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Pa. Liquor Store Privatization OK with LV Lawmakers

Lawmakers appear to like Gov. Tom Corbett's proposal to eliminate and privatize the state's wine and liquor stores.

Several Lehigh Valley lawmakers look favorably upon Gov. Tom Corbett's plan to privatize the state's approximately 620 wine and liquor stores.

Under Corbett's plan, announced Wednesday afternoon in Pittsburgh, state liquor stores would be eliminated. That, it is hoped, would increase availability of beer, wine and liquor sales.

In a press release, Corbett committed $1 billion in proceeds from the process to education funding.

Corbett said that the $1 billion will be used to create the Passport for Learning Block Grant, which will provide flexibility to schools.

“Our plan gives consumers what they want by increasing choice and convenience, and helps to secure our future by adding $1 billion in funding toward the education of our children, without raising any taxes," Corbett said in the press release.

State Sen. Bob Mensch, R-24th District, said the idea of privatizing state liquor sales is popular within his district.

"Divesting is not a bad idea to me," said Mensch. "To me, it's an economically-driven decision. It could be handled by the private sector."

Mensch said he supported a bill introduced by House Majority Leader Mike Turzai, R-Allegheny. That bill, however, died before making it into the state Senate.

In Turzai’s plan, beer distributors would have the first shot at buying 1,600 new liquor licenses — finally allowing Pennsylvanians to purchase beer and liquor in the same location.

Steve DeFrank, a spokesman for State Sen. Lisa Boscola, D-18th District, said the senator would have no statement on the matter at this time.

"We'll need at least a couple of days," DeFrank said. "The devil is always in the details. We'll have our Law and Justice committee as well as appropriations committee look at the details."

State Rep. Ryan McKenzie, R-134th District, said he supports efforts to remove government competition from industries that can be adequately operated by the private sector.

"Privatizing the liquor system in Pennsylvania provides the opportunity to reduce the size of government and allows the private sector to take over," he said.

McKenzie said he is reviewing the financial details of the proposal, along with the safety precautions that will be implemented alongside the private sale of wine and spirits.

State Rep. Marcia Hahn, R-138th District, said she was in favor of privatization during the last legislative session and stated 65 percent of her constituents agreed.

"I'm in favor of the concept," Hahn said. "There are just a few more things that I need to look at."

State Rep. Joe Emrick, R-137th District, said he's "generally a free market guy," but didn't have a position on the legislation yet since he hadn't thoroughly vetted it.

Meanwhile, the Greater Lehigh Valley Chamber of Commerce weighed in with the following statement:

"The Chamber doesn’t have a formal stance. We commend the Governor for putting this entrepreneurial proposal on the table.  The Chamber is built on the spirit of enterprise and there are certainly a number of members who have interest in buying into an opportunity like this. As always, jobs are a concern but we look forward to learning more details as the plan is debated in Harrisburg."

Corbett said the $1 billion in revenue will come from the three- to four-year process of selling the Liquor Control Board. A total of $575 million will come from the wholesale license process, $224 million from the wine and spirits retail auction process, $107 million from the wine/beer license application process and $112.5 million in the enhanced beer distributor application process.

