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LANSING—A state audit released in July gave a mixed report on the state's financial management of the liquor distribution process, which was partially privatized almost two years ago.
The Detroit News reported on July 17: "While calling the agency's financial oversight generally 'proper and effective,' Treasury Department auditors cited several weaknesses." Those weaknesses include the possibility of incomplete and inaccurate records from delivery companies, which the audit suggests could be dealt with if the Liquor Control Commission established written contracts with delivery firms.
In the first year of the state's partial privatization, problems arose that critics said proved the whole effort was a failure. Sales declined, the state's net profit fell, and about 400 state employees lost their jobs. But Liquor Control Commission Chairman Jacquelyn Stewart said the new system is now working much better and is financially sound. If her numbers are right, the state showed a profit through the first seven months of 1998.
Michigan Privatization Report criticized the way the state went about its privatization in 1996, suggesting that problems were bound to occur because the process left the state heavily involved in fixing liquor prices and other aspects of the business.
