A Liquid Market: Newly Wet Counties See Modest Tax Growth

Mark Hughes of Ship ’n Shore Liquor Mart in Garland County predicted two years ago that Clark County’s going “wet” would put him out of business.  

“This right here will probably be what puts the fork in me,” Hughes told Arkansas Business after the Nov. 2, 2010, vote legalized liquor sales in Clark County.

Well, he’s out of business.

Arkansas’ Alcoholic Beverage Control Division suspended Ship ’n Shore’s liquor permit on Feb. 17 after the store defaulted on a payment plan for back sales taxes. Ship ’n Shore, which for more than 25 years was the “first chance” liquor store closest to the Clark County seat, Arkadelphia, has been closed ever since.

Boone County also legalized liquor sales during the 2010 election, and Benton County voters will have the chance to switch from dry to wet on Nov. 6. (Click here for a related story on the Benton County election.)

The Arkansas Department of Finance & Administration doesn’t track the taxes collected on liquor sales by county.

However, the rise in sales and use tax collections in Clark and Boone counties since they legalized alcohol sales supports the arguments of those who backed changing the law: Permitting alcohol sales contributes to economic growth — though the effect appears modest.

Clark and Boone counties were legally wet in 2010 as soon as their election results were certified, and stores and restaurants began selling beer and small farm wine in January 2011, according to Michael Langley, director of Alcoholic Beverage Control.

The ABC board approved the counties’ first liquor permits in August 2011, and the first liquor stores opened within days, Langley said.

Boone County’s sales and use tax collections were $6.11 million in 2010 and $6.53 million in 2011, a year-over-year increase of 6.9 percent. County sales tax collections for January through July of 2012 were $3.8 million, up 2.7 percent from the same period in 2011.

Clark collected $4.21 million in sales taxes in 2010 and $4.43 million in 2011, which is growth of 5.2 percent. The county’s sales tax collections for the first seven months of 2012 were $2.64 million, up 4.4 percent from the same period last year.

Despite the fate of the family-owned Ship ‘n Shore, Clark County’s four new liquor stores haven’t harmed neighboring Garland County’s overall economy, according to County Judge Rick Davis. “I don’t think it’s bothered us a bit,” he said.

Boone County’s going wet has mainly damaged business for county-line liquor stores in wet Marion County, said Marion County Judge James Giles.

Rocky Kosh, whose family owns LJ’s Liquor in Pyatt at the western edge of Marion County, has cut back staffing hours by about 14 per week since Boone County went wet, but the store hasn’t cut its employee count. “It’s still trucking right along,” Kosh said of the store.

Hughes didn’t return phone calls seeking comment, but perhaps his store’s closure is a symptom of the spread rather than growth of liquor sales as Arkansas counties go wet.

“It’s just rearranged existing business. It’s a known fact in the industry,” said Stan Hastings, CEO of alcohol distributor Moon Distributors of Little Rock. “I don’t think people change their consumption trends. If you’re a teetotaler, you’re not going to start drinking just because there’s a store near you.”

Looking Ahead
In Clark County, however, locals hope legalized liquor sales will improve the area’s economic well-being long term.

Rodney Hurst in May opened Little Mo’s Liquor at Gurdon. He co-owns his store with Mitch Pennington, who was one of five people given a Clark County liquor permit during the lottery-style selection process.

Clark County was awarded five permits based on its population of 22,995 as of the 2010 census — that is, one permit to sell packaged liquor per 4,000 residents.

Hurst said towns in Clark County had greater opportunity to grow now that stores and restaurants can sell alcohol. Businesses are hesitant to relocate to dry areas, he said.

“Just about any town with a large population is in a wet county. For Arkadelphia ever to get there, I think going wet had to happen,” Hurst said.

Clark County Judge Ron Daniell said that since the county went wet, the Hamburger Barn began selling beer and wine and The Mirage, a sports bar, recently opened in the county.

“I was hoping when we got [Mirage], we could draw Outback or something like that, some bigger brand-name restaurant,” Daniell said. “It would be nice to have down here.”

Boone County Convenience
Boone County, with a population of 36,903 in 2010, was allotted nine liquor permits.

Mark McGarrah’s Express Liquor in Harrison opened Nov. 4, and looks like it will turn a profit its first year in business, McGarrah said. A major change that his store and the others have brought to Boone County is convenience, he said.

“I think for the most part people are pretty happy they don’t have to drive and stock up,” he said.

Boone County Judge James Norton declined to be interviewed for this story.

Neighboring Marion County went wet in 2006, the first county to do so since the number of voter signatures required to get the question on the ballot was raised to a daunting 38 percent in 1993. It, then, has had a head start in experiencing any economic growth from the transition.

James Giles, Marion County judge, said he thought liquor stores had provided about 50 jobs in his county, about half of them part-time jobs.

“It’s not been a world-changer, but I think that people probably spending their money in the county versus outside the county has helped some,” Giles said of going wet.

He thinks Marion County could use a hotel from a major chain and nice restaurants, and the freedom to serve alcohol is part of attracting those, he said.

“We’re set up right now so that at least they would look at us,” Giles said.

And Giles believes going wet will play a part long term in attracting new industry and preventing young county residents from moving away.

“People want all the commodities. They want water, good restaurants, good roads,” Giles said. “If you ain’t got the whole package, it’s hard to sell anything. You’ve got to have the whole package.”