Devastating: WSJ says White House “steps back” from VA

By VA Blogger

In my estimation, this is the worst development yet for Creigh Deeds. The lede of the Wall Street Journal:

 

The White House is stepping back from lending its heft to a bellwether gubernatorial race in Virginia, party strategists say, seeking to conserve its political capital and avoid close association with a candidate who might lose.

 

Ouch. A few paragraphs later:

 

After one appearance earlier this year, Mr. Obama hasn’t committed to any further engagements in the state, despite repeated requests by the campaign of Virginia state Senator Creigh Deeds. Mr. Obama will make a second appearance on behalf of New Jersey Democratic incumbent Jon Corzine, on a date yet to be announced.

 

Double ouch. Creigh Deeds still has Mark Warner and the Washington Post, but the deck is increasingly being stacked against him: Sheila Johnson, the NRA, and every single business group endorsing McDonnell; the Wilder non-endorsement; and now this.

 

It’s worth noting exactly how far Deeds has deviated from the campaign model of Warner and Kaine he pledges to follow. Where they de-emphasized social issues, Deeds has made it the centerpiece of his campaign. Where they pledged no tax increases (and quickly betrayed the electorate once elected), Deeds has wedded himself to tax hikes. Where they were able to get business support, Deeds has received none and is instead embraced by unions. Where Warner was able to get votes in rural Virginia and Kaine was able to run up margins in Richmond and NoVa, Deeds seems unable to do either.

 

With Bob McDonnell, we have our best candidate and our best opportunity in over a decade; let’s get out there, keep the pressure up, and make sure we bring this home.

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Comments

  • I Bleed Obama Blue says:

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    Mikey –
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    Perhaps you’ve been napping and missed the $300 billion of tax cuts in the stimulus bill. How’s that tax cut worked out, revenue-wise?
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    Reagan’s 1981 supply-side tax cuts dramatically lowered marginal income-tax rates. In 1990 and 1993, by contrast, Congress raised marginal income-tax rates on the well off. Which do you thing increased revenues more? WRONG! Real per-person revenues grew about twice as quickly in the 1990s, when taxes were increased, as in the 1980s, when taxes were cut.
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    Mindless slavery to political ideology is an ugly thing, Mikey, and you’re today’s poster boy!

  • AFF says:

    In addition to growing the size of the Federal government, Reagan quadrupled the Federal deficit. The myth of GOP fiscal responsibility has better staying power than the Great Pumpkin.

  • Dan says:

    Hey! The Great Pumpkin is real!

  • FedUp says:

    Concerning California’s budget problems and prop 13, the state has the highest paid public school teachers of any state in the country at an average of $63,490. It appears their budget woes have more to do with spending too much than not generating enough revenue. Prop 13 just keeps greedy politicians from abusing the property tax.

  • Dan says:

    FedUp, I’m sure it is possible to randomly pull statistics that show areas where California is the highest, the lowest or somewhere in between. That is hardly the point though. And prop 13 doesn’t just deal with the property tax. As I said in my comment, that portion was well thought out and reasonable. It was the rest of it that was a potential disaster and subsequent history has proven it to be a disaster.
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    It is simplistic to attribute all budgetary woes to “greedy politicians”. Politicians represent the people who elect them. Sometimes disturbingly accurately. But they are our elected representatives and we are perfectly capable of holding them accountable at the ballot box when they do a poor job. The 2006 and 2008 election cycles are crystal clear examples of that.
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    The problem in California is that the elected representatives face a virtually impossible task in crafting a budget because of the two thirds threshold set by prop 13. No doubt spending is a part of that. But you still have to have schools (and you have to pay teachers in high cost of living areas or you won’t have any) and wildfires don’t put themselves out and police protection isn’t discretionary spending and the pensions of retired state employees have to be paid and the guys who keep the Mediterranean fruit fly at bay don’t work for free and on and on.
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    Now at some point you have to pay taxes for all this stuff. And responsible legislators might find that it would be beneficial to lower or eliminate some taxes and raise others or create new ones to replace the ones eliminated. And let’s say 65% of the people in California think this new tax structure is a good idea and that 65% of the legislators they have elected to represent them do too. Well, tough luck! Gotta have a super majority of two thirds. The state and its taxpayers are screwed. Thank you one note anti-tax, faux fiscal conservatives.
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    The larger point here is that we elect people to represent us. It is OUR government. And if we elect people with sound judgment and hold them accountable then the best course is to give them the ability to govern effectively. Not to hamstring them with stupid gimmicks like super majorities. That is the formula for disaster as California proves vividly. And if they do a poor job, turn them out at the next election.
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    Now, before someone chimes in about the high rate of re-election for incumbents can we all agree that non-partisan redistricting that would create far more competitive districts at all levels is the way to go. Having so many seats that are ridiculously safe for one party or the other isn’t a good thing.

