Monday, September 27, 2010

Catching up....

 I've been slack on posting to the blog lately.
I went on vacation in Vegas and had a hard time getting back into blogging mode. And, I didn't want the blog to be too dominated by posts about Ken Cuccinelli, although he does something worth talking about nearly every week, or the governor's ABC privatization plan. I've written a lot about ABC privatization. I was on that bandwagon before Bob McDonnell.

However, with the full details of the governor's plan available since my last post, I'll hit it another lick in a grab bag full of topics in the news.

  • McDonnell tries to give away the stores...and the wholesaler too: I'm on record as thinking Virginia needs to get out of the business of selling alcohol. It's hypocritical for the state to put people in prison for drug offenses while Virginia markets and sells the drug that has the most disruptive effect on society -- in terms of lives lost to drunk drivers, divorce, domestic violence, etc.  The state should never have gotten into the liquor business in the first place after Prohibition. But it did. We crossed that Rubicon more than 70 years ago. The state controls the right to sell hard liquor in Virginia. And, to paraphrase a now-disgraced former governor of Illinois, "That's a @#!$%&* valuable thing, you can't give that away for nothing." But that's essentially what our governor has planned. He's allowed a commission composed of many of the interests who will probably end up buying the business to set the bid price. They've come in at about $500 million. At a guess, the state's ABC business is probably worth closer to $2 billion, based on annual sales of more than $600 million. That's for 1,000 permanent retail licenses. To give but one example of how the governor has underpriced this asset, Paul Goldman former Zvengali to Gov. Doug Wilder points on at Blue Virginia that Maine will realize about $144 million from leasing its wholesale distribution facilities to a private entity for 10 years. Virginia has about six times the population of Maine, but the governor proposes to permanently sell the state's wholesale operation for $168 million. That doesn't smell right. An audit of the states liquor business, to find out what it's really worth, would be appropriate before the General Assembly proceeds with the governor's plan, which it's showing no inclination to do so far.
  • The McDonnell Miracle: turns up $1 billion in unspent money at VDOT : Speaking of audits, an audit of the Virginia Department of Transportation turns up more than $1 billion in unspent funds. While the McDonnell administration acted surprised by this and said it created a windfall for transportation and inferred that it bespoke of mismanagement by the prior two Democratic administrations, there's less to this story than meets the eye. All state agencies accumulate cash reserves for unforeseen circumstances. In the case of VDOT, with uncertain funding coming partially from the state's general fund and partially from the Transportation Trust Fund from fuel taxes and with uncertain expenses due to weather conditions, it's not surprising that those cash reserves are unusually large. That's what VDOT would have used to clear the roads in a harsh winter or to make repairs if we had a bridge collapse like the one in Minnesota two years ago. It's not that big a deal.
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