Charlie Arlinghaus

October 23, 2013

As originally published in the New Hampshire Union Leader

The federal government doesn’t work because it doesn’t have to. Politicians are not capable of compromise in a natural state. They only compromise – or at least seek some vague common ground – when they are required to and have no other choice. Right now, competing politicians can’t even talk to each because they aren’t working on the same problem. State politicians aren’t nobler than the federals. They just have a common goal imposed on them externally.

Washington has long been a dysfunctional circus. Sometimes a new personality enters the mix but the broad insanity continues along more or less the same lines. In recent years, the same insanity seems to occur but slightly more frequently.

Every few months, we are treated to cable news channels blaring very serious with dramatic concern about the latest fiscal cliff or impending government doom. Tax cuts may be about to expire, some automatic spending cut may be about to take place, or perhaps 18% of the federal government might shutdown.

People should be forgiven for thinking each one of these scenarios is partly real but mostly exaggerated for the sake of ratings wars among the half of a percent of the population who bothers paying attention to cable news stations.

I want to believe these are real crises but we seem to have one every few months and they all sound about the same. One party or the other thinks we’ll have Armageddon if we don’t raise something or cut back something. And no one is quite sure the exact day of the supposed deadline. As the deadline approaches, someone clarifies that the actual deadline is a few weeks later than we first thought.

Ultimately, every crisis is averted. The solution is always about the same. As a temporary measure we do some slight variation of what we’ve been doing all along and it buys us another five or six months until we have the debate again. The cable channels will have new music and a new logo. The crisis will have a slightly different name but the big picture is about the same: nothing much changes.

Congress has some trouble changing because this is what they do. They all walk around a really nice old building surrounded by sycophantic staff holding their bags, an array of servants rarely seen outside Downton Abbey, and a very serious press corps talking to them in hushed tones about how statesmanlike they are compared to the other people who are causing the problem. It’s all very intoxicating and theatrical.

What they lack is an agreement on what exactly their job is. These fiscal cliffs all have a nominal deadline but it’s not clear what must be accomplished before the deadline. You would be excused for thinking they had to produce a budget, a balanced and binding document detailing spending and the revenues to pay for that spending. This is what states produce and it makes them functional even when they hate each other every bit as much as the federal patricians do.

But at the federal level we move from one stopgap to another, one temporary fix to another. There are no requirements or real deadlines.

This is their ultimate failure. They don’t act because they don’t have to act. For a politician, nothing is as painful as having to balance a budget. It involves saying no. Not everything can be done. Decisions have to be made, priorities balanced, and someone will be unhappy. No politician in his natural state wants to balance a budget. They do it at the state level because they are forced to. By a date certain, a balanced budget must be passed. No ifs, ands, or buts. If they fail, generally speaking the lower, pre-inflation level of spending for each agency and program continues. Saying yes to a couple of things always trumps saying no to everything so they act.

At the federal level, the consequence of not acting is happy. No decisions, fewer angry people, and all the hard stuff left for future generations. It is conventional wisdom among the establishment of both parties now that actually balancing the budget is both impossible and unnecessary.

Ultimately, federal politicians are children and they need to be treated like children. They need rules imposed on them from the outside. A balanced budget amendment shouldn’t be needed but it is. They need to have a goal imposed on them because they can’t be trusted to do anything responsible.

The sooner we start treating them like adolescents, the sooner they might clean their room.

 

Charlie Arlinghaus

February 15, 2012

Today we can buy three out of four categories of alcoholic beverages at the grocery store. Adding a fourth category constitutes a convenience not a catastrophe. It will be good for the state, good for revenues, and good for consumers.

When federal prohibition was repealed, then Gov. John Winant still wanted state prohibition but acquiesced to the legislative repeal so long as alcohol sales were a state monopoly sold at the three state liquor stores that opened in August of 1934.

Gradually sales expanded beyond the state-run retail outlets which have grown to 77. There are four categories of alcohol in New Hampshire: beer, table wines, higher alcohol fortified wines and liquor.

Today, the first three categories can be sold at grocery stores (licensed off-premise consumption outlets) but each step was a struggle against the same arguments made today for the retail monopoly.

Initially, non-monopoly beer sales were limited to a small number of outlets. Attempts to open sales to most grocery stores were opposed by the liquor commission. In the 1970s, retailers asked to be allowed to sell wine in addition to beer. For most of a decade the liquor commission fought this expansion with the same arguments made today against liquor sales.

Control advocates argued that selling wine in 1000 stores was too much and should be limited to the 77 state liquor stores. They argued that wine sales would merely cannibalize state sales and cost the state millions of dollars in revenues.

Based on experience, we now know that they were wrong. About half of all wine sales are in state-run stores and half in private outlets. The wholesale side of the business is still a strict state monopoly. Revenues didn’t decline and in fact experienced a significant increase. Just as important, consumers were able to purchase a legal product in 1400 locations instead of 77.

When fortified wines – wines with a higher alcohol content, usually for dessert – were added, the same objections were there but muted by past experience.

Today, you can buy beer, wine, and fortified wines all at your local grocery store. The one exception is liquor. A bill in the legislature would change that. Stores that currently sell beer, wine and fortified wine could add liquor to the shelf. After all, if a store is currently selling all the other alcoholic products, why would it not be able to also sell whiskey responsibly?