SWT Resident January 31, 2013 at 06:28 PM
Ruby. I don't know anyone who has complained about the price of booze in this Commonwealth. There are probably some. But in the end they break down and buy it anyway. What will they do with the money they save? Buy cigarettes? Has the restaurant industry crashed because Apple Bee's gets $7 for a gin and tonic? Last time I was in one the bar was 4 people deep in line for drinks. No one is being held hostage because the alcohol bix in this Commonwealth is government owned. Perhaps it is because I don't drink that I don't see any benefit in privatizing the industry. What I see is one mistake after another; taking that money from the sale of a well performing industry and throwing it in the pension hole. And when that hole gets bigger...they will reach for my home next. Once you let a government owned industry go private...you will pay twice; to the profit of the private owner and to the taxes which return to the state. And you can bet when this sale goes through that the government has a stipend in there that they can raise the sales tax to the private buyer...which will be passed onto YOU...the buyer...as much as they want. Again...as a taxpayer, Ruby...where do you win? Cheaper booze? Govt. is not always the best at running a business...we know that for sure. But one like alcohol or lottery which has to do with money...they will NEVER fully pull their nose out of it. You are not buying a car here. Or a new TV. When booze goes private...you will pay twice. I guarantee it.
Albert Brooks January 31, 2013 at 07:21 PM
SWT, you seem to be confusing selling off the MANAGEMENT of the lottery with selling the lottery itself. The company that bought the management rights believes they can do it more efficiently then the PA State Govt and will make their money in those savings. The amount guaranteed to be turned in to the state is greater then what is currently brought in. The only people "losing out" are state lottery management workers. You say the PLCB has gross profits that are sky high but due to their incompetence and inefficiency the net profits are not. $85 million last year on $2.1B of sales. Sales will go up due to increased convenience (1200 stores instead of 600) businesses will pay business taxes which the PLCB doesn't do, higher more people and run more efficiently. The taxes collected will increase because of the higher amount of sales and education and enforcement funding will go up far more then what the PLCB spends now.....or didn't you listen to the proposal. The majority of other states handle private liquor just fine and most do a better job then the PLCB ever could. It is time to let the state regulate and educate and not be in sales.
Carl W February 01, 2013 at 12:02 AM
State Stores bring $500 million into our State finances every year. God knows, we don't want that. Up with taxes ! Up with Turnpike fees - triple them ! $200 to renew your driver's license !!
Something to consider February 01, 2013 at 01:21 AM
There is nothing positive about 5000 people losing their jobs statewide, and those who say it doesn't affect them are mistaken, anybody who is a taxpayer living in PA will be paying thousands of people's unemployment as well as welfare for those who will be forced to apply for it. There is nothing definite about what Corbett is proposing for the existing employees, just a bunch of "we could do this" like possible schooling and other state jobs that aren't even available now. Something else they don't inform the public about, if it is privatized the convenient liquor store you may use(for some everyday) very well may not be there, and if it is a once $5 bottle vodka may be $20 instead, it is something for everyone to think about. Once again, like the lottery PA is broke and looking for fast money. So if they do privatize and get a couple billion, in ten years when they are broke again, which we all know they will be what are they going to sell next? roads? bridges? oh my! It is a permanent solution to a temporary problem . So for all those ignorant people who do not fully understand the consequences of privatizing and how it affects everyone as a whole maybe you will once you start paying for 5000 people's unemployment and welfare goes up. I don't know call me crazy but laying off that many people and having the taxpayers pay for it doesn't sound like a positive way to fix a deficit.
kicks on 4th February 01, 2013 at 01:37 AM
Those state employees ALSO pay taxes and the lost of their job will increase local school taxes- and the difference is a low wage employee and your taxes still rise. This big push to get rid of govt workers, no one seems to get they pay taxes and spend money, take their part away - you pay more. Keep outsourcing and reducing wages and all taxes go up. If you live in the middle of the state and don't want to drive hours you go to a state store, they know about how much each year they would get in profits and the fine Gov just wants this for another friends- a loss for the state! From a dept that was making money and could have made more for the state each year. Good thing he is only going to be a one term, but it will be too late to undue all the gifts he was given friends!!
SWT Resident February 01, 2013 at 06:48 PM
