Capitol Alert

Number of California alcohol cops drops as industry grows

Investigators from the California Department of Alcoholic Beverage Control post “notice of suspension” signs on the windows of Paragon Bar in Davis in 2001. There were almost 90,000 alcohol licensees statewide as of mid-2015.
Investigators from the California Department of Alcoholic Beverage Control post “notice of suspension” signs on the windows of Paragon Bar in Davis in 2001. There were almost 90,000 alcohol licensees statewide as of mid-2015. Sacramento Bee file

From restaurants and bars to craft breweries and mini-marts, Californians had plenty of ways to buy and drink alcohol during the just-concluded holiday season.

But as consumer options have expanded, the number of sworn agents who enforce state liquor laws is lower than it was a decade ago.

Agents, charged with preventing underage drinking and enforcing rules against serving drunk patrons, say they now have time to deal with only the worst liquor scofflaws.

Alcohol industry representatives who foot the bill are equally unhappy, saying they need agents to crack down on competition from unlicensed clubs.

“There are far more licenses out there than there have ever been,” said John A. Hinman of Hinman and Carmichael LLC, whose clients include the alcoholic and beverage and hospitality industries. “If I’m a licensee, paying a quarter-million dollars a year, I’m pretty hacked off that there’s a guy (selling alcohol) with a sound system and a six-pack in a garage.”

California has the largest alcoholic beverage industry in the country, and entities that sell or make alcoholic products represent about 8 percent of state businesses. The state had almost 90,000 entities licensed to sell alcohol as of last summer, up about one-fifth from a decade ago. The number of authorized sworn agent positions, meanwhile, dropped from 165 to 145 during that time.

Kevin Highbaugh, a veteran agent whose Sacramento division covers 11 counties, said he and his colleagues could be more proactive in enforcing liquor rules if there were more of them. Now they concentrate on some of the sketchiest establishments, he said.

“We don’t go to places like Morton’s,” he said. “We go to places where you stop when you go in the door and look where the exits are – and then you go in.”

Recruiting agents – and holding onto them – has been a challenge for the department. Alcohol agents regularly have to work at night, on weekends and holidays. Of the 145 positions authorized in 2014-15, 40 were open, according to a department report to the Legislature.

The state developed a new agent exam in 2014 after an earlier online test yielded only 229 job candidates out of 1,332 people who began the exam, the department said. A revamped exam went online several months later.

Many agents who left did so for improved working conditions and more pay, said Highbaugh, who leads the union affiliate of the California State Law Enforcement Association that includes Alcoholic Beverage Control agents.

“At the end of the day, it all boils down to money,” he said.

The state departments of justice and insurance were popular destinations for former agents, alcohol control officials reported to the Legislature.

In 2013, agents for Alcoholic Beverage Control had average base pay of $68,000, with average overtime of almost $7,800, according to state payroll data. By comparison, employees in the special agent class at the Department of Justice averaged regular pay of almost $76,000 and overtime of nearly $13,000, the records showed.

73,227 California alcohol licenses in 2004-05

88,490 California alcohol licenses in 2014-15

Timothy Gorsuch, the current director of Alcohol Beverage Control, questioned the notion that California regulators are falling behind.

Other states with large numbers of alcohol licensees, such as New York, have 59,000 licenses and only 29 regulators, he said. His department, he added, is doing its best to recruit applicants for new positions authorized in recent budgets as well as to fill vacancies, which stood at 20 out of 146 authorized positions as of Monday – a decrease in open jobs since the summer. All the while, he said, the department is fulfilling its mission of enforcing state liquor laws.

“If you’re looking for a (licensee-to-agent ratio) standard, I’m not sure you can come up with one,” Gorsuch said.

We don’t go to places like Morton’s.

Kevin Highbaugh, veteran alcohol agent

Most state departments receive funding from the state’s general fund. But all of the $59 million budgeted for Alcoholic Beverage Control in the current budget year comes from a special fund that receives license payments – and would be the source of any increase in agent salaries.

The fund had nearly $30 million in reserves as of June 2015. By this coming June, the fund will have an estimated $25 million.

The Brown administration takes a cautious view toward special fund balances. Department of Finance spokesman H.D. Palmer noted that the alcoholic beverage fund reserve has declined in recent years, as expenses outpaced revenue.

The state, though, could raise license fees if the fund was ever in danger of insolvency; the last fee increase was in 2008. Such options are not being considered, Gorsuch said.

But Jerry Jolly, who held Gorsuch’s position during the Schwarzenegger administration, warned of ongoing problems with underage drinking and disorderly premises as the number of licensed entities increases. He is now a consultant with Pillsbury Winthrop Shaw Pittman LLP, whose clients include the beverage industry.

“You would think the industry wouldn’t want more enforcement,” he said. “They want more enforcement. They know that strong enforcement brings balance, brings integrity, and they want that.”

Jolly added that, as director, he made “the best case I could” that the state should spend more of the fund on liquor law enforcement. “It was the biggest disappointment and biggest frustration I had at ABC,” he said.