  • Brian S says:

    R, it’s kind of funny to see you decrying someone else as having “no manners” when you have been more than willing to engage in the exact same kind of statements when you’ve felt like it. Telling me to “keep up the golden moments, old sport” and calling articles “whiny” doesn’t strike me as being lifted from Emily Post. So enough with the haughty complaining.
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    One of the biggest issues I have with balanced budget amendments at the state level is exactly the situation we find ourselves in now. When we need to be spending in order to generate new jobs we can’t, because we can’t go into debt to do so. At the same time, raising taxes is also out of the question, because any increase in taxes will result in lost jobs and a shrinking economy. I would be for allowing the legislature to waive the budget neutral rules in bad economic times like now to allow the state to work its way out of the mess we’re in and repay the debt once the economy has bottomed out.

  • R says:

    I’m 200% [my vote counts twice ;) ] behind non-partisan, independent redistricting.

  • R says:

    And I agree, I have been a knee-jerk and I apologize. It isn’t right for me to do that.

    I agree on waiving budget-neutral rules as long as there can be a clear and visible consensus on prioritizing what is underfunded that should be spared from neglect. Increases in tax or fees will not necessarily shrink the economy in all instances. I’d argue that assessing the original overweight fee for trucks will certainly help us on fixing our transportation woes, considering that trucks have a physically more detrimental effect on road conditions than passenger cars. The fees are there to make up for the fact that out of state shipping by truck cannot be directly taxed by Virginia. Why these fees were slashed back in the mid-90s is beyond me and I’d be interested to see if increases comparable to earlier levels would still keep business rolling through our state on I-81, I-95 and I-64 as usual. I haven’t heard very much talk of it.

  • Alter of Freedom says:

    IBOB still simply just not get the whole ABC thing. He thinks its about a “sale” and fails to see that it is much much more than that and YES the biggest cost cutting measure would be the payroll and benefit expenses associated with runnin the VABC at the State level in the first place. Second, the localities get to bring in both sales tax and property tax revenue receipts from the stores which currently they are not getting in the current ABC operation. Thats big for localities, but the point that is lost on people like IBOB is they think its a one shot deal or liquidation/divesture when in reality the State could (and should) impose an addtional tax like we do with the gas tax and of course tobacco on liquor sold via the stores throughout the Commonwealth or even if they allow supermarkets to begin selling liquor. Localities get a pieceof the tax, all the property taxes and have oversight over zoning ordinances for where a store can be located and the State gets its share of continual revenue through tax revenue associated with sales. If what happens in other States occurrs in Virginia where former “control”states have seen revenues INCREASE post divesture. If revenues increase than so does the tax receipts brought in by the State IBOB. Its not a one time or one year windfall by any means if done the right way.

  • R says:

    It’s very correct that ABC privatization includes a continued influx of sales and real estate taxes, although most ABC stores I know of are leased out from the owner of the strip or single commercial building. Real estate wouldn’t be that huge of a gain unless I’m missing a line item in that process. Sales tax would be good but I think it wouldn’t recoup the profits lost from state sale of the liquor if sales tax remains at its current levels locally. Third, and perhaps the biggest, is the assessment made by the commission designed to research a possible privatization move. I’d argue for a reassessment of viability before proffering the idea as a guaranteed solution based on their findings.

