Maui County’s Department of Liquor Control is plagued by a multitude of shortcomings and failures in its oversight, fulfillment of responsibilities, staffing, licensing processes, and enforcement policies, a recently released performance audit finds. The third-party report by California-based consulting firm Harvey M. Rose Associates, LLC, was commissioned in February 2018 by the Maui County Council, which cited a waning confidence in the performance of Liquor Control. Councilmember Yuki Lei Sugimura, who introduced the resolution to authorize the audit, noted public scrutiny following the rule change on 24-hour liquor sales and stringent requirements for nonprofits and single-event licensees.
For years, Liquor Control has faced criticism from the public and local establishments for what was seen as heavy-handed enforcement of nonsensical and outdated rules, levied in a manner that was often viewed as overly punitive and retaliatory. So when licensees and concerned residents had the opportunity to speak out as part of the audit, many did (although some attendees said attendance would have been greater if there wasn’t a fear of retaliation). Their comments, along with a multitude of interviews and extensive research, are taken into account in the auditor’s report, which is broken up into five sections, each containing the firm’s findings and recommendations.
Basically, it’s a long, comprehensive, and damning 104-pages. Here’s what you should know about the auditor’s delve into the many drunken stumblings of a department that’s been over-served on power for far too long.
- Oversight of Liquor Control
- Overall, the audit finds that “The oversight structure for liquor control in Maui County has not ensured that the commission fulfills its mandated duties and that the Department of Liquor Control achieves high performance.”
- Existing county rules do not specify how the mayor or county council may redirect Liquor Control operations if there’s unsatisfactory performance. In fact, no existing rule authorizes the mayor or council to require action if there is poor performance by the director.
- County rules also allow the Liquor Commission to enter closed sessions and override a fair and transparent selection process, even allowing the hiring of a person who has not filed an application.
- An annual review of the director’s performance by the Liquor Control Commission is mandated by the Maui County Charter, but there is no timeline or required process outlined by the LC rules. Between 2014-2018, the commission did not complete an evaluation of the director.
- The commission has failed in establishing long- and short-term goals for the department despite recommendations to do so in a report from 1994, resulting in an absence of meaningful performance goals and measures for liquor control.
- The report states that “neither the Department’s annual reports nor its strategic plans include any information on the prevalence of these issues [of underage drinking and alcohol abuse], specific goals to tackle these alcohol‐related issues or any performance measures to track the Department’s progress.”
- Performance measures used in the 2017 annual report of the department were generally not outcome-oriented or insightful with regard to the effectiveness of the operations. For example, one measure, total number of premises inspected, is not tied to any overarching goal. Another, total permits processed, doesn’t consider the percentage of the total applications submitted or how long the application process takes. Also, the department does not include historical data, which could be used track trends.
- The department does not track any measures of customer satisfaction.
- The Liquor Control Commission is the only (!) entity which can direct Liquor Control operations but has been unable to fulfill its mandated duties (see section 2), resulting in an absence of guidance and accountability.
- The department has not adequately consulted key stakeholders and the public before major changes, such as rule changes for 24-hour liquor sales and removal of the cap on local hostess bars.
- Corporation Counsel has not ensured compliance with state laws and county rules, despite being a member being present at all commission meetings, and has not rigorously trained the commission on legal requirements of the commissioner position.
- The operations manual has been in place without updates since 2000, leaving outdated practices in place.
- Commission Responsibilities
- The LC Commission is not fulfilling its mandated responsibilities.
- Although annual evaluation of the director was mandated by the County Charter in 2012, only two have taken place: one in 2014 and the other in 2018.
- The commission’s 2018 evaluation of the LC director as “above average, satisfactory” is at odds with the audit research findings, which could not justify the high marks. Of the five criteria used by the commission to grade the director, the audit states, “the Director has demonstrated difficulties performing in at least three of the five categories.”
- These “difficulties” include an increase in employee grievances, a violence in the workplace claim, low office morale, lack of a clear direction, inadequate communication leading to distrust within the community, violation of state laws and county rules by the department, and general mismanagement.
- Some commission members have poor attendance records. “From July 2016 to June 2018, no Commission member attended all Commission meetings during any fiscal year. At least four of the total nine Commission members had six or more absences each fiscal year,” the report states. Yet, no commissioners have been recommended for removal.
- The LC Commission violated public noticing requirements (“Sunshine Laws”) at least twice in the last three years by failing to ensure the public was adequately notified before proposing and adopting new liquor control rules.
- Staffing and Human Resources
- The authorized staffing levels of Maui County’s LC are high compared to other counties in the state, which could result in unnecessarily high license fees.
- The department had consistently high vacancies of about 26.7 percent of staff in the last two fiscal years. In fiscal year 2017-2018, the director’s private secretary accrued 270.5 hours of overtime.
