“Dyke Nally was there for a long time,” Anderson told IdahoReporter.com.  “We’re different people with different styles.”  He said he’s still getting adjusted to his dual responsibilities leading two state agencies that generate revenue for the state.  Anderson also has little interest in changing Idaho’s alcohol policy, including allowing liquor sales in grocery stores.  “The control state model works pretty good for us,” he said.  “It’s one that fulfills the dual constitutional mandate of making the product available while at the same time managing its availability to curtail intemperate use.”

Lawmakers in Washington state and Virginia, which like Idaho have state-run liquor stores, have brought forward plans to privatize liquor stores in an effort to bring in more revenue or reduce the number of state employees.  Idaho paid the 201 liquor division employees $9.9 million in wages and benefits in the last fiscal year, though liquor sales also generated $45 million for cities, counties, and other state funds.

Another potential change to alcohol policy Anderson opposes is allowing samples of hard alcohol at state-run stores or Idaho distilleries.  “I have no plans to allow sampling in state stores,” he said.  He understood the comparison to breweries and wineries that offer free samples to encourage purchases, but said that model wouldn’t work for vodka, rum, or other spirits.  “Distilled spirits are a different ballgame.  And for many products, there are mini bottles you can sample without buying a big $20 bottle.”  A plan to allow sampling in distilleries failed in the Legislature earlier this year.

Jeff Anderson

Idaho’s liquor sales and lottery sales use different business models besides having state-run liquor stores and allowing convenience stores and grocery stores to sell lotto tickets.  The state doesn’t advertise its liquor stores, though alcohol companies do promote certain brands, and limits hours of operations.  “The reason the stores aren’t open from 6 a.m. to 2 a.m. seven days a week is because we’re trying to curtail intemperate use,” Anderson said.  “That’s a balancing act that we have.”

Idaho’s lottery, however, does promote products on television and other media.  “At the lottery we do advertise, because we have new products that come out frequently,” Anderson said.  “But we’re very focused about responsibility and responsible play here.”

Both state liquor stores and the state lottery have seen increased revenue during the past few years, which Anderson said hasn’t been irresponsible growth.  He said lottery revenues are up because the state now has a more balanced selection of scratch tickets and draw games.  As for alcohol, he said population growth and more expensive taste had led to higher sales.  “Up until the recession, people were trading up,” he said.  “They weren’t necessarily drinking more, but they might be buying Grey Goose (vodka) instead of Smirnoff.”  The latest liquor division annual report showed overall revenues outpaced the sale of individual bottles of alcohol, but that bottle sales rose almost 30 percent between fiscal year 2005 and fiscal year 2009.

Anderson’s added responsibility overseeing the liquor division comes with a 20 percent pay increase, though the state will save $80,000 a year with him taking a dual role.  “The governor was looking for ways to save money, and this does that,” Anderson said.  “This concept of a single executive overseeing multiple operating units is nothing new in private business.”  In his former job in television broadcasting, Anderson managed TV stations in Boise and Idaho Falls.

Idaho isn’t the most welcoming state for alcohol or gambling, due to its large Mormon population, but Anderson said he is mindful of the state’s population, and that both state agencies he directs try to be responsible in generating money for the state.  “If you’re in the Bible Belt or in Idaho or Utah, the cultural makeup of the state is different, and we try to be very sensitive to that,” he said.

“Part of me feels guilty for leaving the governor before his work is done,” Nally said in a news released prepared by the governor’s office.  “I couldn’t ask for a better boss or friend, and I appreciate his understanding that I need to ‘pull over.’”   Nally added that he thinks the liquor division will be in good hands with Anderson.  Nally has supported maintaining Idaho’s position as a liquor control state and not privatizing liquor stores.  Liquor sales brought in $45 million to cities, counties, and the state general fund in the last fiscal year.

The state lottery brings in $35 million a year, which is split evenly between public schools and the Permanent Building Fund.  Anderson told lawmakers earlier this year that the lottery is seeing a 5.4 percent sales increase during the current year, and is expecting 2.5 percent growth in the next year.

“I look forward to working closely with the Liquor Division team, and with the benefit of Dyke’s experience and advice, to continue efficiently and effectively serving the people of Idaho,” Anderson said.

Otter had kind words for both Nally and Anderson.  “I’m proud of  [Nally] and wish him the best in his retirement, and I look forward to having him around in many other capacities for years to come,” Otter said. “Accepting Dyke’s decision was easier with someone as qualified and proven as Jeff ready to take the helm.  His work at the Lottery is exemplary, and I’m pleased that he’s willing to take on this new challenge.”

Rep. Darrell Bolz, R-Caldwell, asked Nally about privatizing liquor sales because Washington state is considering a similar measure. Virginia is also looking at a potential one-time windfall of $500 million from privatizing stores, according to the Wall Street Journal. Idaho’s liquor division has $15 million in annual operating costs. Nally said a down economy usually spurs this idea. “During these tough times, privatization is being talked about more and more and more,” he said. Nally said most other control states, which have state agencies in charge of the distribution of alcohol, usually decide not to privatize. Nally said it’s also about more than economics. “Our mission is to promote temperance first and foremost, and second is to promote profit.”

The 57 percent increase in Idaho liquor sales comes from two factors, according to Nally: an increasing population and a shift to higher-end, costlier spirits. He said he’s seen some customers go back to cheaper brands in the worsening economy, and said the state is trying to profit on that trend. The liquor division raised its prices 15 to 20 cents on bottom shelf alcohol, which could bring in up to $268,000 in the current budget. “We saw that our prices (for these brands) were lower than surrounding states,” Nally said.

The request, originally submitted to Governor Butch Otter’s office for legislative consideration, has been withdrawn due to lack of information.  The proposed legislation would have allowed liquor distributors to provide small liquor samples to customers inside State Liquor stores, in hopes of encouraging them to buy more expensive products.

Dyke Nally, the director of the Idaho Liquor Division, isn’t dropping the idea altogether, but plans to watch and study as other states implement similar programs over the coming year.  Oregon and Pennsylvania are two states that plan to offer sampling in state liquor stores in the upcoming year, though Nally believes only Oregon is worth watching.

“Pennsylvania is ahead of us technologically as far as liquor goes,” Nally said. “We are more like Oregon in this area, so we plan on watching them over the next year and see how they do with it. “

Sampling could lead to higher revenues for the state, Nally believes.  He wants to introduce people who usually purchase cheaper liquor to some of the “higher-end product.”  His believes those patrons who sample the “good stuff” will favor the more pricy liquor over a $10 bottle of scotch.

“We want people to buy more expensive and better liquor, not more liquor,” said Nally. “We’re still here to promote temperance.”

The samples would be very small, with patrons being limited to 3 samples at any one store.  It is estimated the total amount of liquor consumed by one person would be less than half an ounce.

“It’s would not be enough to get anyone intoxicated, not even close,” said Nally. “It would be just enough to get some taste on your tongue.”

The proposition wouldn’t cost the state anything, since the sampling would be the sole financial responsibility of the distributors.  The store staff, however, would be required to ensure customers taking the samples were of legal age.

The stores, and ultimately the state, would have been able to reap the benefits of the more expensive purchases.  Idaho requires all vendors and distributors to pay all revenues from the sale of their products directly to the state in accordance Title 23-407 of the Idaho Code.  All revenue contributed to the state liquor fund is used to support the Substance Abuse Treatment Fund and the Drug and Mental Health Court Supervision Fund.

Nally says he plans to propose the legislation next again next year, but only if he is able to monitor Oregon’s program for one year and deem it successful.