  • I Bleed Obama Blue says:

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    Let’s see what it is that I just don’t get about; “…the whole ABC thing.”
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    You say the state will save “…the payroll and benefit expenses associated with running the VABC at the State level in the first place.” While that’s true, the ABC operation adds $100 million per year to the general fund AFTER EXPENSES. Sell the ABC stores & that $100 million per year is gone from the general fund.
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    You say; “…localities get to bring in both sales tax and property tax revenue receipts from the stores which currently they are not getting in the current ABC operation.” State sales taxes are collected by the state. ABC stores collect sales taxes. Are you talking about some sort of local sales tax? I’ll give you the property tax, but really, what is that worth? What would the annual property tax of all ABC stores total? Not $100 million, that’s for sure!
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    You say; “…the State could (and should) impose an additional tax like we do with the gas tax and of course tobacco on liquor sold via the stores throughout the Commonwealth or even if they allow supermarkets to begin selling liquor.” WHOA! Are you advocating raising taxes, Alter? If so, why not just raise the taxes and leave the ABC operation alone?
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    You say; “Localities get a piece of the tax, all the property taxes and have oversight over zoning ordinances for where a store can be located and the State gets its share of continual revenue through tax revenue associated with sales.” But localities already share in the sales tax generated. Besides, as mentioned earlier, the property taxes on these stores just aren’t that large. As far as zoning goes, the ABC stores are already subject to local zoning ordinances.
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    You say; “If what happens in other States occurs in Virginia where former “control” states have seen revenues INCREASE post divesture. If revenues increase than so does the tax receipts brought in by the State IBOB. It’s not a one time or one year windfall by any means if done the right way.” Do you have any evidence of this claim, Alter? If this is true, I suspect that the way in which revenues were increased is through those tax hikes you mention earlier. If that’s the case, that gross prices for liquor would increase, how does that benefit Virginians?

  • G. Stone says:

    “When we need to be spending in order to generate new jobs we can’t, because we can’t go into debt to do so.”
    You have bought into the BS. Your rational is flawed. Gov’t spending money for the purpose of creating jobs( real jobs, long term jobs )does not work. It never has it never will. Not a partisan issue either, Both sides of the aisle have fallen prey to this pretzel logic.
    Tax breaks, tax credits and a general REDUCTION in the total cost of doing business will create far more real jobs than Gov’t spending.Those in Gov’t . often believe that their spending of tax revenue is more beneficial than creating an environment that lowers costs, the cost of goods sold and getting out of the way of available capitol.
    Job creation is about capitol, capitol, capitol.

  • Brian S says:

    G. Stone, I understand your point, but at the same time, direct government spending on certain things does create jobs – namely, infrastructure. I don’t have a problem with the government going into debt to finance infrastructure improvements.
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    I would have a problem with the government going into debt to pay for things like education or social services, but paying for improvements is different.

  • Alter of Freedom says:

    Yes IBOB current stores are subject to local ordinances but are granted on a case by case basis. These are what are called “exceptions” which are at the discretion of the local BOCS. Ever has an ABC sought by the State not be granted IBOB. Check out West Virginia for one if you want to see receipts grow for liquor. How were these receipts (and thus taxes generated) increased after the “control” status was lifted….simple…access. Now this is the rub with folks. Fear of having a liquor store on every corner, but this is where the local government can be pro-active in the future regarding zonings. For example, no liquor sold within a certain mileage of schools, churches, etc. IBOB is not to hard to grasp that if you allow liquor access in grocery stores like wine and beer you will see revenues increase. Afterall are not must of us impulse buyers anyway. Obviously today you have to go to a liquor only ABC Store to make that purchase which means you have to have planned on buying that bottle beforehand. It does not work that way in big box grocery stores. Access, convenience equals opportunity.
    Sales taxes from liquor sales are not granted to the localities IBOB on a per store receipt basis as would any other store like say a convenience store. The State instead offeres localities certain funds for relative to the number of stores within the locality. These funds are not reflective of any tax generated or revenue. Thus currently the locality gets no direct sales tax or property tax receipts, which depending upon the area an ABC store is located can be more than you think and factored in growing localities that have multiple stores it is certainly revenue that no locality would turn down.
    Why is the 100 million not gone from the fund???? In no way will the Hermitage Road warehousing facility be shut down. The State would still be involved via the warehousing, which in place the model would change to where the liquor is delivered much like wine is today through distributors. The State would in a sense be the distributor it seems in the model and would be collecting fees associated with the operation. The State would be shedding “retail” operations in one proposal I have heard but keep control of distribution for restaurants, clubs, etc. Remember, how much of that 100 million windfall is coming from “sales” and how much is coming from ABC license fees, and event fees IBOB. These fees would not be going away. They average about 1,500-2,000 a year for restaurants and increase with mixed beverage and off premise sales permits.How many of these businesses exists throughout the Commonwealth. How much does it cost the State to simply issue a permit on paper? There is still some question regarding the law enforcement aspect (Special Agents) and what would happen there should ABC be divested but in the end the State certainly could increase its revenues through divesting ABC at the same time it reduces overhead and other expenses within the Department. You have to account for the two revenue streams and the growth model IBOB. Its not just sales, but the money generated is in those permits and event fees paid upfront before the first bottle of liquor, wine or beer ever gest sold and those fees are annual fees IBOB.

  • I Bleed Obama Blue says:

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    Alter –
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    You admit; “Yes IBOB current stores are subject to local ordinances but are granted on a case by case basis. These are what are called “exceptions” which are at the discretion of the local BOCS. [N]Ever has an ABC sought by the State not be[en] granted IBOB.” So local folks have always had control over ABC store placement & operations…so what’s your point?
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    You claim; “Check out West Virginia for one if you want to see receipts grow for liquor. How were these receipts (and thus taxes generated) increased after the “control” status was lifted….simple…access. Now this is the rub with folks. Fear of having a liquor store on every corner, but this is where the local government can be pro-active in the future regarding zonings. For example, no liquor sold within a certain mileage of schools, churches, etc. IBOB is not to hard to grasp that if you allow liquor access in grocery stores like wine and beer you will see revenues increase. Afterall are not must of us impulse buyers anyway. Obviously today you have to go to a liquor only ABC Store to make that purchase which means you have to have planned on buying that bottle beforehand. It does not work that way in big box grocery stores. Access, convenience equals opportunity.” So you want to spur alcohol consumption in the Commonwealth to raise tax revenue? That’s a bad idea on many levels. Where I live, in the land of the strip mall (Western Fairfax County), there is already an ABC store in every one. These stores are almost always located next to a supermarket which sells beer & wine. Convenience stores sell beer & wine. Alcohol is plenty available now, Alter, and I don’t see how “increased availability” is even possible, let alone desirable, or will increase revenue.
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    You suggest; “Sales taxes from liquor sales are not granted to the localities IBOB on a per store receipt basis as would any other store like say a convenience store. The State instead offers localities certain funds for relative to the number of stores within the locality. These funds are not reflective of any tax generated or revenue. Thus currently the locality gets no direct sales tax or property tax receipts, which depending upon the area an ABC store is located can be more than you think and factored in growing localities that have multiple stores it is certainly revenue that no locality would turn down.” Either way the state allocates sales tax revenue, on a per-store basis or by direct receipts; there will be winners & losers. Certainly rural localities stand to lose the most (simple mathematics: more folks = more sales = more sales tax revenue). So all this proposal does is change who wins & who loses. It does not necessarily increase revenue overall.
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    You Say; “Why is the 100 million not gone from the fund???? In no way will the Hermitage Road warehousing facility be shut down. The State would still be involved via the warehousing, which in place the model would change to where the liquor is delivered much like wine is today through distributors. The State would in a sense be the distributor it seems in the model and would be collecting fees associated with the operation. The State would be shedding “retail” operations in one proposal I have heard but keep control of distribution for restaurants, clubs, etc. Remember, how much of that 100 million windfall is coming from “sales” and how much is coming from ABC license fees, and event fees IBOB. These fees would not be going away. They average about 1,500-2,000 a year for restaurants and increase with mixed beverage and off premise sales permits. How many of these businesses exists throughout the Commonwealth. How much does it cost the State to simply issue a permit on paper? There is still some question regarding the law enforcement aspect (Special Agents) and what would happen there should ABC be divested but in the end the State certainly could increase its revenues through divesting ABC at the same time it reduces overhead and other expenses within the Department. You have to account for the two revenue streams and the growth model IBOB. It’s not just sales, but the money generated is in those permits and event fees paid upfront before the first bottle of liquor, wine or beer ever get sold and those fees are annual fees IBOB.” The $100 Million lost revenue figure is ONLY ABC store sales, not restaurant & bar licensing fees (which are imposed & collected locally, BTW). Regarding package stores, really what is the demand for hard liquor purchases, for consumption outside of a bar or restaurant, after ABC store hours? I have a difficult time believing it’s significant enough to generate more that a small trickle of revenue. There is also no doubt that enforcement would need to be increased, with attendant costs.
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    All-in-all, Alter, the argument for privatizing the ABC stores is riddled with holes, suppositions, and…risk. Why should we, as a commonwealth, RISK losing ANY part of a $100 million annual cashflow? And for what? To fund 10% of one years’ transportation needs? I remain VERY skeptical.

