North Carolina’s system of selling alcohol has come under review as the public learns some people who run the system are receiving six-figure salaries and others are treated to $12,000 dinners.

Gov. Beverly Perdue established a commission to review Alcohol Beverage Control operations and recommend reforms. While a 2008 legislative study recommended strengthening the powers of the state commission that oversees alcohol sales, recent weeks have brought an increasing demand to privatize the state system.

Amid the statewide furor, Pitt County’s ABC board earned the county $1 million in revenues in each of the last two fiscal years.

Pitt County ranks 10th in sales among the 161 boards operating in North Carolina, generating nearly $13.93 million for the fiscal year that ended June 30. It operates 10 stores and employs 49 people. The board also built a store in 2008 without borrowing money.

Appointed to the commission several years ago because of his business experience, Henry L. Smith, chairman of the Pitt County ABC Board, opposes privatization suggestions.

“Privatization is a bad idea,” Smith said last week. “The money would end up in Raleigh and not in the communities.”

Local people should reap the financial benefits of the taxes they pay, he said.

“I think it is a well-run system, a well-run board,” Smith said. “I think we’re lucky to have this means of getting money for the county.”

While the current ABC system was established in the late 1930s as a means of giving local communities control of alcohol sales, it’s become an important tax generator.

Local liquor sales in North Carolina exceeded $700 million last year, generating $259 million in state and local taxes, according to data The Associated Press obtained from the state ABC Commission.

However, not every community gets the financial windfall that the system makes possible. That’s because there isn’t a minimum standard for operations and profitability of local ABC boards, according to a 2008 study by the General Assembly’s Joint Legislative Program Evaluation Oversight Committee.

The study’s executive summary stated: “Some boards use the lack of a clear mission to justify ineffective and inefficient store operations by de-emphasizing profitability.”

The legislative study recommended the state commission be given the authority to enforce minimum standards for operations and profitability, assist local boards in making changes to improve operations, and have the authority to mandate board consolidations or mergers to improve profitability.

Standardizing pay scales and job performance evaluations are reforms that would eliminate some of the problems confronting the ABC system, said Teresa Campbell, Pitt County ABC Board administrator.

The 2008 study found the salaries of administrators and other ABC employees vary widely and rarely have any connection to local sales or profitability.

In New Hanover County, ranked fifth in liquor sales, it was discovered the long-time administrator’s salary was $232,000, more than double the salary of the Mecklenburg County administrator who oversees the state’s top-selling system.

Campbell, who joined Pitt County ABC in 2006 and became administrator in September, earns $52,000. Her predecessor, Paul Banta, retired with an annual salary of $72,000.

The state ABC Commission is responsible for issuing and controlling permits for the consumption and sale of beer, wine and mixed beverages. It oversees the local ABC boards by determining what liquor is sold in North Carolina and operating a central warehouse. Local ABC boards can only buy liquor from the central warehouse. The state commission sets sale prices.

The state commission has the authority to supervise the purchases of local boards, approve rules adopted by local boards, remove for cause any member or employee of a board and authorize the operating of location of new ABC stores. It also requires the local board to submit reports and audits of its activities.

It has little power to change local policies or operations.

North Carolina has 161 local ABC boards, 49 operated by counties and 112 operated by municipal boards. There are five dry counties in the state that have no ABC boards.

Pitt County’s ABC Board is a county system overseen by a five-member board appointed by the county Board of Commissioners.

When the ABC system was established it was decided that after local expenses were met and state and federal taxes were paid, all profits would go to the county or city that established the local board.

When preparing its 2009-10 budget the Pitt County Board of Commissioners budgeted a $1.1 million appropriation from the local ABC board. The ABC board has paid about $500,000 of the appropriation. Campbell told commissioners last week that while ABC will pay an additional $500,000 in revenues, it won’t be able to cover the extra $1 million.

The commissioners are seeking a meeting with ABC representatives to find out why.

Campbell said Monday the $100,000 payment may leave the ABC Board short on cash. County Manager Scott Elliott said ABC officials should have said last spring it might not have the $1.1 million available.

Smith, chairman of the Pitt County ABC Board, said in a later interview that he and other ABC officials warned about the shortfall when they met with Elliott during planning sessions prior to the budget discussions.

“We told them we would be lucky to meet the $1 million we met the previous year,” Smith said.

After making the $1 million payment to the county, the local board was left with slightly more than $247,000, Campbell said. The board spent $142,000 to put new roofs on three buildings plus reinforce the exterior wall of the 10th store, she said.

“These stores haven’t had anything done to them in 15 years,” Campbell said. “That’s why I want to keep some of the profits here.”

Contact Ginger Livingston at glivingston@reflector.com or (252) 329-9570.