Last call Baldacci proposal could mean end of remaining state-run liquor stores

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Closing the remaining state liquor stores is just one facet of a proposal that, if approved, will end once and for all the state’s hands-on control of the sale of alcohol.

Along with shuttering the last 13 Maine State Liquor Stores, Gov. John Baldacci’s proposal calls for getting the state out of the wholesale liquor business and eliminating the state agency responsible for liquor enforcement. The administration says the changes will save the state $100 million over two years.The proposed cuts are part of Baldacci’s plan to bridge an estimated $1 billion gap between state spending requests and anticipated revenues over the next two-year budget period beginning July 1, 2003.

Under the current management system, the state earns a profit on every bottle of hard liquor sold in the state. According to the most recent figures, the state last year sold $81.5 million in liquor and earned a profit of $26 million.

The potential for annual profits in that range should be attractive to someone in the private sector who might want to lease or buy the wholesale liquor distribution rights from the state, said Rebecca Wyke, state commissioner of administrative and financial services. She said any deal with a private company would have to be “front loaded” so that the state could increase its revenue stream from liquor sales to help close the budget gap.

“Essentially, we’d be looking for competitive bids to lease or franchise the wholesale distribution to a private party while still protecting the state’s interests,” said Wyke. “The concept is what we’re moving forward with and we feel that makes sense. We’ve certainly been moving toward the privatization of liquor for some time.”

Wyke said any lease would be for a specific length of time, with perhaps one extension being made optional. She said the quality of distribution and variety of product offered also would be part of the leasing arrangement. She stressed that any lease agreement would contain provisions granting the state the option to regain control of the business in the future.

“We want to look at this for a specific period of time,” she said. “At some point it would revert back to the state or the state would bid it out again to keep it competitive.”

All of the state’s liquor currently passes through the Fore River Warehouse in South Portland. The sale and distribution of liquor is handled by the Bureau of Alcoholic Beverages, which is a division of Wyke’s department.

Pamela F. Coutts, acting director of the bureau, noted that while the state would no longer directly control sales and distribution, it would continue its oversight of alcohol.

“There are laws on the books and there will continue to be state regulation,” said Coutts.

Enforcement of the state’s liquor laws, however, falls under the domain of the Bureau of Liquor Enforcement, a division of the Department of Public Safety.

While the governor’s proposal would eliminate more that 50 state jobs by closing the liquor stores and privatizing the wholesale liquor operation, it would cut another 20 jobs by eliminating the Bureau of Liquor Enforcement. Elimination of the department, which currently employs 28 people, would save an estimated $1.5 million per year.

Lt. Holly Pomelow, assistant director of that bureau, said the plan calls for the elimination of her and director Lynn Cayford’s jobs along with a secretary and the agency’s 17 liquor enforcement officers. Another eight employees currently involved with the licensing of the 4,500 bars, restaurants and stores that sell alcoholic beverages would be transferred to another state agency. Pomelow expressed concern at the loss of the liquor enforcement officers.

“They are the ones who go into the bars, restaurants and stores and make sure the state’s laws are being enforced and that the taxes are being paid,” Pomelow said this week. “We are concerned. We understand that cuts need to be made. However, public safety is one of the primary purposes of government. We all know that liquor is a common denominator in many crimes.”

It was that concern that got the state into the liquor business in the first place. With the repeal of prohibition in 1933, the state Legislature created a system where the state exercised complete control over the sale and distribution of liquor. Under that system, the state managed both wholesale and retail sales of spirits.

George Seeley of Belfast is one of those who can still recall the days of the “Green Front” state liquor stores that were put in place in the 1930s. They were so named because of the uniform green paint job on the store’s exterior.

Unlike today, where shoppers can pick items from shelves, Seeley said customers entering a “Green Front” store would select from a brand and price list posted on the wall.

“They had slips of paper there and you would have to write down the item number of what you wanted,” Seeley recalled during a recent interview. “You would hand it to a guy behind a counter who would go out back and fill the order. He would give your order to a cashier and that guy would give it to another guy who would bag it. It’s a lot different today.”

Along with operating the state stores, Maine also permitted agency retail stores where liquor could be sold in rural areas. The prices in the agency stores were set the same as the state-run facilities. The number of state liquor stores peaked at 72 in the mid-1980s. At the time, Maine also licensed another 70 agency stores.

