FEW LOCAL public agencies in the region are as reviled as Montgomery County’s Department of Liquor Control, an antiquated public monopoly that distributes millions of cases of beer, wine and spirits annually to nearly 1,000 restaurants, stores and bars countywide. Those businesses — the agency’s clients — complain of shabby service, unreliable deliveries and price-gouging for specialty items, not to mention the occasional scam run by delivery crews.
As the grievances have increased in volume, so too have demands to allow private firms into the delivery market. That would be a death sentence for the DLC’s warehouse and wholesale operation, though the agency’s 25 liquor shops, which already compete with private stores selling wine and beer, would probably survive.
Mindful of the complaints, and the existential threat, the agency issued an updated “improvement action plan” in December, complete with dozens of steps to enhance customer service and warehouse operations. Two weeks later, at Christmas, disaster struck: delivery snafus that left bars and restaurants high and dry for the holiday season.
It’s time to scrap Montgomery’s liquor monopoly. How many times, and for how many years, must the county demonstrate that notwithstanding its proficiency in running libraries, maintaining parks or educating children, it is inept at the liquor business?
A bill in Annapolis, sponsored by Del. C. William Frick (D-Montgomery), would put the question of abolishing the monopoly to voters in a referendum this fall. It is opposed by almost all of the county’s Democratic politicians, for fear of two things: the power of the union representing more than 250 DLC workers who staff the warehouse, delivery trucks and county-run liquor shops; and the prospect of losing $25 million the liquor operation generated for the county’s annual budget.
The revenue issue is serious. The $25 million amounts to 2 percent or 3 percent of Montgomery’s annual discretionary spending — the amount not earmarked for public schools and other non-optional priorities. The liquor revenue also helps pay debt service on county borrowing to build roads. Those funds would have to be replaced starting in 2018. That’s a tall order but not an insurmountable one; the county regularly manages bigger jolts to its revenues.
One option is for the state to help out. It would gain some $20 million in annual tax revenue as it recoups cross-border sales now lost to the District and Virginia; that money could be shared with the county. With the state’s permission, the county might also sell the right to operate existing DLC stores, or enact a tax on retail liquor sales.
In the longer term, breaking the liquor monopoly is likely to have a salutary effect on overall economic activity — just as doing away with most public monopolies does in most places. An analysis by the Maryland comptroller’s office suggested privatization would yield $193 million in new economic activity by 2020. The concerns about scrapping the monopoly are legitimate, but outweighed by the potential benefits.