Spending more to sell less

The Liquor Control Board has released its (unfinalized) financial statements for Fiscal Year 2010 (ended June 30).
Here are the 2010 Operating Statement and the 2009 Operating Statement. The OFM's invaluable fiscal.wa.gov site, which has detailed information about all state agencies and funds, also has additional information about the Liquor Board's financials.

Note how the numbers have changed since 2009. Net pre-tax sales appear to have increased, from $558 million in 2009 to $579 million in 2010. But that's only because the board imposed a massive temporary price increase starting last August, to raise more money for state programs. (State officials thought that would go down smoother with the voters than having the Legislature go on the record and vote to raise the liquor tax).

If you look at the Cost of Goods Sold (the liquor stores' total cost of products purchased from its suppliers, at suppliers' prices), that decreased from $399.1 million in 2009 to $379.5 million in 2010 -- with both the higher prices and the recession, customers are buying less expensive brands and also less volume over all. Nevertheless,  the total spending on operating the stores (sum of "Direct Sales Expense" and "Other Expense Applicable to Merchandising Function") increased from $101.2 million in 2009 to $102.0 million in 2010. What changed to account for more spending -- among other things, according to the OFM, merchandising head count went up, from 833 employees to 888. Selling less, and spending more to do so.

The other noticeable change since last year -- resources for licensing and enforcement declined from $18.5 million to $16.4 million -- a mere 14% of total spending.

Wouldn't it better to let the private sector sell products more efficiently, and let the Liquor Control Board spend 100% of its time and attention enforcing alcohol safety laws? That's exactly what I-1100 will accomplish