MONTGOMERY COUNTY COUNCIL

ROC KVILLE, M AR YLAND

ROGER BER LINER

CHAIRM AN

C O U N C I LM E M B E R
D IS TR IC T 1

T RANS POR TAT ION, I NFR ASTR UC TURE

E N E R G Y & E N V IR O N M E N T C O M M I T T E E

December 16, 2015

Delegate Bill Frick
House Office Building
6 Bladen Street, Room 350
Annapolis, MD 21401
Dear Delegate Frick:
I write regarding our shared desire to fundamentally reform Montgomery Countys unique and
unpopular liquor monopoly subject to voter approval.
There have been sincere and well-founded concerns raised about how your legislation would
affect county revenues beginning in 2019. While I am a strong public supporter of your legislation, I
also share the concerns regarding the loss of revenue prior to when the longer-term economic benefits
of your legislation materialize.
You have stated publicly that you believe the revenue implications can be addressed, and I
commend you for constructively engaging on this aspect of your reform agenda. With the goal of
advancing that objective, I asked our Office of Legislative Oversight, which has done the most
analytical work on this issue, to provide their best estimate of how much revenue may be necessary to
keep the county whole and possible avenues by which those revenues could be generated. I have
enclosed their memo to me for your review.
The bottom line is that OLO believes that using reasonable assumptions, the revenue gap would
be approximately $20 million, not $30 million. According to OLO, this gap could be closed if the state
were to either return the additional sales tax revenue that would go to the state and/or authorize the
county to impose as little as a 1 cent per ounce excise tax on alcohol. The key assumptions underlying
OLOs analysis are that the retail function, jobs, and profitability continues, much as Worcester
Countys has; that non-retail expenses of DLC would be pared; and that the county moves forward with
its plan to open three more stores. OLO also noted that if DLC, in the face of additional competitive
pressures, were to reduce its costs by a mere 10%, an additional $2 million would be saved resulting in
a net revenue gap of approximately $18 million.
As I know you appreciate, other states have taken similar steps to ensure that government
revenues are not adversely affected when ending government liquor monopolies. It is particularly
important to me that we find sufficient and stable revenues to service the debt secured by revenue
anticipation bonds, which requires roughly $10 million a year or half the projected revenue gap. We do
not want those bonds competing with or pushing out important capital projects that could otherwise be
financed through general obligation bonds.
STELLA B. WERNER OFFICE BUILDING
100 MARYLAND AVENUE, 6TH FLOOR, ROCKVILLE, MARYLAND 20850
240-777-7828 OR 240-777-7900, TTY 240-777-7914, FAX 240-777-7989
WWW.MONTGOMERYCOUNTYMD.GOV

I personally believe that our public overwhelming supports eliminating our county's unique
liquor monopoly, and that over the long term the economic stimulus provided by ending the countys
monopoly will result in a net plus for our county coffers and our residents. However, it is equally true
that our county can ill afford to lose the revenue currently generated by the DLC in the meantime. We
should not be forced to choose one or the other.
If you and your colleagues can find an acceptable revenue stream or streams, I am confident that
we will be able to simultaneously help our consumers, our county's economic future, and the state's
revenue, while keeping Montgomery County whole from a budgetary perspective.
Thank you for your leadership on this important issue.

Sincerely,

Roger Berliner
Montgomery County Council
Councilmember, District 1

cc:

County Executive Isiah Leggett

Montgomery County Council
Montgomery County State Delegation