Josh Kurtz: Montgomery County’s Alcohol Problem

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In Baltimore, leaders are trying to keep the city off the precipice, and are praying the trials of the police officers indicted in the Freddie Gray killing don’t result in more crippling unrest.

In Prince George’s County, leaders are trying to lure the FBI headquarters to one of two sites and are working day and night to improve the long-lagging public schools and business climate.

And in Montgomery County, where the streets are no longer paved with gold, where the rapidly changing population faces myriad challenges that are inadequately acknowledged or documented, leaders are preoccupied with…liquor.

Only in Montgomery County would the sale and distribution of alcohol become the hottest political fight of the season. But only in Montgomery County does the local government possess a monopoly stranglehold on the wholesale market for booze – and on retail sales of hard liquor.

The fight over whether – and how – to change this antiquated system has become a morality play, with most of the county’s key political players as actors.

You want Gino Renne, the leader of the county government workers union, trying to intimidate politicians? It’s here. You want African-American government workers yelling at the suburban white kids in the county’s Annapolis delegation? You want two veteran Montgomery lawmakers in a classic showdown of sanctimony and condescension? You want County Councilman Hans Riemer (D), the self-styled avatar of a new generation of Montgomery leaders, trotting out his hipster cred (and glasses)? You want state Comptroller Peter Franchot (D) cranking up his well-oiled hype machine? You want county officials hand-wringing over revenue? It’s all here.

The high-pitched debate exposes some of the changes under way in polyglot Montgomery. And lest anyone think it’s strictly a local fight, it has regional and electoral implications – and is heading to Annapolis in 2016.

How We Got Here

The county government control of alcohol dates back to the end of Prohibition, in 1933. But you’d be hard-pressed to find anyone who thinks it’s a good idea today. The Cosa Nostra, after all, is not looking to mob up Poolesville.

More to the point, Montgomery County restaurants and consumers complain that the system limits the variety of brands available to them. The Department of Liquor Control (DLC) is perfectly adequate when it comes to distributing familiar, widely-consumed brands. But special orders of microbrews, rare wines and specialty liquors become problematic. Some liquor store owners and restaurateurs say the system impedes their ability to compete with establishments in nearby jurisdictions.

So scrapping the county monopoly makes perfect sense, right? Well, sure – in theory.

But is everyone rushing to support a bill by state Del. Bill Frick (D), who represents the dining mecca of downtown Bethesda, which would create a ballot initiative in 2016to enable private liquor distributors to compete with the county DLC? Well, no.

The DLC is a cash cow for the county, generating some $30 million a year. And the agency employs about 250 unionized workers – whose jobs would presumably be eliminated if the county were to abandon the booze business.

Montgomery County, whose elected officials cherish every penny they’re able to spend on compassionate and progressive government, has taken several budgetary hits in recent years: the Great Recession, a shifting of the pension burden for educators by the state, Republican Gov. Larry Hogan’s reluctance to release supplemental education funds and his insistence that the county up its financial commitment to build the Purple Line, among many others. And while recent revenue estimates for the state were up, they were down for Montgomery County.

Even with these legitimate concerns on his side, Renne, the union leader, has decided to go on the attack – comfortable political terrain for him. He has filed an ethics complaint against Frick, noting that the lawmaker’s wife is vice president of a liquor company – and alleging that the couple would stand to benefit financially if the county privatized its liquor system. Frick says the charge is without merit.   

Eight of the nine County Council members and County Executive Ike Leggett (D) are opposing Frick’s measure, which most see as an open door to privatization, rather than competition – at least until someone comes up with a credible plan for recovering the lost revenue.

The Preliminaries

A poll taken in September for Franchot – who evidently plans to make privatization one of his signature issues – found that more than 70 percent of Montgomery County residents want the county out of the liquor business. But the pollster’s question made no mention of the $30 million shortfall or the loss of good government jobs, which would undoubtedly have altered the response.

What’s in it for Franchot? After a lifetime in Democratic politics, the former Takoma Park liberal now has no greater friend than Larry Hogan. So Franchot’s push for privatization, in the guise of helping small business and consumers while challenging Montgomery officials to do more with less, makes a certain amount of sense.

Franchot’s second best friend in Maryland politics these days is Annapolis lobbying savant Bruce Bereano, who represents the License Beverage Dealers Association of Maryland. Franchot is the state’s lead liquor regulator – a job he fought hard to keep a few years ago when the legislature tried to take it away from him. Between January 2014 and January 2015, he collected at least $94,300 in campaign contributions from liquor interests, according to finance reports.

But how much muscle Franchot lends to the privatization effort beyond his formidable bully pulpit remains to be seen. For now, the action is with the 32-member Montgomery County legislative delegation, which must decide on Frick’s proposal and related legislation.