  • Alter of Freedom says:

    ABC permits are NOT collected “locally”. They are paid directly to the VABC Board IBOB.Anyone who ever holds a catered event knows this. You must apply and then pay the fee and then get the permit from the VABC. I know of no circumstance where the locality comes in nor gets any revenue from the fee. Enforcement is already in decline IBOB. The arguement for cost cutting is the same for brick and mortar stores versus online sales for other retailers. Why should the State incurr the costs of running stores if they do not have to. If you think the revenue is low from the stores than should they not simply just be divested as a cost cutting measure? Why not let the private sector grocery industry or others take up the burden of those costs?

    I think you need to dive into the books for the VABC IBOB and see where the growth is; it is in on premise sales where fee/permits are paid as well as liquor is purchased via the VABC. Remember even a place serving beer only still must get a on premise permit via VABC. Its not just liquor. The fees for on premise and on/off premise are different yet revenue from these licensees far outpaces the revenue from direct retail sales.

    The State has an opportunity to have the best of both sides if it determines to have the vision to do so. And by the way, no one is advocating Increased consumption by seeking to have liquor accessible in stores anymore than by offering a multiple of microbrews and variety of imported and domestic beer somehow encourages consumption. You do believe in an individual right to choice what legal beverage they would like to purchase don’t you? Or do you subscribe to the continued nanny state mentality?

  • I Bleed Obama Blue says:

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    “ABC permits are NOT collected “locally”. They are paid directly to the VABC Board IBOB.Anyone who ever holds a catered event knows this. You must apply and then pay the fee and then get the permit from the VABC. I know of no circumstance where the locality comes in nor gets any revenue from the fee. I think you need to dive into the books for the VABC IBOB and see where the growth is; it is in on premise sales where fee/permits are paid as well as liquor is purchased via the VABC. Remember even a place serving beer only still must get a on premise permit via VABC. Its not just liquor. The fees for on premise and on/off premise are different yet revenue from these licensees far outpaces the revenue from direct retail sales.” And this would change if the Stores were sold…how? There would still be an ABC, which would continue to collect the permits. We’re talking about selling the stores, not abolishing the VABC.
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    “Why should the State incur the costs of running stores if they do not have to. If you think the revenue is low from the stores than should they not simply just be divested as a cost cutting measure? Why not let the private sector grocery industry or others take up the burden of those costs?” Perhaps you’re not familiar with how the retail business works, so here’s a primer: Retailers buy inventory (merchandise to offer for sale) at a price generally referred to as “wholesale”. Retailers than “mark up” (add their costs and profit margin) the wholesale price to arrive at the “retail price, which is what you pay at the register. Currently, since the state is both wholesaler and retailer, the profit margin (retail price – wholesale price – costs) is earned, as revenue, by the Commonwealth of Virginia. If the retail store were sold, the $100 million in revenue, net of expenses, now enjoyed by Virginia from its ABC store sales would be no more.
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    “And by the way, no one is advocating increased consumption by seeking to have liquor accessible in stores anymore than by offering a multiple of microbrews and variety of imported and domestic beer somehow encourages consumption. You do believe in an individual right to choice what legal beverage they would like to purchase don’t you? Or do you subscribe to the continued nanny state mentality?” Variety and availability are two different things, Alter. As I said before, ABC stores are VERY conveniently located and open 12+ hours a day. I cannot see how accessibility is an issue.

