UT: State liquor outlets should run more like convenience stores, Utah auditor says

Deseret News

By Dennis Romboy

September 27, 2016

SALT LAKE CITY — Utah’s state-run liquor outlets would better serve customers if they were operated more like convenience stores, according to the state auditor, though he stopped short of calling for privatization.

A state audit of the Department of Alcoholic Beverage Control released Tuesday shows its management lacks the flexibility, data and tools to reach the “level of operational success we expect,” Auditor John Dougall said.

“If we want DABC run more efficiently and more effectively and act more like a private business, then we need to untie their hands from some of the regulations and restrictions of government and allow them to perform more like that private sector business,” Dougall said after presenting the report to the state alcohol commission.

The audit found:

• Stores could be better staffed to handle customers, especially at peak hours.

• Ordering and stocking products could be improved.

• Wages are lower than other liquor-control states but comparable to convenience stores.

• DABC has inadequate tracking and evaluating of store costs.

Dougall said the audit showed DABC should use the information it has about staffing levels and product ordering, for example, to make decisions about how to run the agency.

“We’re not talking privatization here,” he said. “We’re saying: How do we allow them to better benchmark their activities against what happens in the retail sector … while still being a government operation?”

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Sal Petilos, DABC executive director, said many of the issues highlighted in the audit are a matter of state law and would need the Legislature to change.

“We can’t be as free about the way we do things within the DABC. We have to stay within the system the state has,” Petilos said. “If you want to act like a business, be careful what you ask for because there are certain constraints on what we can do.”

DABC conducts, licenses and regulates alcohol sales in the state. Its charge is to make liquor available to adults who choose to drink but not promote drinking or sales.

According to the audit, Utah pays hourly sales clerks less than other alcohol-control states but comparable to the retail industry. Full-time clerks in the state earn $10.86 an hour, plus benefits, while part-timers make $9.31 an hour.

Dougall said it makes sense to him to allow the agency to run its own benefits and retirement system separate from the state.

Petilos said he raised the pay for part-time workers when he took over the job four years ago, but to create an exception to the state system for benefits would require discussion and involve more than just DABC management.

“We’re a state government agency trying to act like a state government agency,” he said. “It’s difficult to say we can just go out there and act like a normal retailer. It’s difficult for us to do that.”