Delegation Weighs Its Options

Last week, the county delegation held an extraordinary public hearing on the liquor conundrum – extraordinary for its intensity, and because it took place between the hours of 11 p.m. and 2 a.m. One of the most riveting encounters, shortly after midnight, was between two seasoned debaters – County Councilman George Leventhal (D), opposing the Frick bill, and Del. Kathleen Dumais (D), a supporter. Mere words cannot do it justice. A tape of the hearing is worth watching.

During the late-night session, Riemer, who led a well-intentioned task force earlier this year to gussy up Montgomery County’s nightlife, laid out a Council proposal that would allow restaurants, privately-held liquor stores and caterers to bypass the DLC for certain special orders and instead place them with private distributors. Some county leaders view this as a reasonable compromise. But the political blog The Seventh State last week published letters from two large liquor distributors arguing that the economics of the plan would not work.

Next Frick and his co-sponsor, Del. Kirill Reznik (D), made the case for the privatization bill. Peppering them with questions was state Sen. Roger Manno (D), who sarcastically suggested that if the county is thinking of getting out of the booze business, perhaps it should consider privatizing education and public safety as well. A twist to the encounter: Frick, Reznik and Manno could all be candidates for Congress in 2018 if U.S. Rep. John Delaney (D) runs for governor in 2018.

Renne came next, on a panel of privatization opponents with Leventhal and Joslyn Williams, president of the Metro Washington Council of the AFL-CIO. After Leventhal delivered a thought-provoking Power Point presentation on how significant the DLC’s revenue is, Williams, a Washington, D.C., resident, started talking incongruously about his own liquor buying habits – not that anyone cared. He was simply there to further intimidate the lawmakers – along with the shouting DLC workers in the back of the room.

Some of the delegation members are likely to reflexively go along with the union. Others have legitimate fears about the $30 million shortfall if Frick’s ballot initiative passes. Others probably don’t like the idea of privatization generally because they see it as a Republican precept. But others are no doubt open to the idea.

Yet it’s easy enough to imagine that at least some of the lawmakers were sitting there, well past their bedtimes, regarding the protesters and Renne’s sneering visage, and thinking to themselves, “For what do I need this tsuris?” They may wind up voting against Frick’s bill just to save themselves the electoral heartburn – and in a way, it would be hard to blame them.

But this is hardly a profile in courage – or the innovative thinking among its government and civic leaders that Montgomery County so desperately needs.

Montgomery’s financial well-being has been linked to the federal government for so long that it’s easy to forget that the service sector is playing a growing role in the county’s economic portfolio. Bethesda has always been Bethesda, but now downtown Silver Spring is a regional destination. Wheaton redevelopment is under way, and a slew of new restaurants and building projects are opening along Rockville Pike. Surely county leaders should at least consider the possibility that a more robust restaurant and night life scene, with more choices on the wine and beer lists for consumers, could aid the economy – and maybe even make up for a significant share of the lost revenue if the DLC closes.

And hey, Montgomery County Democrats – think strategically. The election you really care about is in 2018. Maybe put off Frick’s ballot initiative from 2016 until then.

Democrats have been saying all along that they’ll need a big turnout from Montgomery County if they’re to have any prayer of denying Hogan a second term in 2018. If the privatization measure is as controversial as everything thinks it is, that should boost the 2018 general election turnout in MoCo, and give the Democrats an additional advantage.

See? This is not such a parochial issue after all.

Josh Kurtz is editor of Environment & Energy Daily, a Capitol Hill publication. He can be reached at . Follow him on Twitter -- @joshkurtznews

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Josh Kurtz has been writing about Maryland politics since late 1995. Louie Goldstein, William Donald Schaefer and Pete Rawlings were alive, but the Intercounty Connector, as far as anyone could tell, was dead.

But some things never change: Mike Miller is still in charge of the Senate. Gerry Evans and Bruce Bereano are among the top-earning lobbyists in Annapolis. Steny Hoyer is still waiting for Nancy Pelosi to disappear. And Maryland Republicans are still struggling to be relevant.

The media landscape in Maryland has changed a lot, and Kurtz is happy to write weekly for Center Maryland. He's been writing a column for the website since it launched in January 2010.

In his "real" job, Kurtz is editor of Environment & Energy Daily down on Capitol Hill. But he'll always find Maryland politics more fascinating.

Kurtz grew up in New York City and attended public schools there. He has a BA in History from the University of Wisconsin and an MS in Journalism from Columbia University. He's married with two daughters and lives in Takoma Park, Md. He hopes you'll drop him a line, or maybe go out for a meal with him, because he's always hungry -- for political gossip.