A state audit released Wednesday found that Baltimore’s Board of Liquor License Commissioners had failed to correct a number of problems unearthed in a 2013 audit. However, the board’s chairman said most of the recurring problems have been addressed since auditors closed their investigation in September.
The 49-page report by the state Office of Legislative Audits spells out 18 major problems at the board identified between January and September 2015. A common thread was a lack of policies or procedures to guide liquor board operations, including how license applications are handled, how payments are accepted and how inspections are conducted.
The audit found that the board did not assess correct license fees for the Horseshoe Casino Baltimore, it renewed licenses without ensuring that licensees paid the proper amounts, it did not always complete license transfers within 180 days and it failed to digitize license records for the public by July 2015.
The board, which oversees liquor licenses for more than 1,200 establishments in the city, is required to be audited at least once every three years. A March 2013 audit found 24 issues in the board, and the most recent investigation determined eight of those findings had been corrected in the last three years.
In a response to the audit, liquor board chairman Albert J. Matricciani Jr. wrote that, although the board did not agree with every finding, it agreed with its overall conclusion: The agency lacked policies and management practices at the time of the audit, which “directly led to agency outcomes that did not necessarily comport with state law.”
Auditors found the board lacked policies and procedures to guide the licensing process, and renewed licenses without ensuring licensees had paid necessary fees. That led to the board failing to collect the $76,000 from the casino for the 2014-2015 license year. The audit also found the board lacked proper record-keeping procedures to track payments license holders.
The board failed to complete some license transfers within 180 days, a requirement in state liquor law affirmed by a 2015 ruling of the Attorney General, according to the audit.
“We were advised by BLLC management in February 2016 that it has no intention of following the Attorney General’s Opinion and that it believes it has the authroity to determine the consequences if transfers are not completed within 180 days,” the audit said.
The audit also found that the board had no system for tracking inspections outcomes, licensee violations were not clearly defined and there was no process for resolving 311 complaints. Auditors estimated inspectors completed as many as 3,605 inspections during the year that ended April 30, 2015 — far below the agency’s goal of 5,200 inspections per year. In its response, the board said it completed 3,591 inspections during that time.
Auditors also found the board did not consistently monitor employee performance, and some employees who had been with the organization as long as 10 years had not received a single formal performance review.
Furthermore, management failed to track and approve hours worked, including overtime.
“Between January and June 2015, 11 employees earned 1,609 hours ($51,000) of overtime," the audit said. "During this period, one inspector was paid for 314.5 hours of overtime totaling approximately $9,400. The Chief Inspector could not explain why this employee was paid overtime to this extent.”
Matricciani said the audit told only half the story, and that since September the agency has addressed 16 of the 18 findings. The board has revised its rules and regulations, published a procedures manual, implemented regular management meetings, and created a tracking systems to monitor licensed establishments and inspections. The agency still has to establish a process for monitoring closed establishments and digitize its license records, a process expected to be complete by the end of the month.
“I believe the agency has made significant strides in becoming an agency that is more accountable, transparent and effective in the discharge of its duties as required by state law,” Matricciani wrote.
Anthony McCarthy, a spokesman for Mayor Stephanie Rawlings-Blake, said the mayor was pleased to see the liquor board moving in the right direction.
“The actual audit, which I think is a very small picture of the challenges we see at the liquor board, did in fact give them clear direction, and I believe that she is excited about the opportunities that this affords the liquor board to be more effective in services,” he said. “She’s especially pleased at the dialogue and conversation that’s going on right now between the new liquor board commissioners and the staff, and this real renewed sense of accountability.”
Matricciani and commissioners Aaron Greenfield and Dana P. Moore joined the board in April.
Chrissy Anderson, the president of the Fells Prospect Community Association who is active in liquor board issues, said she wasn’t surprised the audit contained many of the problems brought to light in 2013, but she thought the board’s response left a lot to be desired.
“It’s disappointing to read some of it. I mean, I’m happy with some of the changes that they’ve made," she said. “What do you do to a state agency that doesn’t comply with state law?”
Thomas Akras, the liquor board’s deputy executive secretary, said turnover contributed to delays in addressing the 2013 audit’s findings. In the past three years, the board has had four sets of commissioners and three executive secretaries, and its inspection staff was cut by 60 percent. Now that the staff has stabilized, the board has implemented technology fixes, published standard operating procedures and put new management practices in place, all while communicating with auditors, he said.
“There’s been a lot of work that’s been done here at the agency. Is it all complete? Are we perfect? No, by no means are we perfect,” Akras said. “But with the [procedures] in place, with the right-sizing of our agency, we’re moving in the right direction to really come into compliance.”