ROCKVILLE – Montgomery County’s Office of Legislative Oversight (OLO) released a report Tuesday presenting five options for private versus public liquor control, which the County Council’s ad hoc committee on liquor control will review over the coming months.
Montgomery County is the only liquor control jurisdiction in Maryland, which means the county government serves as the wholesale source of alcohol for retail stores and owns the 25 retail liquor stores in the county. Over the years many consumers and groups like the Montgomery County Taxpayers League have advocated privatizing the system to lower prices, increase availability and generally improve service.
The five options inlude:
- Fully privatize the wholesale distribution and retail sales of alcohol.
- Privatize wholesale distribution but maintain county control of liquor retail.
- Privatize only the wholesale distribution of beer and wine but keep county control of wholesale and retail sale of liquor.
- Privatize only the wholesale distribution of special order beer and wine.
- Do not privatize anything but improve Department of Liquor Control (DLC) structure.
The report found the Liquor Fund made a net profit of about $32 million for the past three years, selling 1,024 licensees and 29,390 alcoholic products. The survey results in the report also indicate that licensees are dissatisfied with the DLC operations and availability of wine special order products.
Because each of the first four options would bring in less revenue for the county, the report also details potential alternate revenue sources. For all four options, the county could potentially enact a variable or flat fee on wholesale distribution to bring in $7-$29 million or a special county sales tax on retail sales to bring in about $3 million for each 1 percent of tax rate.
If the county council enacted option 1, the county could bring in $229,000 by increasing licensing fees for private retail sellers of liquor or $2.8-$5.3 million per auction period by selling or auctioning the rights to operate a liquor store.
According to the report, many of these options would require changes to state law, which jointly governs the sale of alcoholic beverages with the county.
For option 5, the DLC implemented a new system on Feb. 1 to streamline communication and the ordering process, particularly for special orders.
But OLO only received 96 responses to the survey – a 25 percent response rate that the report’s authors said was still helpful but not “high enough to draw statistically valid conclusions.”
Councilmember Hans Reimer (D-At large), chair of the ad hoc committee, requested the report.
“I requested the OLO report and the formation of the ad hoc committee because, whether due to management or structural failures, our current system is not working for our county,” Reimer said. “This report confirms that we have many options for reform. I am confident that, by conducting a thorough review of all options, we can strike the right balance of public safety, public health, economic development, quality of life, county revenue, good jobs and fair treatment for public employees.”
The ad hoc committee members plan to hold their first meeting on Feb. 27.