Collaboration Through Communication

Each year, the incoming chairperson for the National Alcohol Beverage Control Association (NABCA) selects a theme that will serve as a mission statement for their term at the helm of the association.

For Dan Gwadosky, chairman-elect for NABCA and director of Maine’s Bureau of Alcoholic Beverages and Lottery Operations, the theme is representative not only of his plans for his term of service as chairman, but of a method that has led to success throughout his career: Collaboration through Communication.

“Communication has always been and will continue to be perhaps the most essential key to success for any endeavor,” Gwadosky said. “In the 21st Century, what makes it even more critical are the ever-expanding channels of communication utilized today.”

Gwadosky has spent 18 years in the legislature, in a roster of roles that include time served as the Assistant Majority Floor Leader and House Majority Leader. These posts led to his election as Maine’s 92nd Speaker of the House and then on to serve eight years as Maine’s 46th Secretary of State. He was appointed to his current position of director immediately following that term.

It is in his past in these offices that Gwadosky crafted what would become a hallmark for his career and a plan of action he takes with him into his chairmanship with NABCA: A commitment to customer service and the efficient use of emerging technologies. In fact, his contributions to the areas of technology and e-government have been locally and nationally recognized.

For his term as NABCA chairman, Gwadosky said he will build on his experience as a Speaker of the House and Secretary of State, terms which were “always about seeking consensus, collaboration and consistency.”

Unique Responsibilities, Unique Decisions

Of course, Gwadosky hails from a state that handles things a little differently than others. In 1992, the Bureau of Alcoholic Beverages and the Maine State Lottery were combined to become the Bureau of Alcoholic Beverages and Lottery Operations.

“The Bureau’s dual responsibilities for Liquor and Lottery are somewhat unique in the nation,” Gwadosky said. “The broad mission of BABLO is to provide exceptional service, while managing the state’s enterprises of Liquor and Lottery through dynamic product development, distribution and sales.” He added that the Bureau transfers more than $100 million to the State’s General Fund.

Then, in 2004, the state of Maine followed that move to combine Liquor and Lottery by signing a ten-year lease with a private company for the warehousing and distribution of spirits subject to price regulation by state. That private entity provided the state with an up-front payment of $125 million for the privilege. At the onset, Gwadosky said, the private company subcontracted the warehousing and distribution to a local Maine distributor.

The Bureau provides oversight of the lease agreement by requiring monthly and annual financial reports and by instituting an auditing process. The state guarantees the company an annual gross profit baseline in aggregate sales of 36.8%. After aggregate sales reach 36.8%, all additional profits are shared equally between the state and the company.

The move to privatization is one many states are currently considering and, therefore, expected to be a hot topic for the coming year. As a result of Maine’s decision, Gwadosky said agent’s ordering time has been decreased from seven days to two days and delivery days have increased from one day per week to two days per week.

“During this period the State has also added 90 additional agency liquor stores,” he said. “In 2009, total annual sales reached $120 million, or 17%, more than the first year of the lease.” Gwadosky further noted the fact that the State has not implemented a statewide price increase during that same time period.

Whether or not this practice will continue in Maine is a decision Gwadosky said will ultimately be made by a future Governor and Legislature. “The current lease expires in 2014 and can only be extended with legislative approval,” he said. “This important safeguard will ensure a healthy dialogue among the various stakeholders, which is extremely important for evaluating the overall policy and fiscal impact to the state.”

Extreme Budgets and Privatization

That said, there is no question that many states are currently looking at tightened budgets that show no sign of loosening at any time in the near future.

 “Privatization is probably being discussed and debated more in this budget cycle than we’ve seen in the past decade,” said Jim Sgueo, president and chief executive officer of NABCA.

What will be important moving forward, however, is not simply how these states react to their strained situations but how they interact with each other and provide for their citizens in the process.

 “Most states across the nation are experiencing unprecedented financial challenges at a time when citizens are demanding more and more from their government agencies,” Gwadosky said.

It’s a matter on which Sgueo concurred, noting NABCA and its incoming chairman will need “to continue trying to modernize states in this era of extreme budget cuts.” He added that all concerned parties-“the industry, NABCA and the states are trying to partner in ways to become more efficient and create more revenue. Our role at NABCA, in meeting these challenges, is providing all the stake holders with as much information and resources as they need as they move to make these decisions.”

Current NABCA chairperson, and administrator of the Liquor Control Division (LCD) of Montana’s Depart-ment of Revenue, Shauna Helfert, also pointed to privatization as one of the biggest challenges facing the control states this year.

“As states continue to have budget concerns, states and legislatures will continue to look for ways to fill the gap,” Helfert said. “Oftentimes, privatization comes up for a short-term fix.”

