The Raleigh Report

From the Office of Representative William Brisson  

March 11, 2010

In the face of concerns about ethics and efficiency, reformation of North Carolina’s ABC System has become an important issue for many North Carolina lawmakers. The following information highlights the mission of the recently appointed Joint Select Committee on Alcohol and Beverage Control, and provides a general outline for the issues addressed by committee members this week during their first meeting.

Thank you as always for your interest in state government. If you have any questions about this information or anything else that I can help with, please contact me. I am always glad to be of service.

Overview of ABC System

_ Our ABC system dates back to 1874, and the ABC Commission was established in 1935 after the repeal of Prohibition.

_The state controls the sale of liquor, which means that only local ABC Boards are authorized to operate retail stores and sell liquor in NC. There are 163 local ABC boards and 414 stores across the state. These local boards employ close to 2,400 people.

_The ABC system is a profitable industry for the state of North Carolina: $757 million in sales in 2008-09 makes the ABC system an important source of revenue for the state. Proceeds from these sales support the operation of the stores and provide funds for state and local governments.

Joint Study Committee on Alcoholic Beverage Control

_The Joint Study Committee on Alcoholic Beverage Control is responsible for evaluating the need for statewide consistency and uniformity in ABC structures, rules, and ethics standards, and examining the current compensation structure for both state and local ABC board members and employees, and making recommendations for any salary limitations or oversight that might be needed.

_The committee will examine the governance structure of local ABC boards, the geographic proximity of local ABC boards, existing ethics rules and possible privatization of the ABC system. Committee members are expected to make recommendations for reform or change where needed.

Committee Meeting:

_Key findings of General Assembly’s Program Evaluation Division:

_ The ABC system has not kept pace with demographic and economic changes in the state.

_ Population growth is concentrated in urban centers, rather than rural areas,    and these population shifts affect local board profitability.

_ The system is governed by statutes that limit system management.

_ The General Statutes limit ability of ABC Commission to effectively and efficiently manage the system. Currently, the commission is not allowed to enforce minimum standards for operation and profitability, assist boards in making changes to improve operations, or mandate board consolidations or mergers.

_ The system has not clearly defined the mission of local boards.

_ North Carolina has not clearly defined mission of local boards, neither by statute nor by rule.

_ Lack of a clear mission allows local boards to justify ineffective and inefficient store operations.

_ The system regulates the sale of liquor differently than in other states.

_ North Carolina is the only retail control state that has local boards operating stores.

_ Program Evaluation Division recommendations:

_ Define mission of local boards.

_ Efficient store operation; profitability and revenue; convenient access; excellent customer service; and appropriate control

_ Provide commission better management tools

_  Establish performance standards for local boards; mandate local board mergers; provide technical assistance; provide financial incentives; and authorize agency stores

_ Modify statutes for store elections and purchase-transportation permits

_ Increase threshold from 500 to 5,000 registered voters for election; eliminate ABC store requirement to hold mixed-beverages elections; and eliminate purchase-transportation permit requirement for liquor

_ Consider whether other regulatory systems are appropriate

_ Changing the system could affect: revenues; liquor selection and pricing; and warehouse ownership and operation

_The committee is scheduled to meet again on March 24, 2010.

Notes

_Siemens Energy Inc., an international supplier of products and services for the generation, transmission and distribution of power, will expand its gas turbine operations in Mecklenburg County. The company plans to add 825 jobs and invest at least $135 million over the next five years. The announcement was made possible in part by state grants from the Job Development Investment Grant program and One North Carolina Fund.

_Affiliated Computer Services, a global call center operation based in Dallas, announced this week that it will add 280 jobs at its Raleigh office. The company is accepting applications and inquiries by phone, online and in person at its Raleigh office. ACS employs 1,100 people in Raleigh and 3,250 throughout the state.

_Pierre Foods Inc., a Cincinnati-based food products maker, announced this week that the Company plans to invest $16.8 million over the next three years and add 500 jobs in Claremont in Catawba County. The expansion is a result of a $600,000 incentive provided by state officials.

Please remember that you can listen to each day’s session, committee meetings and press conferences on the General Assembly’s website at www.ncleg.net. Once on the site, select "Audio," and then make your selection – House Chamber, Senate Chamber, Appropriations Committee Room or Press Conference Room. A calendar of meetings is also available on the site.