Abolitionist movement eyes OLCC

By Cathy Shaw

"No matter what your religion, you should try to become a government program, for then you will have everlasting life." - Congresswoman Lynn Martin

As phone lines burn across Oregon and legislators gather in small groups trying to decide how millions of dollars can be cut from the Oregon budget in the upcoming special session, Don MacIntire (author of Measure 5) has a partial solution: abolish the Oregon Liquor Control Commission (OLCC). I have never before agreed with a measure brought to the Oregon voters by Don MacIntire, but this petition deserves our signature and the initiative our vote.

BACKGROUNDING THE OLCC

With the repeal of the 18th Amendment, Congress gave states the authority to regulate the sale of alcohol. Oregon became one of eighteen "control" states for the sale of distilled alcoholic beverages. That means the state "controls" the sale of such beverages by doing the selling themselves (i.e. state liquor stores).

The State of Oregon, through the OLCC, completely controls the wholesale distribution of distilled alcohol. They purchase, warehouse, price, and ship to 235 state controlled retail outlets. OLCC controls hours of operation, wholesale product selection, and warehouse inventory. They monitor all aspects of the liquor business in this state from customer service to the store's appearance.

By law, anyone who owns a liquor store must be an OLCC agent. An agent's compensation is based on a percentage of total gross sales and varies from 5.5 percent to 18 percent. Lower volume stores are subsidized with a higher percentage on gross sales. Agents use the compensation to pay operating expenses, salaries, real estate costs, and upkeep of the stores. The OLCC requires agents to work at least 40 hours a week in the liquor store and has the authority to yank an agent's contract at any time.

Although agents must follow specific OLCC guidelines, they do not enjoy any of the benefits normally associated with employment by the state. They do not get health insurance, overtime, sick pay, or fringe benefits. Treatment of agents has become so contentious that OLCC is being sued by agents who feel that they should be treated as state employees. This, coupled with other lawsuits challenging the legality of OLCC sting operations, suggests the potential of big pieces of state money going in the wrong direction.

Agents find themselves not only betwixt and between at the state level, but also on the federal level. For example, the Small Business Administration does not recognize OLCC agents as small business owners because the liquor they sell is owned by the state. As a result they can't buy health care plans or take advantage of other benefits available to small business owners. They're also ineligible for SBA loans.

A lot of "cha-ching"

The OLCC "mark up" on distilled beverages is 106 percent of wholesale - the second highest in the nation. That translates to plenty of state revenue from OLCC. In fact, OLCC is third behind the Department of Revenue and the Department of Consumer and Business Affairs in contributing to the General Fund. Unfortunately, it's also right up there for expenses. Currently, OLCC employs 218 state workers with a biennium budget approaching $90 million. So, other than inopportune store hours, what do we get from this lumbering state bureaucracy?

Supporters of the current system say that state-controlled liquor stores reduce per capita consumption and DUII accidents. However, according to the Congressional Quarterly's 1997 Alcohol Consumption Per Capita State Fact Finder, controlled states are no more likely to have lower consumption rates than privatized states. In fact, the state with the highest per capita consumption in the nation, New Hampshire, is a controlled state.

A study of Ohio, Iowa and West Virginia, three states that privatized their liquor stores in 1997, showed that the number of alcohol-related driving fatalities actually decreased following privatization - 30 percent in Iowa, 32 percent in Ohio, and 23 percent in West Virginia. That same year, Pennsylvania, with the strictest liquor control system in the nation had a 41 percent alcohol-related fatality rate - exactly the national average. (Pittsburgh Business Times 9/8/97.)

Supporters of state control also point to state alcohol education and prevention programs implemented through OLCC as a reason to maintain state control. Privatization, however, does not mean Oregon would have to do away with education and prevention programs. Freed from the state bureaucracy, we may actually be able to direct more money to local level alcohol and drug treatment programs that are actually working.

In 1998, the Oregon State Legislative Administration Committee assembled all studies relating to OLCC privatization done since 1967. For forty years the recommendations were surprisingly similar: privatize alcohol sales. A number of the studies went so far as to specify where to transfer OLCC responsibilities if the agency were abolished. For example, OLCC enforcement functions, clearly a law enforcement issue, could be transferred to the Oregon State Police.

WHEN THE SPIRITS MOVE US

The time has long since come for Oregon to privatize distilled spirits. Besides saving $90 million per biennium, privatization could mean more local control for enforcement and licensing. It can also mean more wisely spent dollars for alcohol abuse prevention and treatment, continued city and county revenues from sales, and millions of dollars saved in pending lawsuits against OLCC.

In fact, if we coupled the savings of privatization with a modest increase in the state tax on beer and wine (currently the lowest in the nation), we'd be pretty close to a balanced budget.

Cathy Shaw is chief of staff for Rep. Alan Bates, D-Eagle Point; an author; and the former three-term mayor of Ashland.