What amazes me is this: in time, when the number of people collecting SS begins to rise and we begin to get closer and closer to not be able to pay them, the fed will have NO PROBLEM with cutting back the pay outs to those who are entitled to receive SS payments. $1,500 a month this year. $1,000 a month in the year 2025. But, here we are with a severe pension issue in this Commonwealth. We are already at in PA where the fed SS program is approaching. I don't see anyone standing up at the Commonwealth level telling those with taxpayer funded pensions...sorry, folks, because of a declining income, we will have to cut back your guaranteed payouts. Nope. Not a word. You will see taxpayers on the streets, loosing their homes, and not a single thing STILL being done about it. What do they do? They begin to sell off anything that makes money, rent out our pristine woodlands to be ruined by fracking, give big business free taxpayer money to bring $12-$14 an hour warehouse jobs to the Lehigh Valley...just at poverty level...and call they call this success? It may be if you are making $175,000 a year as many who make the decisions for us are. I call on Corbert...or Pat Browne...try living on $14 an hour, gentlemen. Once you piss away ownership of these two assets...PLCB and the lottery...you've pretty much run out of all options except what you should be doing: FIXING THE PENSION PROBLEM. Grow a set and make the necessary changes and STOP KICKING THE CAN DOWN THE ROAD.
SWT Resident February 01, 2013 at 07:08 PM
Mr Brooks...in all my years living in this Commonwealth, and that has been a long time, I have learned one thing: never trust a politician...or a lawyer. I've read 9 diff iterations of fixing the PLCB all the way back to 1977. This latest version by Corbet has a lot of collateral damage that is not even CLOSE to being addressed in its 471 page version. It is all about: money. A quick fix to plug holes created by complete mismanagement over many years. Greed, to put it more correctly. How many elected officials who lost elections were then "gifted" with taxpayer funded $150K+ a year jobs...w/ pensions...and they were no where NEAR qualified for? 28. Twenty-eight of them. Mismanagement seems to rhyme with Commonwealth politics in PA. So we sell off the management portion of money making assets. Why? Because it is so full of mismanagement that is the only solution. Nothing like walking down the hall at the PLCB, for example, and simply saying to all these gifted execs: you're fired, you're fired, you're fired...and replacing them with hired people who can do the job. Boy...it seems simple enough that even a country boy like myself can figure out how to fix a mismanaged system. Problem is...politics seems to get in the way of our elected officials getting the job done. Especially where there is the smell of money. Mr. Brooks if the ONLY way to fix the PLCB is to sell off the management rights, then our elected officials are not even qualified to regulate the industry either.
Albert Brooks February 02, 2013 at 01:28 AM
SWT Resident: I'm not sure where you got your 28 people at $150K or who you are referring to. Conti is the only one in the PLCB and I do agree that he isn't qualified. Since the management of the PLCB isn't even under consideration to be sold I don't know what the point of your reply is. The PLCB is incompetent on the retail end and should be, needs to be and God willing will be replaced with a private system and not with a private management team.
Albert Brooks February 02, 2013 at 01:31 AM
Something to consider: Convenient PLCB stores are damn few and far between. If that wasn't the case there wouldn't be as much push to get rid of them and replace them with something better.
Kathy Ferrizzi February 02, 2013 at 02:26 AM
SWT Resident - well said
Ruby Montana February 02, 2013 at 04:26 AM
When was the last time YOU were in a state store? I hope you are not a "first responder". If you are, you may be needed, LOL! Many state store employees are working on their SECOND pension. They will not go on unemployment. They will retire ... finally. And I will STILL have to move my bottles closer to the register for them to scan them!
Ruby Montana February 02, 2013 at 04:29 AM
Oh! That's good, Albert!
Ruby Montana February 02, 2013 at 04:29 AM
I do have to agree with that!
Something to consider February 03, 2013 at 05:28 AM
To Ruby and Albert, if liquor stores are few and far between and the employees are working on their second pension you obviously live in the country...guess if they privatize they could always go into agricultural engineering if you guys need some help out there
Something to consider February 03, 2013 at 05:35 AM
POINT BLANK: thousands out of a job and those agreeing with it in they way things are today is the devil's work and when is the the last time you have been to a state store where there is actual civilization because you would easily see they are younger employees trained and very knowledgeable about wines and clearly not on a second pension. I know the air is clearer out there but come visit once in a while!
Albert Brooks February 03, 2013 at 06:23 AM
With only 600 stores in a state the size of PA they are few and far between no matter where you live. My closest store is one of the top 20 in the state but it isn't what I would call close. I never said anything about second pensions so please refrain from trying to twist what I did say.
Amend February 03, 2013 at 02:22 PM
There only being 600 state stores isn't a valid reason to give up a proven revenue stream of some $100 million profit to the state. That's just a good reason for the state to consider expanding locations. Maybe the system could be managed better to maximize potential profit, but there's no denying that it's profiting. Profit is a measure of success, even if there is room for even greater success, it's still profitable. What other government agency can say that? Once the $1 billion or so from the sell off is used up, where will that annual revenue come from that the state once had? Surely taxes will have to rise, unless for some reason it's believed that we will somehow double liquor sales. And there is no reason to believe that grocery and convenience stores will hire those who will lose their jobs. Why would they add employees when they already have ones in place to do the job? To me, the numbers simply don't work, tho I do agree the state could do an even better job at maximizing profits thru the PLCB.
Ann February 03, 2013 at 02:48 PM