  • I Bleed Obama Blue says:

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    Alter, I have to ask: What do you have against the VABC and its stores?
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    Those stores are a rare example of a government-run enterprise that is efficient, effective, and MAKES MONEY.
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    Why would you want to sell a money-generating asset for such a small short-term gain?

  • Alter of Freedom says:

    I realize its lost on you IBOB because you subscribe to the notion that the government is better suited to run an enterprise or business entity than the private sector but I think you may want to analyze just why it is we have a “control” status in the first place. Is it money? Or was it for social reasons? You are old enough to remember blue laws are you not? Fact is those states that have reverted to uncontrolled status have seen income to the State by way of taxes on sales increase both at the State and local level revenue through property and use as well.
    What is that 100 million you think will be lost ( and I agrue just like a few State Senators last year who tried to get a bill out of committee) that it will not be lost compared to the hundreds of million that over the next fifty yeras will have to committed to retirement benefits and insurance. Why do you think Frank Hall left the GA and went into State administration I believe at the VABC IBOB. One guess. His retirment payout will be at the highest level of service and not as a GA member. Imagine that. Take a look at the rising costs of benefits hitting the State. I have nothing against the VABC, save it can be run and grown just like the VA Lottery better and more efficiently by the private sector to greater benefit the State overall than simply having the State control it.
    In terms of how retail is run I can tell you that the State of course still must be supplied by direct sellers for the Hermitage Road warehouse and it could still just like National Distributing does for wine. Caould they still not control the cost to groacery stores? Could they still not generate the revenue in this manner much like they would if they were buying for their stores and then selling them at markup? And remember, liquor like wine is a volume business which means you could have say 100 ABC stores or you could be supplying 1,000+ grocery/ warehouse clubs….Ummmm. Even with a lower margin and I make no contention there would be, the greater the accessibility through grocery the greater shipments to those stores and the greater growth in sales IBOB. If you dispute this look at the model of the Virginia microbrews that started locally in retaurants/bars via draft beer and then expanded to retail operations throughout the entire State. sales rose dramtically through access to the product by the masses. They no longer had to go to the bar to experience the beer, but could get it at the grocery store when they were doing their routine shopping. I just do not get how this is lost on you.
    Besides, for someone who thinks transportation is in such disarray you would think you would embrace Bob McDonnells plan regarding the VABC. I mean will not the State simply just find some other way to spend your 100 million IBOB…that seems to be what they have been doing with those profits up until now.

