Report says corruption, bureaucracy, outdated laws taint state agency; sweeping changes advised

By STEVE BARNES, Senior writer
First published in print: Friday, October 2, 2009 ALBANY — A long-awaited report on the State Liquor Authority concludes the agency is fundamentally broken.

The 43-page assessment, released Thursday, depicts a department unable to perform its duties with more than minimal competence because of a profound lack of resources. The SLA, the report contends, has become hamstrung by bureaucracy, antiquated laws, outdated technology and a lax internal culture that allowed corruption to flourish.

The result is a regulatory and enforcement agency that “jeopardizes public health and safety and exacerbates the economic crisis currently plaguing New York,” the report says.

The findings are the result of two years of research and hearings by the state Law Revision Commission, which in 2007 was tasked by the state Legislature with assessing the SLA and suggesting fixes for both the agency and the laws that govern the manufacture, distribution and sale of alcohol in New York state.

“This is clearly the largest most work-intensive report I’ve been involved with,” said Robert M. Pitler, a Brooklyn Law School professor who is the commission’s chair. “What they’re facing is massive.”

Some of the changes recommended in the report are already underway as a result of reforms ordered by the SLA’s new chairman, Dennis Rosen, who took office in August. Others require action by the Legislature.

Even if only partially implemented, the commission’s recommendations would result in the most profound changes to the way the SLA operates since its creation after the 1933 repeal of Prohibition. The public would see streamlined regulation of an industry with $9 billion in direct annual economic impact in the state, including faster license approvals and enhanced enforcement. Practical changes like expanded hours for alcohol sales and wine and spirits sales in stores currently limited to beer sales are also possible.

“I would give the Law Revision Commission a very large gold star,” said Assemblyman Robin Schimminger, a Democrat from suburban Buffalo who co-sponsored the 2007 bill requesting the report. “I think they’ve done very good work and have given a mission to the current administration of the SLA.”

The authority’s problems arew well documented, from a 1981 state Senate report that advocated scrapping the SLA entirely to several major state investigations over the past four years that resulted in fines, prosecutions and major changes. (One investigation was led by Rosen, who previously worked in the attorney general’s office.)

What’s new about the commission’s overview is the way it comprehensively outlines problems and recommends solutions. The overhaul facing Rosen’s administration is “herculean,” the report says. Among the findings:

A nine-month backlog of 3,000 liquor-license applications awaiting processing that grows by at least 150 new applications per month.

The decision five years ago to put the SLA under the financial and administrative control of the Division of Budget rendered the authority “incapable of protecting the public health and safety through licensing and enforcement” because “another agency is second-guessing the SLA’s needs.”

In addition, the report characterizes morale at the authority as “extremely low” because of factors including mountains of paperwork from lengthy applications that must be entered by hand or scanned; licensing software that is incompatible with enforcement software, hampering investigations; a voicemail system that was simply turned off because of an overwhelming volume of calls; and employees being forced to work above their pay grades or in jobs for which they are not trained, such as clerks pressed into service reviewing applications.

“I think much of what the report highlights is very instructive and useful (but) it’s easily demonstrable that we have already addressed or begun addressing many of these concerns and recommendations,” Rosen said.

The new SLA chief has been given permission from the Budget Division to fill key positions, re-implemented basic administrative oversight of areas including employee attendance and use of state vehicles, and signaled a new openness by meeting with industry representatives to seek input about reforms.

“I would say the new chairman brings a very welcome attitude of wanting to change the agency for the better rather than maintain the status quo,” said Albany attorney James D. Linnan, who for 36 years has been appearing before the SLA on behalf of clients seeking licenses and responding to disciplinary measures. Linnan is counsel to the Empire State Restaurant & Tavern Association and also an SLA licensee himself, as the business partner with the chef Dale Miller in the latter’s eponymous restaurant in downtown Albany.

As he moves forward, Rosen appears to have the support of Gov. David Paterson.”Gov. Paterson is confident that the initiatives being developed by Chairman Rosen will go a long way to meet (reform) objectives and improve efficiency at the SLA,” said Paterson spokesman Morgan Hook in an e-mail.Hook emphasized that the conditions described in the report predate Rosen’s appointment. “The governor looks forward to receiving the complete report from the Commission, which will satisfy its statutory objectives and include recommendations for legislative action,” he said.

The second half of the commission’s report should be released in mid-December.

Steve Barnes can be reached at 454-5489 or Visit his blog at Plans for reform The Law Revision Commission report’s recommendations for fixing the State Liquor Authority: Staff: Hire permanent and, if necessary, temporary employees to address backlog. Self-govern: Restore autonomous administrative, budgetary control to authority. Enforcement: Focus on underage drinking. Temporary licenses: Allow liquor-license applicants to sell alcohol and/or permit BYOB for restaurants while applications are pending.