- The audit concludes that Maui’s LC could cut at least two positions and still fulfill its responsibilities, while being closer to the staffing norm in counties across the state.
- The department’s turnover rate of 15.8 percent was double the 7.8 percent average of all county departments.
- Many employees perceive the department’s culture as retaliatory and not open to new ideas, and several employees expressed a fear of retaliation in confidential interviews with the audit team. Grievances have spiked.
- The department is not appropriately utilizing all positions, including using the LC auditor to staff the front desk, a “misuse of that position’s skills and abilities.”
- Three employees are the children of the director or a former director.
- License and Permit Processes
- The report finds the administration of licensing is unnecessarily inefficient and seen as arbitrary and inconsistent to many licensees.
- Maui LC’s website is significantly less informative than the websites of other counties in Hawai‘i.
- Unlike other counties, the department website does not host application forms or guidance materials, or a copy of the operations, policies, and procedures manual.
- The department also does not maintain a database of licensees for electronic communications.
- Licensees have noted delays due to technical difficulties and availability of staff. Further, licensees perceive the renewal process as unfair. Department performance measures don’t measure licensing efficiency.
- Maui’s rules for license applicants are more onerous than in other counties. “10 of 22, or 45 percent, of major items that are required by the Department are either not required by at least
two of the three other counties in Hawaii or at least two of the other counties require less detailed information on the same item,” the audit states.
- Maui County Department of Liquor Control’s enforcement of liquor laws is “not appropriately focused on activities that reduce alcohol‐related risks, and many licensees perceive enforcement as overly punitive and retaliatory.”
- A significant amount of time is spent on violations that do not pose a major risk to public health and safety, due to outdated rules. What’s more, these operations are not based on set enforcement goals to reach “outcomes such as decreases in alcohol use by minors or driving under the influence of alcohol in Maui County.” Instead, department goals are based on number of inspections rather than what is optimal for the health and safety of the county.
- The LC Commission has not conducted a comprehensive review of liquor rules in the last 20 years, resulting in investigation of violations that pose little risk to public safety. For example, rules prohibit obscene language and songs, and breweries may not serve beer flights because rules prohibit serving multiple drinks at once to an individual. Other counties have conducted comprehensive reviews of their rules in the last five years.
- 72 percent of all violations in FY 2017-18 were for minor violations such as failing to clean tables in a timely manner and dancing with a drink in hand. The four most frequently reported violations were for minor violations, and the enforcement division reported minor violations and non-violations consume about one-third of the division’s staff time.
- LC’s policy manual, not updated since 2000, does not provide adequate guidance or limits on conducting inspections and investigations, leaving enforcement officers to operate with wide latitude, inconsistently, and without checks and balances. The department does not track inspections electronically, and enforcement staff could not say how their selection criteria for inspection reflected a perceived risk to public health and safety.
- Inspection data is reported inconsistently between officers, resulting in “inflated and unreliable inspection statistics.”
- LC’s educational offerings are limited and the department does not adequately enable voluntary compliance with liquor laws. Violations could be a result of a licensee’s lack of awareness of specific rules and laws, the report says. Many licensees see enforcement as punitive and retaliatory.
So there you have it, a scathing 104 pages in a nutshell. Each bullet point here could be an entire story.
“The Department disagrees with many of the factual findings, and the Department believes the others lack context,” Liquor Control Director Glenn Mukai wrote in his response to the final draft of the report. “However, with regard to the recommendations directed to the Director of the Department of Liquor Control, several of the recommended changes have already been made. Other recommendations are in the process of being implemented or will be subject to consultation.”
Looks like the department with an ineffective oversight structure wants to oversee its reform. That’s gotta end well.
Luckily, the audit left a number of recommendations for the county council and mayor to consider, if cutting off the LC and sending the whole mess staggering home isn’t an option.
“I wanna hear what testifiers say if they come forward. To me, Monday is going to be important to see what the next steps are,” PEA Committee Chair Councilmember Yuki Lei Sugimura told me. Many department rules are the result of state law, which the council cannot affect, she said, but added “I think that there’s things that can be done, so I really want to hear what the community says.”
A good start would be to follow the report’s recommendation for a county resolution “that outlines the specific improvements that are expected from the Department, Liquor Control Commission, and Corporation Counsel.” But just like that friend who drank too much Friday night and needed your hand making it back home, it looks like this power-drunken mess is gonna need your help finding its way too.
The findings of the audit team will be presented to the Policy, Economic Development, and Agriculture Committee at 9am on Monday, Dec. 3. See MauiCounty.us/agendas for more information. Public testimony is welcome. The full audit report can be viewed online by clicking here.