Gov. Gretchen Whitmer’s Michigan Liquor Control Commission cost taxpayers nearly $1 million when it lost track of more than 62,000 bottles of state owned liquor, mismanagement that’s prompting calls for reforms.

A performance audit from the Office of the Auditor General released this month found the MLCC overseen by five unelected gubernatorial appointees “lacked key controls including spirit purchase and sale reconciliations, spirit ordering oversight, inventory oversight, and others.”

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The MLCC manages spirit products and sales through authorized distribution agents known as ADAs using 11 state-owned warehouses and several information technology systems to license manufacturers, wholesalers, and retailers and to manage online spirit orders and distribution.

The OAG found the commission’s inventory practices “once resulted in negative inventory of nearly 900,000 bottles, 520 unique products with negative inventory balance, over 7,000 instances of inventory purchases with no sales of the spirit product during the week, sales to retailers prior to MLCC purchasing the items, and other weaknesses,” according to the report.

“MLCC did not effectively manage inventory housed in ADA warehouses, resulting in 62,294 missing bottles of State-owned spirit inventory,” auditors wrote.

The report also highlighted 20,794 bottles of state-owned spirits that couldn’t be sold because MLCC did not consistently return inventory to the vendor when another ADA became responsible for spirit distribution.

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State Rep. Tom Knuse, R-Clare, noted MLCC could not provide an explanation for the 62,000 missing bottles – 20% of the commission’s inventory value at $961,317 – in a Tuesday press release calling for reforms.

“I’m sorry, but how is it even possible that the MLCC could be so mismanaged that 62,000 bottles of anything could just go missing?” Knuse said. “There are clearly deep issues within the commission that must be addressed. Just because we are talking about alcohol doesn’t make these problems any less concerning. We would all be fixated on finding solutions if the Department of Corrections said it lost 62,000 prisoners or Treasury said it lost 20 percent of tax revenues.”

Other findings from the OAG showed $1.1 billion in spirit orders were not filed in the state’s online ordering system, and that the MLCC lacked internal controls over its liquor license management.

The latter resulted in three club licensees selling $272,139 in spirits in areas where that’s illegal between Jan. 1, 2018 and Aug. 5, 2022, as well as another bar/restaurant licensee that sold $4,080 in spirits in a “dry-for-spirits” municipality during the same time frame.

The MLCC and the state’s Department Licensing and Regulatory Affairs agreed with the OAG’s findings and promised to implement a series of recommendations to improve oversight.

The OAG report follows a recent letter to Senate and House leaders from Auditor General Doug Ringler that took issue with a 28% funding reduction in Whitmer’s recently presented budget that would slash $8.3 million from the department.

“Ringler explained how the 28% funding reduction would kneecap the OAG’s ability to fulfill audit requirements and could even put federal funding at risk,” according to Knuse’s press release.

Whitmer’s budget cut presented in February came less than two months after the OAG issued the last of five reports detailing fraud, delays and mispayments by the Michigan Unemployment Insurance Agency during and after the pandemic.

The December OAG report pointed to $245.1 million in potentially improper payments to folks who were dead, behind bars, or that did not qualify, including UIA employees, according to The Detroit News.

Prior audits and investigations estimated the state paid out more than $8.3 billion in improper unemployment claims, including at least $5.6 billion to suspected fraud, the news site reports.

“This is yet another example of the auditor general finding deep-rooted failures and incompetence within the Whitmer administration,” Kunse said of the recent MLCC audit. “It is critical that the Legislature ensure this office remains fully funded so it can continue its essential work. The governor clearly wants the investigations to end so she can continue failing our state and misusing taxpayer dollars. We can never let that happen.”