LCB Financial Report Released

Worcester County Liquor Control Board (LCB) finally released its long awaited
financial report yesterday, as elected officials, local licensees and even
state wholesalers scrambled to make sense of the 28-page report.

Some of the contents of
the report seem to indicate that the LCB’s drastic drop in revenue given back
to the county this year (just a little more than $111,000 vs. $410,615 in 2009)
is consistent with claims that it slashed its markup prices for licensees and
as a result of that move, coupled with increased costs and a failing economy,
it had perhaps its worst year on record.

However, there seems to
be some unanswered questions as the report is analyzed by local politicians and
licensees, most notably, why the LCB’s internal spending actually went up this
year by more than 5% from $1.23 million to $1.26 million, and how the LCB can
claim that it tried to help the licensees when the average markups based on the
cost of sales vs. gross profits still averages out to single-digit percentage

The report, which was
compiled by Trice Geary and Myers Accounting firm in Salisbury, confirmed that
the LCB had incurred huge losses in 2010 fiscal year, most notably the 73% less
that they contributed back to the county and more than 50% in operating income
from approximately $624,000 in 2009 to $304,000 this year.

However, the LCB’s total
net sales only dropped 1.5% as it still brought in more than $14.42 million as
opposed to the $14.64 million last year when it gave back more than $400,000 to
the county.

The LCB’s stance
throughout the ongoing debate and what they call a “licensee and wholesaler
scheme to have them abolished”, is that it learned in trying to help the
county’s liquor licensees by lowering their markup prices, officials
drastically hurt their own proverbial bottom line.

“When we realized what
we had done in lowering the prices that much, we knew we had to fix it and
raise the prices back up”, said LCB Board member Joe Jackson last month.

As part of the LCB’s
role as a non-profit organization, it is required to give half of its total
revenue to the county and the other half to the four municipalities in
Worcester County.

By comparison, Ocean
City was hit the hardest by this year’s contribution, as it received 83% less
than it did last year ($22,661 in 2010 vs. $136,401 in 2009).

Berlin and Snow Hill
received less than 79% and 71% (respectively) than they did the prior year, and
the county had to swallow a 67% drop in revenue from $168,625 in 2009 to a mere
$55,853 this year.

Worcester County License
Beverage Association President Doug Buxbaum said in an official statement that
he believes that the report does nothing to address the real issue at hand –
the state’s ongoing investigation.

“As an association, we
haven’t had the opportunity to review the report in its entirety, but there
were a few things that stuck out glaringly to us,” said Buxbaum. “First of all,
how do you give 73% less back to the county when you only went down 51% in
income, and your sales only went down $200,000 from the prior year?”

Buxbaum maintains the
financial report has nothing to do with ongoing complaints of violations of the
state’s law governing the liquor industry.

“Furthermore, nothing in
this report addresses our main concerns about price discrimination, price
gouging, and unethical service to the licensees, and that will hopefully be
revealed in the state Comptroller’s investigation,” he said.

Ironically, the State
Comptroller’s office had yet to receive a copy of the official financial
statements as of press time yesterday.

“I can confirm that no
one in this office has received it yet, said Christine Feldmann, Deputy
Director of the Office of Communications for the State Comptroller.

The Dispatch received
the report yesterday afternoon after learning another media outlet had obtained
the report. Earlier in the week, LCB Board member Larry Wilkinson said the
financial report would be mailed out “by week’s end.”

Ocean City had not
received the report as of yesterday, but Worcester County did get a copy. When
asked about the report, Commission President Bud Church called Administrative
Director Gerry Mason and requested a copy. Church then provided The Dispatch
with a copy.

Other notable figures
from the report include total salaries up just .2%, advertising spending up 2%
to almost $60,000, mileage reimbursement for the monopoly’s sales force and
staff up 76% to $14,867 and, most notably, unemployment compensation was up
787% from just over $5,200 in 2009 to almost $47,000 this year.

The LCB did drastically
reduce its travel spending by 68% and its meals and entertainment costs by more
than 66% this year, but the “miscellaneous” line item costs went up by more
than 58% to more than $14,000.