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Lawmakers took the first step Friday to cut the state's liquor budget in a move that would shorten state-run store hours and close 12 liquor outlets — many of them in Salt Lake Valley.
The first causality of the projected $3.1 million cut is the Salt Lake City store on Main Street, now expected to close April 1.
Other targeted outlets have not been named, but the closings are likely to be in Salt Lake City and other metropolitan areas around the state where there are clusters of stores.
The Business, Economic Development and Labor Appropriations Subcommittee Budget approved reducing the liquor department's budget by 10 percent, even though alcohol sales bring in more than $100 million to state and local coffers each year. The proposed cuts are nearly twice what the Legislature ordered for the previous two years to make up for a an ongoing state revenue shortfall.
"We're going to lose millions of dollars over this," said Sam Granato, chairman of the Utah Alcoholic Beverage Control Commission. "We're charged with running this department like a business — but with these cuts, people are going to change their drinking habits."
Instead of driving across town to pick up a bottle of wine, imbibers are more likely to pick up a six-pack of beer at a grocery store when a neighborhood liquor outlet closes, said Granato. The loss to the state is the 85 percent mark up on wine and liquor from state stores. That mark up is not charged for grocery-store purchases.
And in areas close to state boundaries, say in St. George, imbibers are more likely to drive to Nevada than across Interstate-15 to purchase liquor if the smaller St. George outlet closes.
Closing the St. George outlet, which rang up $3.2 million in sales in 2009, was among store closings recommended by legislative auditors. Their report said the state will save money by closing stores and firing liquor workers while imbibers will drive a few more miles to make purchases at another store in the state's tightly controlled monopoly.
Rep. Todd Kiser, R-Sandy, said he wants a full report on the audit, and he'll likely ask for a follow-up audit to ensure that the liquor workers implement their recommendations to cut the budget.
Among other cuts will be at least six package agencies, which are operated by private individuals under contract with the state. The stores, located in resorts and rural areas, were established at the end of Prohibition in sparsely populated areas where it was economically unfeasible to open a larger, state-operated store.
Package agencies most at risk of closing are close to newly opened state stores, such as the tiny Midvale Liquor Agency, at 7671 Main St., which has been located in the city's historic district for nearly 80 years. The Midvale outlet rang up sales of more than $570,000 in 2008, a 12 percent increase over the previous year.
The first state store to close will be the Salt Lake City store at 1457 S. Main St., which had sales last year of $3.1 million. Liquor-control officials had ordered the store to close after lawmakers slashed the budget by $653,000 last year. But local officials were able to delay the closing in hopes lawmakers would approve additional funding to keep it open.
"We won't be getting the additional funding, so the store will have to close," liquor Deputy Director John Freeman told committee members.
Salt Lake City Economic Development Director Robert Farrington Jr. had said the liquor store is an anchor to the community's retail district. He said boarding it up would harm surrounding businesses and embolden crime.
Both the Main Street store and an older outlet once located across the street have operated in the neighborhood since the early 1970s. Bonds for the current store, which opened in 1994, will not be paid off until 2014.
Once the store closes, the property will be sold off, and the eight liquor employees could be laid off.