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Analysis: State saving money by closing Main Street liquor store

Published July 19, 2011 9:27 pm

Report contradicts earlier claim closure cost state.
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The state is either saving big bucks by closing its liquor store on Salt Lake City's Main Street, or losing big. It all depends on who you ask.

The Legislative Fiscal Analyst released a report Tuesday suggesting that shuttering the Main Street liquor store will save the state about $188,000 a year, as customers migrate to surrounding outlets.

But that number contradicts earlier estimates cited by the state's former liquor board chairman, who said the closure of the 1457 S. Main St. store in April cost the state $120,000 in lost sales in just a few months.



Senate President Michael Waddoups, R-Taylorsville, considers the new report vindication for criticism he has taken for defending the closure of the liquor store.

"I personally feel like I've been attacked as a poor businessman, [that] I wasn't maximizing profit to the state," Waddoups said.

"It just seems outrageous to me," he added, "that we would be vilified for making the decision that we felt was in the best interest of the citizens and helped balance the budget and, in our view, was going to save money."

The Legislative Fiscal Analyst reported Tuesday that the state saved $54,000 on salaries and overhead between April, when the store closed, and June.

Although the Main Street store was expected to generate $315,000 in revenues for the state, surrounding stores saw their proceeds jump by $308,000 over what was expected after it closed.

Therefore, the analyst reported that the closure saved $47,000 during that three-month period. Extended for a full year, the savings comes to $188,000.

The other analysis, which had been cited by former liquor board chairman Sam Granato and Sen. Ben McAdams, D-Salt Lake City, found about $120,000 in lost sales between April and June, but only looked at sales increases at four stores. The Legislature's analysis, in contrast, looked at eight.

To cast the wider net, one would have to assume that a former Main Street customer might drive past at least one closer store to get from the Main Street area to some of those included in the legislative analysis.

In the end, the DABC figures project that about 26 percent of the sales have been lost by closing the store, while the legislative study projects that about 15 percent of sales have evaporated.

"The challenge has always been that it's a moving number. There's no way anyone can know where the customers go," said Vickie Ashby, a spokeswoman for the DABC.

Despite protests from Salt Lake City and residents, the Main Street store closed its doors April 1, part of a cost-cutting move.

Several other liquor stores were scheduled to close, but Gov. Gary Herbert and legislative leaders gave the stores a reprieve, coming up with short-term funding to keep the doors open.

McAdams, who fought to keep the downtown location open, said he visited the liquor stores around Main Street. They are "filled beyond capacity," he said.

"The parking lots are full, the lines are long. If we were operating this as a for-profit business, we'd have to look for another option," he said. Customer service and convenience should be taken into account, he said, even though the state has a monopoly on liquor sales.

McAdams also pointed out that the savings don't account for the state's payments on a building that now sits empty. The state pays about $32,000 a year on the bonds used to build the building and has several years left before those bonds are paid off.

Waddoups said that doesn't matter — the state would be paying for the building anyway, whether it is used or not. Consequently, it is not costing any additional money.

Waddoups said there may be other liquor stores, particularly in Salt Lake County, where the state could save money by closing doors. Or, conversely, it might make sense to open a new store.

"They should all be looked at," he said. "But when we're talking about it from a business perspective, there may be other areas where we could add a store."

The Legislative Fiscal Analyst plans to update the numbers in fall.

gehrke@sltrib.com

Twitter: @RobertGehrke

 

 

 

 

 

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