KEEP KANSANS IN BUSINESS Local businesses are the lifeblood of our communities
84% of Kansas businesses are classified as small businesses. Passing legislation that ensures more than 300 small businesses close is not sound economic policy.
Allowing out-of-state companies to sell beer, wine and spirits will have negative consequences, including: loss of state revenue, an increase in the state budget, and hundreds of Kansan-owned businesses will close.
No one goes out of business or loses their job if the current system stays in place. But if the system changes, hundreds of small businesses close and jobs are lost.
The Division of Alcoholic Beverage Control (Department of Revenue) would need to nearly double the number of enforcement agents beyond its current staff and increase administrative staff to enforce expansion of alcohol to more than 3,500 new outlets, according to Dean Reynoldson, Director of Kansas Alcoholic Beverage Control. He made the comments while testifying before the House Federal and State Affairs Committee last session.
A minimum of 20 new individuals would have to be hired to regulate the system being proposed. (Division of the Budget, February 2013)
It leads to an approximate 50% budget increase for Alcohol Beverage Control. Additional positions represent a minimum of $1.9 million in additional money to fund these positions. Proposed changes also remove an additional $1.8 million annually from the SGF. (Division of the Budget, February 2013)
A memo from the Kansas Department for Children and Families (formerly SRS) indicated it will cost an additional $4.2 million for treatment and prevention programs. Proposed changes takes millions from the State for distribution to cities and counties while creating a new tax system.
Cost to Taxpayers = a minimum of $7.9 million additional dollars
Locally-owned businesses generate 70% more local economic impact per square foot than chain stores. (Andersonville Study of Retail Economics)
3 times as much money stays in the local economy when you buy goods and services from locally owned businesses instead of large chain stores. (Economic Impact of Locally Owned Businesses v.s Chains)
Local stores retain a much larger share of their profits within the local economy. (Economic Impact Analysis: A Case Study)
Kansan-owned stores keep more of their spending in Kansas, using local accountants, vendors, lawyers, and other professional and goods services. Grocery and convenience stores with out-of-state ownership spend those dollars in the state where they have corporate offices (Iowa, Arkansas, Ohio, etc...)
The Beverage Alcohol Industry in Kansas employs nearly 41,000 Kansans - 2% more than the aerospace industry. This high rate is because Kansas-retail liquor stores and on-premise establishments are able to maintain an industry, profitable for Kansas, because of community roots.
Retail liquor stores work closely with distributors, bars, clubs, restaurants, local organizations and everyone who buys alcohol to ensure sales are responsible.
These local, community-based relationships ensure Kansans stay employed, turnover rates are kept low (unburdening the unemployment system), profits stay in Kansas and tax collections remain high.
Many big-box stores use beverage alcohol as a "loss leader." They do this because it accounts for a minimal amount of their sales and they sell thousands of other products to offset lower priced beverage alcohol.
An increase of sales at outlets which sell alcoholic products cheaper could equate to a reduction in enforcement tax collections.
Big-Box and convenience store owners have previously testified to legislators that beer and alcohol sales would account for between 4% and 8% of total sales. For Kansan-owned liquor stores, beer sales account for an average of 50% of sales, and in some stores it is as high as 80%.
Big-Box and convenience stores don't need the additional sales to continue to thrive, while loss of these sales to out-of-state entities will put Kansas owned stores out of business.
Many current legislative initiatives - including new tax and economic development strategies - focus improving small business development and helping rural communities. Legislation to change the retail liquor system goes against these initiatives, as it would harm small businesses and shut down businesses in rural communities.
For an example of this, read Governor Sam Brownback's Economic Development Strategic Plan, which focuses on small businesses and rural communities. It is easy to see how proposed legislation would be detrimental to these efforts.
Any time changes in the liquor laws of Kansas are discussed, there are issues relating to the Kansas Consitution and how liquor law changes will impact our constitution. Rebecca Rice, an attorney, presented this issue to legislators. Click here for her analysis of the issue.