Sgueo echoed Helfert’s thoughts, noting this is a “short-term fix that often ends up creating a longer-term problem. The main thing is that states are looking at privatization as a way to generate more revenue,” Sgueo said, adding that’s “not necessarily because the current way of doing things isn’t working.”

Considering the differences from state to state, Gwadosky noted Maine’s leasing agreement might not be the solution for everyone. “While cash-hungry states are understandably intrigued by the potential financial windfall from privatization, for the most part these agreements represent a one-time infusion of cash at a time when many states have ongoing structural shortfalls,” he said. “States can only sell an asset once, so the decision should be well thought out with regard to long-term goals and priorities.” He noted that states considering such a model should conduct a cost benefit analysis and then balance that with the unique public policy benefits that control jurisdictions are intended to provide.

Communication and Technology

As noted, Gwadosky is no stranger to the power technology has to bring parties together and move them forward. The use of technology to reach a goal has, in fact, been a common thread throughout his career. In 2002, he received the first Maine CIO Award for Information Technology Excellence in Innovation. In 2003, he was named to Government Technology Magazine’s “Top 25: Dreamers, Doers and Drivers” list. And, in 2004, he was the recipient of a lifetime achievement award from the Center for Digital Government.

The effective use of technology for better communication is a practice he intends to employ during his NABCA chairmanship as well. Gwadosky has stressed that control states must take advantage of all communication techniques to become proactively visible to the communities they serve.

“Control systems should continue to build a stronger collaborative platform with all our industry partners,” he said. “The better we understand industry operations and issues, the better we can successfully run our agencies and generate maximum revenue for our jurisdictions.”

Strong relationships between the control states and the industry are paramount to success, according to Gwadosky, and it is a point on which Helfert agreed. During her term, she helped to establish a Legislative/Policy subcommittee of the Industry Relations Committee with that very goal in mind. The idea, Helfert said, was “to increase the communication between industry and the states on issues important to us all, such as tax and markup increases, sampling and tastings, Sunday sales, energy drinks, and advertising rules and regulations.”

It is a point important to Gwadosky’s agenda as well. “Industry must recognize and respect the individual control state environment in order for them to operate at peak efficiencies in our markets,” Gwadosky said, adding that, at the same time, “Control systems should aim to be an important contributing agency, in any communication about public health and safety.”

He further noted that, as both regulator and merchandiser, the control states are in a position to “lend expertise and a unique perspective to the conversation that can only be beneficial for all involved.”

Control systems can “no longer hide behind bureaucratic protection as an excuse for inefficiencies,” Gwadosky said. He stressed the need for control states to become not only more efficient, but more strategic in the planning and execution of their core functions. “I believe the control jurisdictions can successfully meet these challenges while, at the same time, serving their citizens by promoting moderation in the consumption of alcohol beverages and minimizing incentives for predatory pricing that can and have led to alcohol abuse.”

He used his own state as an example of achievement through technology and communication. “Maine is a leader in the development of online services and every department is encouraged to streamline processes and seek interagency cooperation,” Gwadosky said.

In fact, during his tenure in Maine’s State Department, more than 20 online services were created. These encompassed everything from auto registration and driver license renewals to annual report filings, absentee ballot applications and archival record searches. He also worked to implement web-based voter outreach initiatives, including Maine’s eDemocracy website. Such efforts contributed to record voter turnout for the November 2004 general election in Maine.

Continuing Responsible Control

The theme for NABCA’s 73rd Annual Conference, in Marco Island, Fla., of course, is Responsible Control, the focus chosen by Helfert for her term as NABCA chairperson. Helfert said the theme was at the core of her work during her time in office where she “worked on focusing energy on items to help control states regulate, retail and distribute in a responsible and efficient manner.” It was a task made greater, she said, due to the fact that control states must, “at the same time, recognize that we are government officials and need to be accountable to our constituents.”

Helfert’s efforts are evident in a variety of programs, including the commissioning of a tax study comparing all beer, wine and spirit taxes and markups in all states. Helfert said the move “will utilize an average implied markup in the licensed states.” She added, the hope is that “this will provide more accurate information as taxes and markup increases are debated in the future.”

Her term also saw the continuation of the association’s efforts in advising and preparing the states for alcohol policy debates. This was achieved by “continuing with the second version of the annotated bibliography, cultivating partnership with public health organizations and the alcohol beverage industry and utilizing good references from renowned entities like the Centers for Disease Control or the World Health Organization when they make pro-control statements.”

Helfert also oversaw the beginning of work on a Control State Guide that will provide states with proven practices for an effective and efficient control state model. “This will help maximize the benefits the control states offer to our citizens,” Helfert said. “By utilizing other states proven practices, the states can move to more modern, efficient and effective operations.”

In Gwadosky’s home state of Maine, to act with “


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