Today, there are only 13 state stores and 275 agency stores. The remaining state stores are located in Bangor, Augusta, Waterville, Rockland, Portland, Ellsworth, Calais, Belfast, Brunswick, Farmington, Presque Isle, North Windham and Auburn.

Nancy Freeman, manager of the state liquor store in Bangor, has watched with dismay as the state gradually shifted its emphasis from state-controlled access of liquor to the agency stores. Freeman, a 24-year employee, said that former Gov. John McKernan cut the number of state-operated retail stores from 72 to 26. Gov. Angus King’s administration cut that figure to the 13 stores left today.

“It’s all political,” Freeman said of the transition to the private sector. “The state made a lot of money from its stores, there was never any liquor store that lost money. They all made money from day one.”

But the Bangor store doesn’t sell as much liquor to the general public these days. Freeman said 90 percent of her business comes from sales to agency license holders. The other 10 percent are retail sales to the public.

She said some of the agency store owners were concerned that privatization would affect their ability to access certain items of liquor.

Freeman said that under the current distribution system, agency stores order liquor in case lots from the state warehouse and use the state liquor stores to purchase single bottles of exotic brands. She said the smaller “mom and pop” stores do not have the space or financial ability to stock or purchase a case of, for example, an expensive scotch whiskey when they might only sell one bottle a month.

“A lot of them don’t buy full cases,” said Freeman. “They come to us for their split cases or single bottles.”

Freeman also lamented the toll on her team of employees, who are facing the prospect of losing their jobs after years with the state. She said that all five have more than 15 years of service as state employees and are concerned about finding future employment.

“Obviously we’re all very upset because we’re stuck right in the middle,” said Freeman. “I know [the proposal] still has to go to the Legislature [for approval], but at this point I’m not optimistic.”

Neither is Michael Heath, director of the Christian Civic League. Heath said his organization had opposed the relinquishing of state control over liquor for years but took a neutral stance on the matter after realizing that privatization was inevitable. He predicted that greater access to liquor coupled with a decline in enforcement could be a dangerous brew.

“The state liquor system was put in place to control and limit access and make the distribution of alcohol directly accountable to the state,” said Heath. “This is a real concern to me because we are talking about putting more alcohol and liquor into the private marketplace. It looks like the law enforcement community in Maine is going to get hit hard by this budget.”

Heath described drinking as a “life-endangering” habit that needed to be watched with diligence. “We have to maintain a strong deterrence, not just approach it as a therapeutic problem. We need to keep law enforcement vigilant and empowered.”

Along with a state-run distribution system, liquor enforcement also was established by the Legislature in 1933. Liquor inspectors were given uniforms but had minimal powers of arrest. The department received full arrest powers and were required to carry firearms in 1977. By then they also were required to attend the Maine Criminal Justice Academy. Today, the Bureau of Liquor Enforcement is responsible for collecting about $15 million in annual revenues from liquor taxes and license fees.

If the proposal to eliminate the Bureau of Liquor Enforcement wins legislative approval, the duties of enforcing the state’s liquor laws would be taken over by other police agencies, according to Department of Public Safety spokesman Steve McCausland.

“Liquor laws, like motor vehicle laws, can be enforced by any law enforcement officer,” said McCausland. “The vast majority of those offenses are illegal sale or consumption or distribution of alcohol to minors. The sale to minors is really a significant function of the role of the liquor enforcement officers and those duties would be shifted to local, county and state agencies.”

However, Belfast Police Chief Allen Weaver said it would be unrealistic to expect local authorities to enforce liquor laws. He said liquor officers have a specific duty to patrol stores and bars to monitor the purchase and sale of alcohol and ensure that taxes, receipts and records are in order. He said liquor officers have duties beyond those of a municipal police officer.

“I don’t have the manpower to go around and make periodic checks of all the bars and stores that are selling liquor in the city,” he said. “Liquor officers move from place to place and are not well-known. If one of my officers steps into a bar or store, uniform or not, he’ll be recognized. I just think that liquor enforcement is an extremely effective part of public safety and it would be a tragedy to eliminate them.”