  • I Bleed Obama Blue says:

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    Fact is those states that have reverted to uncontrolled status have seen income to the State by way of taxes on sales increase both at the State and local level revenue through property and use as well.” You keep saying this, Alter, stating it as “fact”, yet you offer no evidence, no proof. I’ve researched your claim and cannot find evidence that it is true. Please provide a study, an analysis, something that supports your assertion.
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    “I have nothing against the VABC, save it can be run and grown just like the VA Lottery better and more efficiently by the private sector to greater benefit the State overall than simply having the State control it.” Again: Prove it! I do not ‘subscribe to the notion that the government is better suited to run an enterprise or business entity than the private sector’, nor do I subscribe to your ‘government-run = inefficient, ineffective’ attitude. In the particular case of the ABC stores, believe the state does a fine job, generating sales revenue AND tax revenue that more than offsets lost property tax revenues.
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    Please stop arguing that selling the ABC stores will reduce cost to the state. The ABC stores generate +$100 million in NET REVENUE, AFTER EXPENSES. I am against forfeiting revenues to cut costs. It makes no sense!
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    “In terms of how retail is run I can tell you that the State of course still must be supplied by direct sellers for the Hermitage Road warehouse and it could still just like National Distributing does for wine. Could they still not control the cost to grocery stores? Could they still not generate the revenue in this manner much like they would if they were buying for their stores and then selling them at markup?”
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    Here’s how the retail price of a good, ANY good, is set: Manufacturing/production cost (direct materials, direct labor, indirect costs, overhead, etc.) + profit margin = Manufacturer’s price. Manufacturer’s price + profit margin + profit margin = Retail Price. Currently, through the ABC stores, the Commonwealth earns a retail profit. If the ABC stores were sold, the retail profit would be earned by whatever retailer took the state’s place (e.g.; grocery stores). I dispute your claim that, ‘the greater the accessibility through grocery [stores and] the greater shipments to those stores…the greater growth in sales.’ I’m having a very hard time believing that the availability of liquor on a grocery store shelf instead of at an ABC store RIGHT NEXT TO THE GROCERY STORE will spur sales to the extent where tax revenue would grow by $100 million. I’m also not so sure that broader availability of liquor is such a great idea from a social perspective.
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    “…for someone who thinks transportation is in such disarray you would think you would embrace Bob McDonnell’s plan regarding the VABC. I mean will not the State simply just find some other way to spend your 100 million IBOB…that seems to be what they have been doing with those profits up until now.” The problem w/Bobby Mac’s plan is its short-sightedness. Give up $100 million/yr. in revenue for a one-time $500 million payout. Have you ever heard the term ‘net present value’, or NPV, Alter? It’s the value of cash flows (like $100 million/yr.) discounted to its present value. To get an NPV of $500 million for the $100 million cash flow, in perpetuity, requires a 20% discount rate, meaning the state would need to earn a 20% return on that $500 million for the price to make economic sense. A more realistic 2.5% discount rate results in a $4 trillion NPV for the stores (to put it another way, four trillion is what the stores are worth to Virginia). At that price, I’d be willing to consider a sale of the ABC stores.

  • I Bleed Obama Blue says:

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    Correction: It should read $4 billion in the post above, not $4 trillon.

  • Alter of Freedom says:

    IBOB I have to wonder what reasearch avenues you explored. The study presented in the Virginia State Senate by Republican Mark Obenshein of Harrisburg had it all. It even had data from the 2002 report generated by former Gov. Wilder’s government efficiency and effectiveness regarding divesture of VABC.

    The State operates 331 liquor stores IBOB and in the end what does your 100 million (its actually 104 million btw) come from….it is merely the equivalent of the taxes generated by liqour. The “taxes” IBOB, not any profits. What does that tell us. It tells us the the State loses the “profit” generated through the excessive expenses, costs, benefits and everything else related to the State running the operation. These expenses are greater than the private sectors would be IBOB. Can yopu point to one single government program/agency run more effectively/efficiently? Evidently the Wilder study could not.
    There are 18 “control” States, but only 9 of them actually run liquor stores. 9. Where does Virginia stand compared to those 18? 9 like Virginia run liquor as an monopoly; control of sales and taxes generated whereas other states simply generated revenue through the tax side without the other expenses. Its afunny thing but the control States do not seem to be doing as well as the nonj-control ones in the revenue generation side IBOB eventhough 9 of them control ther stores as well. You want the data? call Sen. Obenshein’s office. He presented the bill in early 2009 to privatize the VABC.

