RICHMOND - As Virginia considers privatizing its state-run liquor stores, several retailer groups have asked Governor Bob McDonnell to carefully examine options before a proposal is issued.

During his successful election campaign last year Virginia Governor Bob McDonnell pledged to sell the state??s ABC agency and its 300-plus locations to the private sector and to use the receipts to fund road construction. Recently the governor has embarked on a series of statewide town-hall meetings to promote the concept of ABC privatization. At the same time large chain stores based outside of the state have formed a "privatization coalition." According to reports this coalition has already retained as many as 20 lobbyists, is planning an extensive media campaign and has been meeting with legislators across the state in anticipation of a Special legislative session this fall.

The retailer groups note that privatizing the state??s liquor sales may be the best solution, but such a decision should examine whether one channel would have an unfair advantage moving forward.

While most parties agree that privatization would produce a one-time revenue boost to the state as the franchise or individual stores are sold, opinions are very much divided on the merits of such a move. Today, convenience stores and grocery stores may sell beer and wine, but many of these Virginia-based businesses say that they would be unable to compete with out of state chain stores in bidding for licenses to sell spirits. Additionally, they question how the sale would impact the state coffers, as the present system of state stores produces upwards of $110 million in net profits to the state every year, through a 69 percent product markup and a 20 percent tax.

The Virginia Petroleum Convenience and Grocery Association and the Virginia Retail Federation wrote to Governor McDonnell saying that it was time to stop discussing concepts and to release a formal plan. The groups also wrote that they could not support a special session until the General Assembly??s watchdog agency, the Joint Legislative Audit and Review Committee, reviewed the proposal and issued a formal report of their findings. They wrote, "We believe that this examination is crucial for two reasons - to determine how privatization would impact future state revenue, and to assure that it would not provide economic advantage to one industry segment over another."

"At the end of the day, some form of privatization may be an answer," said Mike O??Connor President of Virginia Petroleum Convenience and Grocery Association. "How do you maintain state revenue if the markup goes to the private sector? Sure, you could double the number of stores and bring in some new money, but is that what is best for Virginia? Will everyone get an opportunity to compete, or only those with the deepest pockets and the most lobbyists?"

"Each of these questions needs answers before we even think about taking this monumental step. The independent review we have requested will lessen the possibility of unintended consequences later."