WRA Government Affairs Team prepares for implementation of the liquor warehousing proposal

During the 2011 legislative session, a proposal emerged that would hand over the warehousing and distribution of the state’s liquor to the highest bidder. Those interested in taking over this function for the state, would have to demonstrate added financial benefit to the state and local governments, and the bidder with the best proposal – as determined by the Office of Financial Management (OFM) – would be handed over the rights to warehouse and distribute liquor.

Initially, the WRA was actively opposed to this idea. Proponents were unable to articulate how one company could increase efficiencies to the tune of $300 million – for a function that costs the state only $10 million to operate. In addition, the original bill did not provide for a stakeholder input process – and as the state’s largest customer of spirits – were concerned any change to the system would undoubtedly have an impact on licensees. The bill also gave unprecedented authority to the Office of Financial Management without the benefit of legislative approval or a public process. Finally, and most importantly, proponents of the original plan laid out a very risky financial plan and scheme that showed if the new company were to simply maintain status quo on efficiencies, the result would be a loss of revenue to the state at the cost of hundreds of millions, which would have to be passed on to the customers – licensees.

The WRA government affairs team worked with sponsors of the legislation, as well as the full Legislature to ensure these crucial concerns were addressed in the final bill that passed and was signed by the governor. The WRA has also remained active in the implementation process.

The Office of Financial Management has prepared a draft Request for Proposal (RFP) for public review. The WRA will be submitting comments on the draft to OFM and testifying before the House Ways and Means Committee on August 22.