Worcester Proposes Eliminating Liquor Department In 2017; Exit Strategy Might Cost County $2.3 Million

SNOW HILL – The elimination of the Worcester County Department of Liquor Control could cost the county as much as $2.3 million.

County staff said this week that liquidating the department — ending wholesale operations in the fall of 2016 and ceasing retail operations in the summer of 2017 — would cost the county somewhere between $1 million and $2.3 million.

“The worst case scenario is a $2.3 million loss,” said Sonny Bloxom, the county’s attorney. “We can get it down to $1 million or less if everything comes together.”

County officials have been discussing an exit plan for the Worcester County Department of Liquor Control (DLC) since its monopoly on the local liquor market ended in 2014. Though DLC officials estimated a 25-percent decline in revenues, losses were much more significant. The department lost $492,554 — eliminating its $400,000 reserve fund — in FY 2015.

On Tuesday, Bloxom presented the Worcester County Commissioners with the latest exit strategy for the struggling department. He suggested ending the majority of wholesale operations Sept. 30, 2016 and ending retail operations and any remaining wholesale operations by June 30, 2017.

“There is still no way to wind up and terminate the DLC operations without having a negative impact, financial and employee-wise, on the county,” Bloxom wrote in a memo to the commissioners. “However, we have attempted to minimize those impacts with the revised exit strategy.”

Most of the costs associated with eliminating the department come from leases, mortgages and the DLC’s 19 full-time employees. According to Bloxom, three of the county’s four retail establishments are leased. The 16th Street store has eight years left on its lease. While the Gold Coast Mall location’s lease expires this month, the commissioners agreed Tuesday to renew it for a year to allow for the gradual dispersal of the operation.

The warehouse the department owns in Snow Hill has a mortgage of more than $465,000.

Severance pay for DLC employees could range from $199,000 to $643,000. Unemployment is expected to cost Worcester County more than $200,000.

Bloxom said the financial impact of the DLC liquidation would be reduced if the county was able to sublet the 16th Street store and work with local politicians to pass legislation allowing for package stores in Worcester County. While package stores are allowed under Maryland law, they have not existed in Worcester County. Bloxom proposed the county seek legislation that would allow package stores with the restriction that no license is issued within a 10-mile radius of an existing county retail store without the permission of the commissioners.

Bloxom said the rationale behind the change was the idea that it would encourage entrepreneurs to buy or lease the county’s retail locations.

“That is one of the lynch pins of our exit strategy,” Bloxom said.

Commissioner Joe Mitrecic agreed that the legislation was necessary but said changes to the overall strategy might need to be made.

“I feel the rest of the exit strategy needs to be tweaked by this commission,” he said.

The commissioners voted 5-0, with Ted Elder and Bud Church absent, to contact Sen. Jim Mathias, Delegate Charles Otto and Delegate Mary Beth Carozza regarding the need for the package store legislation.

About The Author: Charlene Sharpe

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Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.