Privatization Of MoCo's Alcohol Operation In The Spotlight

Privatization Of MoCo’s Alcohol Operation In The Spotlight

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Complaints from restaurant owners about late and incomplete alcohol deliveries are one reason Montgomery County should get out of the alcohol distribution business, Councilmember Roger Berliner said Friday.

Berliner made the comments during the first meeting of the Council’s Ad Hoc Committee on Liquor Control, referring to years of complaints from Bethesda restaurant owners in particular.

Montgomery County operates under a unique control model in which a county agency called the Department of Liquor Control (DLC) must distribute all alcohol products to restaurants and beer and wine stores, effectively acting as a wholesaler.

Over the rest of 2015, the committee will review a number of recommendations — including full privatization, a few hybrid approaches or fixes to improve DLC’s operations — for dealing with what has recently been a controversial issue.

Berliner said he spoke to a restaurant owner a week ago who said he made a special order of 45 cases of wine. DLC delivered just five cases.

“I really feel like we’ve got to get out of the way here,” Berliner said. “We are not providing a service to our community. We are providing a disservice to our community.”

Much of the first of four scheduled committee sessions focused on how DLC handles special orders of less common craft beers or special wines, since it’s the primary source of complaints from restaurants and beer and wine store owners.

The five options for DLC reform as recommended by the OLOThis week, Berliner called the county’s liquor monopoly a failure and made the case for deregulation in a letter to the editor in The Gazette.

Councilmember Hans Riemer, who spearheaded efforts to form the committee, has made it clear since his involvement with the county’s Nighttime Economy Task Force that he’d like to see major changes to the county’s control model.

“I think it has become impossibly difficult to serve our consumers, the residents, with the choices and the quality of services that they expect and that they know they can find elsewhere throughout the region,” Riemer said Friday. “Restaurant owners are giving up on trying to operate in Montgomery County. I think we need to address that.

“At the same time, I recognize that reform cannot mean that we create a huge fiscal hole for the county,” Riemer added.

That fiscal piece will be a major consideration throughout the debate.

The DLC brought in an average of $25.7 million annually over the last five years that was used to pay for other county government programs and services. The Department has generally made around $30 million for the county government.

Councilmember Marc Elrich, also a member of the Ad Hoc Committee, indicated he’s opposed to full privatization and that the Council should pursue a hybrid approach with better management.

“If I had an asset that was bringing in $30 million to the county without needing county tax dollars, I’d be figuring how to get the revenues to $35 (million) and $40 (million), not selling the asset off,” Elrich said.

Council President George Leventhal, also on the Ad Hoc Committee, said he hasn’t decided which route he prefers.

On Friday, the county government took to its official website to make its public appeal to keep the current model:

Local liquor control has served Montgomery County well. It contributes $30 million in annual profit to the County – helping us to fund schools, transportation, help for the vulnerable in our midst, and more. It helps to keep taxes lower. We have lower alcohol consumption and higher revenue for public purposes than other jurisdictions. There are not liquor stores on every corner. Our system makes it harder for underage individuals to purchase alcohol and provides more education for the public and for servers as well.

The committee will review five recommendations made by the Office of Legislative Oversight (OLO) for the future of the Department of Liquor Control and Montgomery County’s control model. Riemer said it’s his hope that the committee would be able to provide some recommendations for the full Council this summer.

Any significant changes that win the support of the Council would have to be approved by the state legislature, presumably in the 2016 General Assembly.

Friday’s worksession included DLC Director George Griffin, who defended some of the DLC’s operations but said he agreed with the OLO report that the department is in need of some changes.

How Montgomery County might make up for lost revenue if it reformed the DLC, per Office of Legislative OversightThe DLC commissioned its own report last year that found its Chevy Chase retail liquor store was hemorrhaging money, the truck fleet that delivers alcohol to local bars and restaurants is outdated and typical government hiring practices make distributing alcohol an inefficient and disjointed process.

Only the Department of Liquor Control (DLC) can sell liquor products for off-site consumption. Elrich, Riemer, Leventhal, Berliner and Griffin seemed to agree that the DLC should provide more than the 25 retail liquor stores it has today.

Elrich even suggested the idea of a county superstore, similar to private company Total Wine & More.

A committee session on March 6 will include a report from the county’s inspector general and a discussion with Gino Renne, head of the county government employees union that represents DLC workers. The union is opposed to privatizing the county’s alcohol operation.

On March 20, the OLO will give a review of DLC pricing compared to private wholesaler pricing and a number of restaurant and store owners will talk about their experiences.

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