DABC audit knocks management for lack of retail experience

Posted at 2:32 PM, May 26, 2015
and last updated 2015-05-26 20:42:04-04

SALT LAKE CITY -- A new state audit said the people who oversee Utah's liquor control authority could use some more retail experience.

The audit, released Tuesday, said management at the Utah Department of Alcoholic Beverage Control has "limited business experience," having gained most of their experience working their way up through the agency.

"Look around at the retail industry and identify opportunities where you can help strengthen the experience that management has to bring more to the table," Utah State Auditor John Dougall told the DABC Commission.

While open to more training opportunities -- within budget -- DABC Executive Director Sal Petilos said the issue is they can't exactly treat state liquor stores like a business. Under Utah law, the DABC is forbidden from promoting alcohol. They can only provide it.

"I guess you could say, 'Do things the private sector would do,' but we can't do that," Petilos told FOX 13. "It's just to provide what's being demanded."

Earlier this month, FOX 13 reported on an academic study that found Utah is the most controlling of the liquor control states -- but avoids a full retail model for liquor sales.

Tuesday's audit also knocked the DABC over some accounting practices, urging the agency to tighten up billing issues to ensure that money isn't lost. It surveyed some liquor licensees and found they had good feelings about the agency overall, but were unaware of free trainings the agency offered on Utah liquor laws.

The state audits have become a regular fixture at the DABC ever since a 2011 audit that uncovered widespread problems within the agency -- including mismanagement and no-bid contracts. That audit triggered a criminal investigation of DABC and the ouster of its then-executive director (ultimately no charges were ever filed).

Read the audit here:

"I think it's safe to say that for the last several years of audits, every recommendation has either been acted upon or is in progress," DABC Commissioner Constance White said after the audit was presented. "So I would expect the same thing here."

The DABC is a cash cow for the state, generating millions of dollars in sales. However, the agency does not get to keep any of the money it makes: it goes back to the state fund, school lunches and public safety. The DABC was forced to make cuts recently to deal with a $500,000 budget shortfall Petilos said was imposed by the Utah State Legislature.

On Friday, the DABC sent a memo to employees offering a one-time $8,000 retirement incentive. The agency has also slashed a security contract and Petilos told FOX 13 he would not rule out more cuts.

"We're still looking at other options we have," he said.

Some lawmakers have grumbled about the cuts, pointing out the legislature funded DABC an additional $718,000 this year.

"That's true, they did give us increased funding," Petilos said Tuesday. "But the funding came in the form to be used for specific things."

Petilos said DABC was also handed a $300,000 transportation funding cut, and $200,000 for IT (which won't take effect until 2017). The legislature gave it $1 million in ongoing funding for liquor stores and not the $1.5 million he claims they need.

"It is the budget and the fact of the matter is, I received less than what has traditionally been appropriated," he said.

Petilos said he does plan to ask the legislature to restore the $500,000 cut as next year's budget process goes forward.

The DABC has faced criticism over low employee morale and wages as it makes management changes and moves to a new ordering system. An audit on employee issues is expected as early as June.