A lot has been said about ending the liquor monopoly. Let’s separate myth from facts.

Myth 1 - The county budget cannot do without the $25-30 million that DLC returns to the general fund.

  • Fact - DLC’s contribution to the County's general fund accounts for 0.5 percent of the county’s total $5.6 billion operating budget. It is less than half the amount the County Council removed from the budget in July 2015. Over the past decade, the county has averaged $140 million a year in growth of revenue from non-DLC sources – far more than it earns from liquor. Consumer flight away from the county’s liquor monopoly is a massive problem, and if reform causes repatriation of revenue from D.C. and Virginia, the state will make millions more in alcohol taxes and sales taxes on alcohol. Vocal MOCO urges that at least some of that state revenue increase should be shared with the county to plug any budget shortfall. Growth in the restaurant and retail industries from competition would also generate new revenue for both the county and the state as a report by the State Comptroller indicates. [LINK]

Myth 2 - Without liquor money, classroom sizes will rise.

  • Fact - The state’s Maintenance of Effort law prevents the county from cutting its per pupil contribution to the local schools unless it can obtain a waiver from the State Board of Education.

Myth 3 - Unless the county retains its liquor monopoly, it will have to raise taxes.

  • Fact - Repatriation of the millions lost by MOCO to other counties in Maryland, Virginia and the District should more than offset the lost revenue.  On the other hand, unless there is significantly more business growth which is likely to follow an end to the monopoly, considering increased school enrollments and other needs, the pressure for tax increases on individuals will only continue to increase. 

Myth 4 - The county has issued bonds based on liquor profits and without a government monopoly, the county’s capital budget will be endangered.

  • Fact - According to the county’s Debt Service Book, the county had $2.567 billion of bonds outstanding as of June 30, 2014.[Update]  Of that amount, $114 million was accounted for by liquor bonds – four percent of bond debt outstanding. The county routinely issues bonds and retires them every year. One possibility for replacing liquor bonds is to issue debt backed by franchise fees charged on cable company bills. The county’s net proceeds from these fees are projected to total $13 million in FY16, more than the debt service that is paid on liquor bonds ($11 million). In any event,  Vocal MOCO believes borrowings for the alcohol monopoly going forward must cease. 

Myth 5 - If the private sector is allowed to compete with DLC, hundreds of union jobs will be lost.

  • Fact - The two largest wholesalers in the State of Maryland are Republic National and Reliable Churchill. The former is organized by Teamsters Local 355. The latter is organized by Teamsters Local 570. Members of both locals are covered by defined benefit pension plans, whereas DLC employees are covered by a defined contribution plan. Vocal MOCO believes a significant portion of DLC’s workforce can move from one unionized shop to another and supports these efforts as well as offering employees other county jobs.

Myth 6 - If the county loses its liquor monopoly, there will be a liquor store on every corner.

  • Fact - Regardless of whether the county has a liquor monopoly, a modernized regulator, possibly the Board of License Commissioners, will have the  authority to issue liquor licenses as the BLC has now. Obtaining a license is not an easy process in Montgomery County even for established business owners. There is no reason to believe process will change.  Most importantly, zoning restrictions also apply.

Myth 7 - The County Council in 2016 proposed reform that will fix DLC’s problems.

  • Fact - The council proposal was merely a tweak to help restaurants order non-standard, specialty items. It did not address the underlying concerns that the monopoly should end and in fact the Council opposed letting the voters decide by referendum to end the monopoly.

Myth 8 - Since state law requires each manufacturer to pick one distributor for its products, DLC will not be able to stay in business in a competitive environment because manufacturers will go with the private sector instead.

  • Fact - State law indeed requires a manufacturer to select one distributor for its products, but it contains an exemption for county dispensaries. Nothing under state law prevents a manufacturer from selling to both private distributors and DLC.

  *Special thanks to Adam Pagnucco for developing these Myths and Facts



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