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How dry is Dallas?

I’m fascinated by stories about elections to allow the sale of alcohol in places where it is currently prohibited. I suppose I find it weird that these vestiges of Prohibition are still with us. I especially find it strange to learn about such restrictions in big cities like Dallas, since my impression is that they primarily exist in rural areas, but clearly that is not the case.

Since March, when Keep the Dollars in Dallas began collecting petition signatures to force an election [to eliminate dry areas in the city], a central theme of its campaign has been that added sales-tax revenue from expanded alcohol sales could help close the city’s budget gap.

City staffers buttressed that argument during a May presentation to the City Council of budget “brainstorming ideas.” The presentation asserted that the expansion of alcohol sales would add $11.3 million in sales taxes per year.

[…]

The city’s report calculated potential tax revenue from each of two ballot initiatives. One would permit the sale of beer and wine – but not liquor – at stores throughout Dallas. A second would eliminate the “private club” requirement that exists in dry areas, which requires the formality of admitting restaurant customers into a “club” before allowing them to buy drinks.

To project potential revenues from the first initiative, city staffers obtained confidential estimates of beer and wine sales per square foot of retail space from one convenience store chain and three grocery store chains in wet areas. The staffers then applied those numbers to all of Dallas assuming the entire city went wet.

The resulting prediction was that alcohol sales in the city’s grocery and convenience stores would grow from $352 million to about $973 million per year. Taxed at 1 percent, the added sales would generate about $6.2 million in city revenue.

To project revenues from the second ballot initiative, involving alcohol sales in restaurants, city staffers performed a similar extrapolation. Based on mixed-beverage tax receipt figures in wet areas from the state comptroller’s office, they estimated such alcohol sales would go from about $542 million to about $880 million. From an effective tax rate on such sales of about 1.5 percent, the city would receive an added $5.1 million in revenue.

City staffers concede that not all of these gains could actually be realized, since many of the new sales in areas going wet would be “cannibalized” from areas that were already wet.

“As a result, these revenue estimates should be considered a maximum potential revenue gain,” the city research report says.

I don’t know how much of Dallas is dry, so it’s hard for me to say how credible I find the proponents’ numbers. The only dry place in Houston that I’m aware of is a small piece of the Heights, where restaurants that aren’t fortunate enough to have a grandfathered permit cannot sell booze, but the overall effect there is miniscule. Making this area wet would make only a tiny difference to the city’s bottom line. I figure the more of the city that already allows alcohol sales, the more “cannibalization” there would be. Be that as it may, if I lived in Dallas I’d vote for these propositions on the grounds that I think it’s silly for there to be dry areas in this day and age. Whether or not eliminating them brings in extra tax revenues isn’t a factor to me. I don’t see any public policy rationale for these little alcohol-free islands, and the experience of the Collin County town of Anna strongly suggests that nothing bad will happen if they disappear. I say pour a cold one and join the 21st Century, Dallas. The DMN editorial board has a sensible take as well.

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2 Comments

  1. […] I’ve said before, I’m a bit skeptical of the sales tax projections, but it doesn’t really matter to me. […]

  2. […] November, voters in the city of Dallas among other places were asked to decide whether or not to loosen restrictions on alcohol sales there. The measure passed, but not without controversy: Lawyer Andy Siegel, who led the opposition […]