Delegate Requests State Conduct Formal LCB Audit

OCEAN CITY – In the wake
of allegations of the Liquor Control Board for Worcester County’s (LCB) fiscal
malfeasance at worst or poor management at best, the association of liquor license
holders in the county this week held a meeting to begin to determine their own
course of action should the agency be abolished.

The Worcester County
Licensed Beverage Association (WCLBA), an organization of restaurant and bar
owners in the county, appeared to try to distance itself from the beleaguered
state agency at a meeting at Seacrets this week. The WCLBA has been at the
heart of the controversy surrounding the LCB in recent weeks, but with the war
of words and allegations now out on the table, the licensees are now prepared
to let a state investigation and potential audit of the LCB run its course
while planning what, if anything, it should do to replace the revenue to the
county and towns should it come to fruition.

In 1998, Worcester
County voters decided not to abolish the LCB in a countywide referendum. For a
time, the fractious relationship between the agency and the licensees in the
county improved. However, amid shrinking contributions to the county and its
municipalities and reports of mismanagement and mistrust, it now appears there
is a will to disband the dysfunctional agency.

“Let me say this, the
climate is right for change,” said WCLBA President Doug Buxbaum on Tuesday. “A
lot of you guys in here went through this in 1998, and if it doesn’t happen
this year, it might never happen.”

Fager’s Island owner
John Fager agreed the time is right to disband the LCB and called into question
the agency’s validity after years of perceived corruption.

“Who pays the board?
They do,” he said. “Who do they answer to? Nobody. Let’s be candid, the whole
history of this LCB going back to prohibition is riddled with problems with
payoffs, sexual assaults, racism. They’ve dodged a bullet every time, and it’s
amazing there hasn’t been a major lawsuit in all these years.”

Fager said the LCB’s own
actions have forced the call for the agency to be disbanded. He said the LCB
would likely cause its own demise without any further nudge from the licensees.

“They’re self
destructing politically, morally and economically,” he said.

Mathias Calls For Audit

If the LCB is disbanded,
it will likely be the result of an ongoing investigation by the state
Comptroller’s office and now a formal audit of the agency. Delegate James
Mathias (D-38B) told the assembled WCLBA members this week he was penning a
letter to Maryland Comptroller Peter Franchot calling for a formal audit of the

“There’s a very strong
likelihood the Worcester County LCB has never been audited,” he said. “I’m
going to write a letter to the comptroller this afternoon requesting that

Later on Tuesday,
Mathias followed through on his promise.

“Recently, allegations
and remarks have been made and reported in various Lower Eastern Shore
publications regarding business practices and compliance of the Worcester
County Liquor Control Board to Maryland state law,” the letter reads. “Please
allow this correspondence to serve as my request for the Maryland State
Comptroller’s Office to cause an audit of this operation. As a fellow elected
official charged with protecting the public trust, I am confident of your
agency’s ability to accomplish this task in a fair, judicious and timely

In a prepared statement
to the WCLBA members on Tuesday, Mathias, who is seeking the District 38 Senate
seat, vowed to introduce legislation in the next General Assembly session to
abolish the LCB, with the caveat an appropriate plan to replace the revenue
contribution to the county and towns is in place.

“If the information that
has been presented in recent days regarding the Worcester County LCB is proven
to be true, it demonstrates the LCB system in Worcester County has become
obsolete and outlived its usefulness,” the statement reads. “As your Senator, I
will introduce legislation to abolish this system, provided the restaurant and
bar industry presents an acceptable business plan replacing the vital revenues
to the citizens and governments of Worcester County.”

Finance Committee Resurrected

The major issue, should
the LCB be abolished, is whether or not the licensees come up with a business
plan to replace the revenue contribution to the county and, by association, its

This year, the county
budgeted for $368,000 from the LCB and received $110,000, of which all but
$55,000 was distributed to the town from whence the revenue was generated. As
recently as a few years ago, the county was receiving more than $800,000, which
represented the LCB’s profits.

From a political and
public relations standpoint, the WCLBA will likely have to produce a plan to
show how the contributions to the county and the towns will be equal to or even
greater than the current contribution under the LCB system.

To that end, the WCLBA
on Tuesday voted to resurrect its Financial Advisory Committee. Six members
were appointed to the committee and will explore, first of all if there is a
will to replace the revenue, and if so, how is the best way to go about it.

“The question will
always be, how do we replace the revenue,” said Tim King, a certified public
accountant who represents some of the licensees.

According to Liquid
Assets owner John Trader, the first order of business for the committee is to
determine if there is a will to replace the revenue. An informal straw poll of
the WCLBA members conducted on Tuesday by a show of hands seemed to indicate
the licensees were not interested in replacing the lost revenue.

“The big issue is if and
how we replace the revenue,” said Trader. “We need to decide what we’re
prepared to do. If the majority says we don’t want to replace it, then that’s
what we do.”

Buxbaum said yesterday
the point of forming the finance committee was to explore, first if there is a
will to replace the revenue, and if there is, how might that be accomplished.
He said the licensees were going into the process with an open mind and the
finance committee would develop some options deemed equitable.

“They’re going to look
at every possibility,” he said.

While the vote to form
the committee was unanimous, not everybody in attendance was certain replacing
the revenue should come on the backs of the licensees.

“I don’t think it should
be replaced,” said La Hacienda owner Bill Herbst. “I think it will take care of
itself in other ways. In Worcester County, the cost of a liquor license is
already double the average of the rest of the state and we really only have
three or four months of business. On top of that, we have the 35-percent
mark-up on the price of liquor. We’re really already getting hammered twice and
I don’t think we need another tax or fee.”

Several ideas were
discussed, from an increase of the cost of a liquor license, to a fee based on
volume of liquor sold by the individual licensees. Without the constraints of
the LCB and its additional layer of mark-up, some in the room believe the
existing 3.5-percent tax on booze will meet the revenue contribution and then

County Commission
President Bud Church said at Tuesday’s meeting, the county’s contribution under
the current LCB system has dipped so low, it should not be difficult to make up
the miniscule revenue the agency provides. Church said a solid plan to make up
the revenue would increase the political will in the county to abolish the LCB.

“We had $368,000
budgeted and we ended up getting $55,000,” he said. “If you can satisfy that,
if you can come up with a solution, I think it can happen, but you need to work
with everyone to get this solved. If the licensees can work out some kind of
compromise to give a carrot or two back to the county and the towns, I think it
would a giant leap forward to get something done.”