don't need to turn every Sheetz and Wawa, every corner store, every roadside bodega into a cocktail motor-through. Our communities don't need it. Our state doesn't need it. And the risks are too great."

Other viewpoints

With no formal plan on the table, public health and safety officials in Virginia have said they are sifting through the research and largely remain neutral on the concept of selling ABC stores.

Representatives of Mothers Against Drunk Driving and the Washington Regional Alcohol Program have met with the governor's staff. The two groups say that they are monitoring the discussions -- and are particularly interested in how the state would regulate store hours and cashier training -- but that they probably will not weigh in on the broader discussion because they do not see the privatization issue as part of their core mission of curbing drunken driving.

Several Virginia police chiefs recently met with officials of the McDonnell administration to express their concerns. They urged strict rules for new liquor stores and, above all, significant new funding for the state's ABC enforcement division, whose budget has been slashed in recent years.

The chiefs are generally neutral on the idea for the moment, said Virginia Association of Chiefs of Police Executive Director Dana Schrad, in part because they trust McDonnell, who was a tough-on-crime state delegate and attorney general.

But she said they are not sold on the idea that privatization would be harmless.

"We're not convinced right now that more liquor outlets is not going to have an impact on alcohol-related offenses," she said. "More than needing to be convinced, we're going to have to see what happens."

Staff writer Anita Kumar contributed to this report.

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