Division of Alcoholic Beverage Control

The enacted budget makes the following changes to the Executive Budget (analysis as of 3/30/09):

• Rejects the proposed $3 million appropriation in a new Maintenance Undistributed (MU) account within the License & Wholesaler Services Program, for services and expenses related to the processing of license applications, enforcement, and implementation of a bill authorizing the sale of wine in grocery stores.  This appropriation included $1.85 million for personal service and $1.15 million for nonpersonal service ($64,000 of which is for contractual services). It is unclear what impact this cut will have on the agency’s plans to add 50 FTE positions but since these positions were linked to the rejected Executive Budget’s proposal to sell wine in grocery stores it is unlikely any of these new positions will be filled. 

• Adds Article VII language that requires the authority, for SFY 2009-10, to improve and update their information technology in order to meet federal security requirements to assist in the processing of license and/or permit applications and renewals.

According to the Assembly Yellow Book, (analysis as of December 31, 2008):

• Part of the License & Wholesaler Services Program $3 million appropriation increase, will support long term improvements to the agency’s licensing function, including the establishment of the on-line licensing application.  

According to the Senate White Book, (analysis as of December 31, 2008):

• The 50 additional personnel would be used to facilitate the anticipated increase in license applications from the Executive’s proposal to sell wine in grocery stores and drug stores.  Once the initial increase of applications has slowed, the license inspectors would be used to decrease the current backlog of applications. 

The Executive Budget recommends (analysis as of December 16, 2008):

A SFY 2009-10 workforce of 215.  This increases the level of FTEs from the adjusted FTE level for FY 2008-09 by 50.   The following chart identifies adjustments in the current fiscal year’s FTEs along with the recommended differences in FY 2009-10 FTEs by program (if the FTE’s are the same the program is not listed):

• According to the Agency Presentation, there is no difference between the estimated FTEs for SFY 2008-09 and the adjusted level of 2008-09 FTEs.  However, the Workforce Impact Summary Report shows that the difference between the estimated FTEs for SFY 2008-09 and the adjusted level of 2008-09 FTEs is -1. This should be addressed at statewide labor management.

• The total appropriation for Personal Service is $9.5 million, a 7% increase from SFY 2008-09.  However the Executive Budget Agency Presentation narrative for the Division shows that there is no change in the Personal Service appropriation from the SFY 2008-09 agency appropriation.  This reflects adjustments, which occurred during the fiscal year, due to the agency-wide reductions made and the Special Pay Bill, which contained negotiated union raises.

• An All Funds increase of $3.9 million (+22.4%) from SFY 2008-09.  This increase is primarily due to an appropriation of $3 million to a new Maintenance Undistributed (MU) account within the License & Wholesaler Services Program, for services and expenses related to the processing of license applications, enforcement, and implementation of a bill authorizing the sale of wine in grocery stores.  This appropriation includes $1.8 million for personal service and $1.15 million for nonpersonal service ($64,000 of which is for contractual services). According to the According to the Agency Presentation the increase in All Funds is $3 million, this may reflect adjustments made due to the negotiated union raises and the agency-wide reductions made during the fiscal year.

• The following programs had a decrease in personal service funding that is not associated with a decrease in FTEs.  These funding and position changes should be clarified with management.  
  1. Administration, MU appropriation for services and expenses of the State Law Revision Commission (-$70,000 or -100%).    However, the Agency Presentation indicates that resources from the 2008-09 budget suballocated to the State Law Revision Commission will continue to be available to support the Commission’s mandated study of the Alcoholic Beverage Control Law.  A final report of recommended changes is due in June of 2009.  The funding for the entire MU appropriation may have been absorbed in the regular appropriation.
  2. Compliance Program, MU appropriation for services and expenses of nine investigators charged with responsibility of investigating on-premises establishments that pose a significant threat to the public’s health, safety, or welfare (-$400,000 or -100%).  The funding for the entire MU appropriation may have been absorbed in the regular appropriation.

• The Division of Alcoholic Beverage Control employed an estimated 7 employees under consultant contracts in SFY 2008-09 at a cost of $410,200 or an average cost of $58,600 per consultant contract employee.  It is estimated that the same amount of funding and number employees will be allocated for consultant contracts in SFY 2009-10.

• The following program had a substantial increase in the proposed contractual services appropriation when compared to SFY 2008-09:
  1. Administration (+$90,000 or +4.5%).  This increase is equal to the decrease of the Administration’s MU contractual services appropriation (-$90,000 or -100%).  The funds may have been shifted rather than increased or decreased. 

• The Revenue Article VII legislation includes proposal that would change the Alcoholic Beverage Control law: increase the excise tax on beer and wine; provide a tax on flavored malt beverages; and allow the sale of wine in grocery and drug stores upon payment of a franchise fee.