    Why?
    He stated that it would generate 700 million in NEW revenue or 23 percent of 2009 Virginia budget shortfall– and generate that revenue EVERY YEAR.
    BTW even PA, which is a control state is experimenting with selling liquor in supermarkets (19 now more to follow) across the State and have seen gains in sales and revenues throughout the program compared to flat same store sales for its existing liquor-only stores.

    I am begining to truly believe its not about the 100 million issue and your belief it will disappear, but the very fact you seek to grow government and expand its influence. Faced with billions in shortfall dollars, I think we should by now dispel any myth that government can run anyhting better or more efficient than the private sector; and that belief IBOB seems to have alot of bipartisan support. Wilder’s report attest as much IBOB.

    The only “one time” revenue generation in the proposed privatization model IBOB is the sale of licensing or actually the sale of current locations by the State to independent agents. Thats the only singel one time revenue and it would be upfront. Then the stores selling liquor would be charged permit fees to do so (those are annual) just like grocery has beer and wine permits for off premise and then the State would generate the tax revenue imposed on the sale of liquor in addition to the noraml sales tax. Are you saying that the State should have cig taxes at the rate we have now but not on liquor? The model is not shortsided at all.

    “retail profit…. there is none. Look at the amount of taxes collected IBOB and then look at your 100 million dollar figure…..Where are your mark ups going IBOB. Where are those retail profits IBOB? They do not make it to the bottomline IBOB. For each bottle sold there are taxes and the number of cases sold statewide and the amount of taxes assoctiated with those sales is equivalent to you 100 million figure. Meaning? All those retail profits are lost to the expense side and cost of operations. All of them IBOB.

    How much could the State generate without all the operational expenses accompanied with the divesture and sales of licensing and permits to the thousands of retailers throughout the State? Remember that 100 million of yours is off of 331 stores. Open it up to grocery stores/warehouse clubs Obenshien is absolutely correct in determining that the revenue will rise by lowering associated expenses.

  • I Bleed Obama Blue says:

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    “The study presented in the Virginia State Senate by Republican Mark Obenshain of Harrisburg had it all.” Do you have a link to that study, Alter? It’s not on Obenshain website. BTW, Obenshain’s bill on privatization, SB 1542, was crushed in committee, 13-2. One of those yea votes was Kooky Ken Kooch…Hmmm, I wonder why Obensain’s proposal was SO unpopular and how Bobby Mac would get such a bill passed?
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    Here’s a snippet of the a report, Alter, that I was able to glean: In 2008, the ABC Stores generated revenues of $555.8 million and had operating expenses of $452.4 million. Now, where I come from, revenues minus operating expenses equal PROFITS! The ABC clearly generates $103+ million annually for the commonwealth IN ADDITION to tax revenues. So right off the bat, you’re wrong, Alter.
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    “Faced with billions in shortfall dollars, I think we should by now dispel any myth that government can run anything better or more efficient than the private sector; and that belief IBOB seems to have a lot of bipartisan support.” See, that’s part of your problem, Alter: You are so invested in vilifying the government that you cannot even fathom it doing anything right.
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    “Are you saying that the State should have cig taxes at the rate we have now but not on liquor?” We have a tax on liquor now, Alter.
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    “Remember that 100 million of yours is off of 331 stores. Open it up to grocery stores/warehouse clubs Obenshain is absolutely correct in determining that the revenue will rise by lowering associated expenses.” Ummm, no. If grocery stores/warehouse clubs sell liquor (btw, the Costco I frequent in Fairfax sells liquor, at least during part of the year…the Holidays?), then the grocery stores/warehouse clubs will get to keep the profits. You don’t expect those store to sell liquor for free, do you?

  • Elder Berry says:

    Recall when the state wanted to close the weigh stations to save money, including one on Route 50 in Loudoun, until Bob Marshall pointed out that that one not only improved safety but also more than paid its own way.

    Selling the ABCs is short-term thinking of the worst kind and a bad idea. They generate revenue. You sell your horses you have nothing to ride.

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