Case in point: Rep. Tom Anzelc's proposal to permit Sunday liquor sales and dedicate the tax revenue to funding county children’s social services.
Over at MNPublius, Zack says Sunday liquor sales should not be controversial, and he has a host of commenters agreeing with the Distilled Spirits Council of the United States (DISCUS), that "state revenue from sales tax on Sundays could equal up to $10 million a year."
Regular readers know I'm an active supporter of raising tax revenue, drinking on Sunday and providing quality children's social services. So why am I not getting on the bandwagon?
Because this proposal, like many we'll see in the budget-patching season, has its own holes. Let's start with the numbers.
The Numbers Problem.
I wasted a good part of a morning trying to find any actual data
from the "industry studies" to support the increased revenue claims and came up dry. Because state liquor laws are so different, it's also difficult to independently corroborate the claims that
the dozen states that have recently allowed liquor to be sold on Sundays generate more than $200 million in new state revenue every year. The average liquor store in these states is earning between 5 and 8 percent more per week.
But just five of those states account for an above-average share of national liquor sales (about 17.5%), so the $200 million looks bigger than it really is — which is not very. (Minnesota's estimated $10 million benefit represents about 5/100ths of a percent of the state budget.) Also, it's impossible to tell here if any of the gains attributed to Sunday sales actually came from price increases on regular volume growth, which runs nationally about 2.5% annually.
When something is difficult to measure and estimate, you can fund a rigorous study or you can guess and figure no one else will bother to do all that work, either. I wonder which way the liquor lobby went on this one?
As for the liquor stores, are they really "earning" 5 to 8 percent more in a market that's only growing at half that rate? Or are they simply taking sales away from stores that don't open 7 days, or from groceries and convenience stores that used to sell a lot of 3.2 beer on Sundays?
There's also no way to know from the DISCUS press releases and media quotes what the touted 8 percent "average" gain really represents. Is it what a store in the middle of the pack is seeing? Or is it the mean gain, with most of any net sales increases and market share gains going to superstores?
The Retailer Problem.
Remember, DISCUS represents Big Liquor, not retailers, small distillers, brewers or vintners. If Sunday sales end up hurting small stores , it won't be their brands that take the hit. About the only thing certain is consumers will still be able to still buy mass quantities of mass market swill.
Sunday liquor sales is never just about liquor stores, so watch for a revival of the wine in grocery stores debate. Colorado recently went to Sunday sales, but rejected a bill allowing grocery stores to sell strong beer and wine. (Minnesota has also rejected that one.)
Here's a fairly pro-Sunday-sales view from a Colorado home brewer that raises a lot of the common arguments. But I can you tell some smaller Colorado liquor retailers aren't happy with 7-day sales — especially those where the owners are the ones working the extra day just to keep their sales level for the week.
The Payback Problem.
The Anzelc bill proposes to dedicate a small anticipated funding stream to local governments. We know how well that's worked lately. (See local government aid and dedicated funds from the tobacco settlement and medical provider taxes.) And we also know how tying up specific fund sources reduces flexibility to deal with new budget conditions.
Aside from whether the DISCUS estimate of new revenue is remotely correct, policymakers have to consider whether the Sunday sales proposal would impose additional costs on business and state or local governments — for compliance, collecting and segregating the dedicated revenue, etc. That "up to $10 million" can get down to nothing pretty easily. (If you want to get an in-depth look at the issue, the Minnesota Legislative Auditor's Office did an extensive study of state liquor regulation in 2006 [PDF].)
Booze hounds, liberty lovers and tailgaters who forget to buy beer on Saturday can be expected to cheer for Sunday sales. But the benefits are mixed and muddled. We won't know how the concoction will affect us until we drink it.