The Virginia Alcoholic Beverage Control Authority (ABC) Chief Executive Officer Travis Hill recently spoke to the Senate Finance Committee’s Public Safety Subcommittee about budget priorities. ABC started transitioning from a Department to an Authority in January 2018, and many of the requests relate to reinvesting in infrastructure and streamlining and modernizing ABC’s processes.
ABC employs 1,110 full-time and 2,684 part-time employees. The number of part-time employees increased by 556 since 2013 due to the 29-hour cap in the Affordable Care Act. ABC experienced a 50 percent annual turnover rate due to the hour cap and scheduling issues. To address turnover, ABC is converting part-time employees to full-time. The conversion is working with 4 resignations out of 50 positions created last biennium. For this budget cycle, ABC requested $1.5 million to convert 25 positions.
Since last year, store openings and sales increased 4.7 percent to 370 and $172.9 million. ABC contributed $2.4 billion in profit and taxes to the Commonwealth over six years. In 2017 alone, ABC had $171.2 million in profit transfers, $154.4 million in state taxes, $43.3 million in sales tax, $36.8 million in the wine liter tax, and $42.8 in the malt beverage tax. Through sales tax revenue, ABC contributed $111 million to the general fund. Localities directly receive a portion for education, and indirectly for certain infrastructure and services.
Currently, there is $1.9 million in the budget for enforcement, funded by license fee increases. Legislation has been introduced this session – SB 884 (McDougle) increases the retail license application fee by $135, the banquet special event and mixed beverage special event license application fee by $30, and both the wine and beer shippers license by $135. In 2019, the increase is expected to bring $839,752 in revenues.
With a sales forecast increase of 4.42 percent in 2018, ABC requested $20.1 million and $54.9 million. To replace the point of sale system and hardware, ABC requested $7.7 million in both years. Here, a cost savings proposal suggested extending the service contract for existing hardware, costing an additional $2.8 million and $2.5 million. CEO Hill’s plan is to phase-in the system over a three-year period. ABC requested $1.3 million to transition to Office 365, which will create long-term cost-savings. And, ABC intends to add 57 new positions at $8.5 million to staff new and high-volume stores over two years.
ABC has several large-scale capital requests for a new warehouse and central office, and is working with the Department of General Services (DGS) for a Request for Proposal. Another cost-savings discussion will be had in the future about these proposals.
To view CEO Hill’s presentation, please click here.
VACo Contact: Khaki LaRiviere