On budget woes and value systems

Since taking over as Governor of Virginia earlier this year, Bob McDonnell has mostly avoided major controversy. But one of the more contentious issues this year has been his proposal to privatize liquor sales, moving away from the ABC-store monopoly that has existed since the repeal of prohibition.

According to projections from the governor’s policy team, privatizing liquor sales would generate $229 million annually, and it would create $458 million in a one-time windfall that would be devoted to sorely underfunded state transportation projects.  

To generate that $229 million revenue stream, the proposal stipulates fees for wholesalers: a $17.50-per-gallon excise tax and a 1 percent tax on gross receipts. It also contains a 2.5 percent “convenience fee” on restaurants and bars that buy liquor directly from wholesalers instead of retailers... 

To boot, the state would auction 1,000 retail liquor licenses to the highest bidding stores, and the licenses would be divided into three unequal categories based on size and location.

The $229 million annual revenue projection (which has been heavily disputed in some corners) marks a slight decrease from the $248 million in profits and taxes generated in fiscal 2009 under the ABC-store model. So the real benefit of the plan is the one-time windfall to benefit transportation projects that otherwise cannot be funded--especially after the incredible drain on resources caused by the snowiest winter in Virginia history. 

The main source of the controversy is not so much the debate over the governor's projections, but the broader value-based message that would be sent throughout Virginia. 

A weak spot within McDonnell’s privatization pitch has been addressing social implications. Critics have asked: Wouldn’t upping the state liquor store tally from 332 to 1,000 increase alcohol consumption, burden local law enforcement and open a Pandora’s box of social ills, such as increased underage access?

The Virginia Interfaith Center is circulating a petition urging Virginians not to “trade your values for a few pieces of silver.”  According to the petition, privatization “will give our state a short-term financial high with a big long-term hangover.”

Ultimately, the question becomes whether Virginia can afford not to make that trade. The state is in better financial condition right now than many, but coffers are still bare, and deferred maintenance on infrastructure is a very real problem with few viable solutions.

The proliferation of debates like this one (and the ongoing marijuana debate in California) throws into question just how tightly held some of our values really are. I wonder if some "values" are in fact more like luxury goods--nice to have, but fungible and expendable under the right (or wrong) circumstances.

With budget gaps at local and state levels widening by the day, I think it is inevitable that some of our moral lines will begin to blur. Legalizing and taxing vices (like gambling) might end up being many municipalities' only way out of budgetary purgatory.

[C-Ville]
[Washington Post]