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Federal, State, and Local Governments
Government Finance and Employment Classification Manual
Chapter 12 - Liquor Stores and Lotteries Exhibits
Contents and Abstract:

12.1 State Liquor Stores Exhibit Statistics

12.2 Lotteries Exhibit Statistics
12.21 How Lotteries are Treated in Regular Finance Statistics

Certain financial activities of governments, especially commercial-type endeavors, do not fit readily into the Census Bureau's regular financial classification scheme. To provide additional information on these activities, the Bureau has created exhibit codes.

At present, these exhibit categories cover two areas: state liquor stores and government-operated lotteries. For many years, the Bureau also collected exhibit data on utilities, but these were discontinued because of the growing burden required to collect them.

12.1 State Liquor Stores Exhibit Statistics

The exhibit categories for state government operated liquor stores fall into two groups. One provides a type of net income statement while the other shows the overall contribution of liquor stores, taxes, and liquor law enforcement activities to the state government. Although local governments in a few states operate liquor stores, no exhibit data are collected for them.

Code Description
Liquor Store Income and Expense Statistics:
Z41 Net Sales of Goods - Amounts received from sales of liquor and associated services or products. Excludes any amounts for taxes, sales discounts, customer refunds, and other offsets to gross receipts from sales.
Z42 Cost of Goods Sold - Cost to the activity (net of any purchase discounts and other offsets to purchase price) of goods sold to produce the receipts from sales reported under code Z41 above.
--- Gross Profit on Sales - A derived statistic representing the profit on the sale of liquor before taking into account operating costs--i.e., Net Sales of Goods less Cost of Goods Sold (Z41 - Z42).
Z43 Operating Expenses - Expenditures applicable to operation and maintenance of liquor stores, including administration, advertising, purchase, handling, storage, and sale of merchandise (other than cost of goods sold), and other related costs of the liquor stores system. Excludes noncash outlays such as deprecation as well as licensing and law enforcement activities undertaken by the liquor store system.
--- Net Operating Revenue - A derived statistic representing the net profit before taking into account other revenues and costs--i.e., Gross Profit on Sales less Operating Expenses (Z41 - Z42 - Z43).
Z44 Other Income - Nonoperating income, i.e., income from nonoperating properties of the system and sources other than sales, excluding any receipts from sales taxes, licenses, and permits that may be recorded by the system as "other income."
Z45 Nonoperating Expenses - Any costs of the system for interest and for current costs not falling within Operating Expenses above (code Z43), excluding any licensing and enforcement costs that may be recorded by the system as "nonoperating expense."
--- Net Income - A derived statistic representing the final profit of the liquor store system--i.e., Net Operating Revenue plus Other Income less Nonoperating Expenses (Z41 - - Z42 - Z43 + Z44 - Z45). Note that this figure may not agree with that reported by the liquor store system's own financial report, which may calculate its income on another basis.
Liquor Store Contributions to General Funds:
Z46 Transfers to General Fund (Gross) - Total amount actually turned over to general government funds during the fiscal year, as shown in the system accounts (as opposed to the above calculated amounts), including any funds for distribution to local governments. Also includes any amounts derived from tax revenue collected by the system that appear in income accounts of the liquor system.
Z47 Expenditure for Licensing and Law Enforcement - Any amounts recorded in the liquor system accounts as expense for licensing activities undertaken for the state government and enforcement of state liquor laws and regulations. Such amounts are excluded from figures reported under codes Z43 and Z45 in the income and expense statistics above and classified under general expenditure categories.
Z48 Receipts from Sales Taxes, Licenses, and Permits - Any amounts received from alcoholic beverage sales and license taxes (including consumer permits to purchase liquor) that are included in the income accounts of the alcoholic beverage monopoly system. Such amounts are excluded from figures compiled for the income and expense statistics above and classified under general revenue categories.
--- Net Contributions to General Funds - A derived statistic representing the net effect of the liquor control system on the government's overall finances--i.e., Transfers to General Fund (Gross) plus Expenditure for Licensing and Law Enforcement minus Receipts from Sales Taxes, Licenses, and Permits (Z46 + Z47 - Z48).

12.2 Lotteries Exhibit Statistics

Unlike liquor stores, lottery operations do not constitute a distinct sector of government; rather, they are treated as a general government activity. The exhibit codes below apply to state governments and the District of Columbia, the only local government currently operating a lottery.

Code Description
Z51 Total Ticket Sales - Gross amounts received from the sale of lottery tickets or games, before deduction for cost of lottery tickets and prizes. Excludes commissions allowed to merchants for selling the tickets or games.
Z52 Prizes Awarded - Total value of prizes awarded during the fiscal year, whether actually paid out or incurred. Includes "instant winners," lotto jackpots to be paid as annuities, funds transferred to prize reserves, and the like.
Z53 Administrative Expense - The cost of administering the lottery, except for prizes. Includes salaries of officials as well as advertising, supplies, and the like. An identical amount is reported as an expenditure under Financial Administration (code -23).
Z54 Proceeds Available - The net funds available after deducting the costs of prizes and administration (Z51 - Z52 - Z53). Note that this amount is not the same as that classified as Net Lottery Revenue (code U95); the latter represents the amount left over after deducting prizes only (Z51 - Z52).

12.21 How Lotteries are Treated in Regular Finance Statistics

Unlike utility and other commercial-type activities of state and local governments (which are reported on a gross basis without deduction for the costs of providing them), lottery operations are included in the regular finance data on a net basis, as follows:

Net lottery revenues are included in the regular finance statistics as a miscellaneous general revenue (code U95). This item consists of Total Ticket Sales (exhibit code Z51) minus the cost of Prizes Awarded (code Z52). It differs from Proceeds Available (code Z54) by the amount for Administrative Expense (code Z53).

The cost of administering the lottery is reported under Financial Administration (code -23) in the regular finance statistics. Other expenditures made from net lottery proceeds available are reported in whatever function spends them--education, general local government support, highways, etc. Since the Bureau's classification scheme does not relate expenditures to their source of funding, there is no way to determine how net lottery proceeds were disposed.

The cost of prizes is not reported as an expenditure anywhere in regular finance statistics.

Source: U.S. Census Bureau, Governments Division
Created: November 16 2000
Last revised: October 31 2011