This might be a silly question, but why if the state run stores are soooo profitable don't other states take over liquor sales in their states.....if it's such a money maker? We could continue down the path where the state takes whatever they deem necessary. How about all these poor people who just have to hand over their land...could happen...if they wanted to...if it really was such a money maker!
Amend February 03, 2013 at 03:00 PM
@Ann- isn't that sorta what the state has been doing with fracking? Public land is the people's land. It's our asset, not the corporations exploiting it, but that's a separate discussion. No one is advocating that the state get into the business of doing everything. What's being discussed is the privatization of an existing state asset, and the loss in revenue by doing so. Those are tangible issues, not "what ifs". $100 million in annual revenue is nothing to sneeze at. Not with the budget gap we currently have. It seems to come down to as simply two sided question: would you rather gain revenue from the PLCB or from an increase in taxes?
Albert Brooks February 03, 2013 at 03:31 PM
The difference will come from increased collection of taxes due to greater sales because of 600 additional liquor stores and thousands of new licenses. It will come from business taxes the PLCB doesn't pay, income taxes the PLCB doesn't pay, decrease in border bleed, Increase in total employment and that the citizens will not be on the hook for future pension benefits. Since regulation and licensing will increase some workers will transition to those jobs, others will get what the market will bare just like any other job. With thousands of new licenses it is and limits on ownership big box and grocery stores cannot buy up everything, there will be an increase in outlets and somebody has to work in those places. If the clerks are good at their job they'll be hired, if not they won't. That is how business works.
Amend February 03, 2013 at 03:42 PM
@Albert- doubling the number of retail locations doesn't presume that sales will double. The rest of what you say I agree with in theory. I just don't believe that volume/consumption will double simply due to privatization. Thus, the net benefit you mention is questionable considering. I also don't see the realization of job tranference, as I do think that grocery and convenience stores will corner the market. How many WaWas, Sheetz, Wegman locations are there in the state? That's a chunk right there. Perhaps they might open more locations to hire more employees, but that's an assumption.
Ann February 03, 2013 at 03:58 PM
Amend, no one knows for sure the money aspect. Everyone is just giving their opinion. Some say we lose money, some say we make money. We can all agree that we WILL have more convenience and variety!
Albert Brooks February 03, 2013 at 04:12 PM
I didn't say it would double, I said it would increase. It doesn't have to increase very much to make up for the "profit" the PLCB currently turns in. Just looking at raw numbers sales would have to go from the current $2.1B to $2.45B (~17%) to pass the total collected by the PLCB in taxes and profit and that doesn't count the licensing fees, business taxes or income taxes.
Albert Brooks February 03, 2013 at 04:13 PM
You forget that the plan has ownership limits.
Albert Brooks February 03, 2013 at 04:33 PM
The state had 692 stores in June 2000. It has 605 now because the PLCB can't efficiently operate as well as a private business. According to the AG about 7% of PLCB stores lose money.
Joe Sommers February 03, 2013 at 04:35 PM
Hey STW. Resident..Time for the retail Clerks to join the global economy like everyone else. it is not the State's responsibility to take care of thier retirements on the taxpayer dime. Those days are long gone. These retail clerks have long known that their days are numbered so if they havent improved their skill sets to become more marketable knowing the State was privatizing than shame on them. The State has a job to do and thats meeting a budget for all the taxpayers .Ending this State Store charade is long overdue. Look at what the Retail Clerks union 1776 has done to the retail food industry ,..Its contract demands have closed several PROMINENT Retail supermarket chains.... A&P and Acme to name a few. Your arguements are weak and your voice is a small minority on what most Pennsylvanians want.
Joe Sommers February 03, 2013 at 04:47 PM
Amend...Fracking has been a boon to the economies of many Pa towns (Like Williamsport) . If the State didn't bring Shell here then W. Va or Ohio would have . Economically speaking...a great move for the future of our State. Regarding Booze...All the research has been completed ...State would be the clear winner in selling off the State stores.Income from PLCB licences and the taxes generated from Private business would far exceed their 100 M in annual revenue. All the push back you hear is being funded by Wendell Young, the President of the Retail Clerks Union 1776 . His union almost single handily put A&P and Acme out of business. Nuf said.
Ruby Montana February 04, 2013 at 09:47 PM
Correct. And for the record ... I said "second pension", not you! And it is true.
Ruby Montana February 04, 2013 at 09:51 PM
I am in an actual civilization. AND near a border. There is no knowledgeable person waiting on me. A sales person for the State controlled store cannot tout one item over another. They must treat them equally. What wines are returned often because the bottle is bad? What box wine turns to vinegar first? No one will tell you. They can't. They are not allowed. When you own your store and stock your shelves, you can have a place where only vodka is sold! And know everything there is to know about it. THAT'S private enterprise.
Ruby Montana February 04, 2013 at 09:53 PM
That's a good point! Yet only one other state has the restrictions that PA does and that is Utah. So, maybe the better question is: "What are WE missing, LOL?"

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