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BROKEN BUDGETS: Local governments tap into alcohol sales for revenue

Thursday, September 22, 2011 | 5:06 p.m. CDT; updated 5:14 p.m. CDT, Thursday, September 22, 2011
Antone Zeller pays for a 30-pack of beer at a convenience store in Harrison, Ark., in Boone County on Thursday. Boone County is one of many local governments across the South that have dumped their bans on the sale of alcohol in the hopes of tapping into booze as a new source of revenue.

Editor's note: This story is the latest installment in a joint initiative by The Associated Press and Associated Press Media Editors on the fiscal crisis facing U.S. states and cities, how state and local governments are dealing with severe budget cuts and how American lives will change because of it.

HARRISON, Ark. — Dee Gusewelle used to rail against the sale of alcohol, posting signs in her yard and encouraging neighbors and passers-by to keep booze out of this patch of northern Arkansas.

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But now that her county has dumped its ban on the sale of alcohol, she and her husband are doing something that would have been unthinkable — and illegal — just months ago: opening a liquor store.

"It's not like it's going to be Sodom and Gomorrah," Gusewelle said as customers lined up to buy beer at the gas station where she worked this summer.

For years, cities and counties across the South have been quietly throwing out Prohibition-era laws banning the sale of alcohol. But as local governments confront ever-greater budget problems, many are now tapping into booze as a source of untouched income. That means towns where preachers once condemned "demon rum" are now counting on six-packs and cheap wine to make up for declining revenue.

"It's the same thing with the lottery," Gusewelle said. "People didn't want that. But then I see avid churchgoers that come in on Sundays and buy their lottery tickets."

In Harrison, a city of 13,000 tucked between tourist attractions in the Ozark Mountains, stores began stocking beer and wine earlier this year. Liquor stores are slated to open in the coming months.

The city hopes to collect up to $200,000 a year from alcohol-related sales taxes and fees once spirits hit the shelves. That will account for about 1 percent of the total annual budget.

Local officials say the availability of alcohol encourages visitors to stay longer — or at least long enough to polish off a beer. Lodging is up 25 percent so far this year compared with the same period in 2010, when voters approved a measure to shift the county from "dry" to "wet."

When the area was dry, many tourists cruising along the region's curvy highways kept driving after realizing they couldn't wash down a rack of ribs with a cold brew.

Now convenience stores peddle lagers and ales, and a former feed store sells wine in flavors and colors that sound as if they belong in a bag of Skittles: wild cherry, sunshine pink, blue Hawaiian. Officials hope the change will also attract chain restaurants and other companies that typically avoid investing in dry counties.

"We're a pretty poor county, and we just can't afford to say we don't want anyone's business," Gerald Ragland, the city's finance director, said.

But for years, they did just that. Anyone craving a cold beer or a glass of wine in Boone County, Ark., had to cross the county line or head north to Missouri, where liquor laws are less restrictive.

After Prohibition ended in 1933, dry laws popped up in counties and municipalities across the nation. Like the laws they replaced, the restrictions controlled the sale of alcohol, not consumption.

"People are going to drink regardless," Antone Zeller said before buying a 30-pack of Keystone Ice at the Harrison convenience store where Gusewelle worked. "It doesn't matter how far you've got to go to get it. So you might as well just get it here and keep our money here."

Zeller didn't know what a dry county was when he moved here from Shreveport, La., about 15 years ago. But he quickly learned. For him, it meant a long drive to stock up on booze. And while he was out of the county, Zeller would often spend money on other things.

"We'd eat. We'd buy gas," he said. "But now for the most part, all my money stays here."

Some people who fought to keep the county dry say easier access to alcohol fuels underage drinking and raises crimes rates.

"Tax revenue doesn't make up for loss of quality of life," said Ralph Hudson, a real estate broker in Harrison who sought to keep the county dry, just as it had been for more than half a century.

Others share his beliefs and post them on church signs here. One, across the road from McDonald's, told people that Jesus, not Budweiser, is the "light."

But supporters of the change say forbidding alcohol did little to prevent problems — and sometimes contributed to them.

For instance, Zeller said when he had to drive elsewhere to buy booze he often bought in bulk.

"Normally, it actually worked out bad because I would drink more," he said.

Fears that alcohol would overtake the community didn't materialize, either.

"They thought there was going to be a bar on every corner," Terry Cook, who runs the visitors bureau said. "But there's not."

There were alcohol-related arrests long before the county permitted alcohol sales, and there hasn't been a spike since the law changed.

"Nobody's drinking any more than they did, but they're driving a lot less now," Ragland said.

Elsewhere across the South, counties and towns that permitted limited alcohol sales are easing their laws, too, often dispensing with rules that prohibited sales on Sunday.

In Texas, 418 out of 542 ballot questions on alcohol sales have gone wet since 2004, according to the Distilled Spirits Council of the United States, a trade group. And more alcohol issues are likely to appear on ballots this fall.

Besides addressing economic needs, the shift in liquor laws mirrors a change in consumer demographics since Prohibition.

"In today's economy, consumers are out shopping on Sundays," Ben Jenkins, a council spokesman said. "It's inconvenient to have to drive to a different county to buy alcohol."


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