Alabama Democrats Vote to Save Jobs: ABC Privatization Bill Dies in Senate Committee

A bill by State Senator Arthur Orr (R-Decatur) to privatize the Alcoholic Beverage Control Board has died in the Senate Finance and Taxation General Fund Committee by a 7-6 vote along party lines, with one Republican voting ‘NO.’ The vote received applause from attendees.

A substitution bill presented by Orr would’ve changed the suspension penalty for Selling to Minors from one year to one week, and increased taxes, was also adopted along party line vote.
Orr said earlier that, “Part of our job is to downsize government,” and demanded a committee vote be taken on his bill today.

Alcoholic Beverage Control Board Administrator Mac Gipson testified that employees are paid from mark-ups from sales in the state’s 176 ABC stores. He also noted that by comparison, there are 587 private package stores in the state.

In Alabama, liquor is marked up at cost plus 30% in ABC stores. Orr’s bill would’ve also increased the liquor tax to 56%, along with other taxes. Alabama’s alcohol taxes are among the highest nationally.

Research by the Beer Institute found that beer taxes are inherently regressive, because “Instead of taxing equitably across all income groups, beer taxes place a much heavier burden on low- and middle-income taxpayers than on the rich. That’s because many more beer drinkers are men and women with modest incomes rather than wealthy people.

“An analysis by the Beer Institute found that households earning less than $50,000 per year pay half of all beer taxes, while accounting for less than one-fourth of all income earned in the U.S. Beer taxes are actually 6.5 times higher as a percent of income for lower-income households (those earning less than $20,000 per year) compared to higher-income households (earning $70,000+ per year). The tax on beer is thus one of the most discriminatory of all taxes in the federal and states’ tax codes.”

Mac McArthur, Director of the Alabama State Employees Association, said approximately 2% of the state’s workforce would be lost if Orr’s bill was adopted.

Orr countered saying, “The reality is, there’s going to be a lot of job losses (in state government), not just this.”

Orr also said that he assumed ABC employees’ would be hired by the private businesses that takes over stores. Several citizens and others attending in the audience said ‘no.’

Orr has long attempted to privatize the ABC, and has been accused of benefiting private interests.

As early as 2006 when Orr first campaigned for Senate District 3, he was Corporate Secretary of Petroleum Sales, Inc., which owned the local Bud’s Convenience Store chain. The corporation included his brothers, sisters and father Bud. Shortly thereafter, Orr introduced legislation which would’ve eliminated the ABC Board, and privatized liquor sales in Alabama. Accusations of benefiting private interests quickly emerged, and lingered. It was only in 2012 that his family sold the chain.

Sen. Beasley said he was concerned about losing 643 state jobs, and possible loss of state revenues. Sen. Singleton also opposed due to job losses, noted that these who would lose their jobs could end up on welfare, and said that “Where you think solving one problem, you’re going to create another.”

Also present at the hearing were representatives of ALCAP, Alabama Citizens Action Program (earlier known as the Alabama Council on Alcohol Problems), the Birmingham-based group which bills itself as ‘Alabama’s Moral Compass,’ and is the descendant of the Alabama Temperance Alliance.

Joe Godfrey, ALCAP’s Executive Director said that alcohol is a “mind-altering drug… we’re trying to keep control on.” In 2010, ALCAP’s Board of Directors divided the organization into two separate entities, and ALCAP became a 501(c)(4) organization established to lobby the Alabama Legislature.