The proposal is very simple and does nothing else. The state would still control the import and wholesale operation of liquor. New Hampshire would still be a control state. New Hampshire would still operate liquor stores and private retailers would be required to purchase from the state as the monopoly wholesaler.

Just as when wine was opened up, opponents have claimed the state will lose money. It wasn’t true with wine. It wasn’t true with beer. It wasn’t true with fortified wine but this time they really mean it.

A study by the New Hampshire Grocers – advocates now and advocates when wine was opened up as well – suggests that the state will realize one-time revenue from initial shelf stocking (purchased from the state as the monopoly wholesaler) and licenses. In addition, they believe the state will see an annual revenue increase of $11 million (current liquor commission profits are about $130 million per year).

Opponents dispute those numbers, as they did when we expanded wine sales, but a 9% profit increase from a tenfold increase in retail locations is hardly unrealistic.

Another attempt to stop retail sales is by claiming liquor enforcement needs a dozen new agents. Yet no store that doesn’t already sell alcohol will be added. We already monitor and enforce sales at each of those outlets. How would the addition of a few products that are sold under the exact same rules as products they already sell change anything? Agency administrators like any excuse to add staff but this one is fairly easy to see through.

Finally, more stores mean more choices. The state-run stores necessarily limit products. Currently, locally produced John Stark vodka is about to be removed from state stores. It may be a reasonable business decision but surely with local grocers making their own decisions, the “Live Free or Die” vodka would find a few niches. Specialty drinks that have no room in the limited liquor stores would find a home somewhere.

It is natural for a control agency to want to maintain control. But there is no reason that stores that sell three categories of alcoholic beverages can’t sell a fourth. Arguments that were wrong about wine, wrong about beer, and wrong about fortified wine should be discarded. The change will be good for consumers and good for state revenues.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org.

 

By Grant Bosse

All three of New Hampshire’s Liquor Commissioners have lost the use of their state-issued cars, after racking up thousands of miles in personal use last year. Under a new law, state agencies have to reassign cars that are used more than 15% of the time for Non Business Use, unless a panel of state officials approves a waiver. That committee voted 4-1 against letting all Joseph Mollica, Michael Milligan, and Mark Bodi keep their state cars.

Documents filed with the Department of Administrative Services also appear to show that all three Commissioners originally understated the amount of personal miles they drove when seeking to keep their state cars.

Joseph Mollica

Liquor Commission Chairman Joseph Mollica drove a 2010 Chevrolet Impala a total of 13,836 miles in Fiscal Year 2011. In his waiver request to Administrative Services Commissioner Linda Hodgden, dated August 10, 2011, Mollica claimed to have accumulated 5,520 miles for non-business use, but the official report Hodgden presented to the Legislative Fiscal Committee states that Mollica drove 8,799 miles not on state business.

It would have cheaper for New Hampshire taxpayers to reimburse Mollica at $.55 per miles for the 5,037 miles he drove on state business. According to DAS estimates on the cost of maintaining state vehicles, it cost $1,770 to subsidize Mollica’s personal use of the vehicle.

Michael Milligan

Commissioner Michael Milligan had the fewest personal miles of the three, and the lowest percentage of non-business use. According to the DAS report, Milligan drove a 2008 Ford Fusion a total of 18,329 miles in FY11, 9,916 miles on official business and 8,413 for personal use. But his August waiver requests claims to have only accumulated 5,920 miles non-business use.

That request contained identical language to Mollica and Bodi’s letters, seeking to justify Milligan taking the state vehicle home at night.

This vehicle is used for commission business from the Commission’s offices in Concord and frequently from a home office. On a regular basis, Commissioner Milligan travels directly from his home to visit our 76 retail store locations. It is not unusual for him to spend the entire business day traveling from store to store. Commissioner Milligan also attends meetings throughout the state with business partners and other state officials. In addition, Commissioner Milligan attends special events held at our retail stores and other venues during evenings and weekends.

DAS estimates that Milligan’s personal use of a state vehicle cost $545 more than it would have to reimburse him for his official travel.

Mark Bodi

Commissioner Mark Bodi, who chaired the three-member panel until being demoted last year, drove by far the most personal miles, and the highest percentage of non-business use. According to the DAS report, Bodi drove just under 75% of his miles for non-business use. Bodi accumulated 17,099 miles on a 2006 Chevrolet Impala LS.

Bodi’s waiver request claims that he drove 8,710 miles for non-business use, but the DAS report concludes 12,793 miles were off the clock. DAS estimates the cost of those personal miles at $3,253 more than reimbursement for Bodi’s 4,306 miles driven on state business.

Hodgden tells New Hampshire Watchdog that if the Liquor Commission would like to have a state vehicle to use as a pool car for Liquor Commissioners to use for official travel, that request would likely be granted. The New Hampshire Liquor Commission did not returns requests for comment on this story.

The committee did approve the continued use of one Liquor Commission vehicle that had more than 15% of its miles for non-business use, unanimously approving a waiver for Investigator Glen Bullock to keep using a 2004 Chevy Impala. In FY11, Bullock drove the car 4,877 miles, 1,360 of which were non-business use. DAS estimates that letting Bullock use the vehicle saved taxpayers $343 versus paying Bullock for $.55 per mile for his official travel. A fifth Liquor Commission car that tripped the 15% threshold was reassigned by the Commission. The Liquor Commission has 45 state vehicles in its fleet.

NH Liquor Store photo: Grant Bosse
Commissioner photos: NH Liquor Commission

NH Liquor Commission State Vehicles Requests