Corbett injects school aid into debate over state stores

How to raise $1 billion Governor's plan for privatization gets mixed reviews, dismissed by union


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Pursuing a goal that has eluded Republican governors for decades, Gov. Tom Corbett outlined a sweeping proposal Wednesday to privatize liquor sales and expand beer and wine outlets in the state while using the proceeds to fund $1 billion in school block grants.

The latest plan to get the state out of the alcohol business drew immediate and predictable criticism from union leaders and Democrats. More significantly, the governor's announcement, at a news conference Downtown, followed tepid public reviews for the concept from the top-ranking Republicans in the House and Senate.

Mr. Corbett, who was accompanied by about a dozen legislators including House Majority Leader Mike Turzai, R-Bradford Woods, said he was confident that his plan would prevail despite its current opposition and the history of failed attempts to end the state store system.

"Our proposal is part of my commitment to changing Harrisburg, streamlining government and moving Pennsylvania forward," Mr. Corbett said. "Our plan gives consumers what they want by increasing choice and convenience, and helps secure our future by adding $1 billion in funding toward the education of our children without raising taxes."

The Corbett plan would shutter the current state store system for sales of liquor and wine and expand sales to sites such as groceries and pharmacies. Traditional beer distributors would be permitted to sell beer in smaller batches, such as six-packs, and would be allowed to seek licenses to expand their offerings to include wine.

Currently, there are just more than 600 state stores. They would be replaced by the winners of 1,200 auctioned licenses for liquor and wine stores. An unlimited number of licenses for groceries and other retail outlets would be available. The administration said that the transition process could take three or four years and would yield roughly $1 billion in auction and license fees that would be used to fund block grants for school districts focused on the areas of safety, early education, individualized learning programs, and STEM programs -- education in science, technology, engineering and math.

The legislation, to be introduced next week, anticipates $575 million from licenses for wholesalers; $224 million from the auction for the 1,200 licenses that would replace the current state stores; $107 million from the open-ended number of new retail licenses for beer and wine, and $112.5 million from the licenses for expanded offerings in existing beer distributors.

Mr. Corbett said the new system is designed to be revenue neutral, producing tax revenue for the state roughly equal to the current system. Initial details on the education grants were sketchy. Mr. Corbett said he wished to give schools maximum flexibility, but the one-time cash infusion would include guidelines to ensure that the funds would be spent in the four broad areas and not used for day-to-day operations.

"It would be capital-type expenditures," Mr. Turzai said after the news conference.

Wendell Young IV, president of the union representing 3,500 liquor store workers, dismissed the new bid to revive a cause that frustrated governors Dick Thornburgh and Tom Ridge.

"I don't think the governor's got a very good chance of getting this through," said Mr. Young. "[We] just heard yesterday from leaders in the Republican Party. They're not real crazy about the governor's idea in the Senate."

Mr. Young also argued that the plan would hurt the state budget over the long term, reducing the overall revenue from profits and taxation.

Senate President Pro Tempore Joe Scarnati, R-Jefferson, offered a wait-and-see attitude on the Corbett proposal, while the chairman of the House committee with jurisdiction over the bill suggested that it was likely to face significant changes.

"Today's proposal by the governor begins in earnest a needed conversation of where Pennsylvanians may purchase alcohol in our state," said Mr. Scarnati. "I plan to communicate regularly on this issue with fellow senators, members of the House and the governor to help determine how consumers are given additional choice and convenience."

Rep. John Taylor, R-Philadelphia, chairman of the House Liquor Control Committee, said he shared many of the governor's goals but added, "The way we get there reasonable people may disagree on that, so we're going to work through that."

Answering questions at the news conference, Mr. Corbett said he welcomed the legislative debate but he also emphasized the need to move on the issue.

"I think we're going to have a very spirited discussion, but you know, we've been nipping and tucking away," he said, "... this is the time to go in and do it."

The governor said that despite the recent comments, he felt he had a productive relationship with his party's legislative leadership.

"We're not necessarily going to agree 100 percent of the time," he said. "My wife and I don't agree 100 percent of the time."

Mr. Turzai, a longstanding supporter of an LCB overhaul, lauded Mr. Corbett's record of working with the lawmakers.

"Different people bring different perspectives to the table," he said, "but we have quite a cross section of members from across the state who are quite supportive of what the governor is doing."

Democrats and labor leaders, for the most part, don't share that view.

"What I'm hearing from folks is it explodes the number of places that individuals would have access to alcohol, from corner drug stores to gasoline stations to box stores," said state Sen. Jay Costa, D-Forest Hills. "I just don't think that's the right system."

"Linking liquor store privatization to school funding is just another way of holding students hostage to the governor's political agenda," said Mike Crossey, president of the Pennsylvania State Education Association, the union for current and retired public school teachers. "It's nice that the governor has acknowledged that he created a school funding crisis, but our students shouldn't have to count on liquor being available on every corner in order to have properly funded schools."

Bill Green -- a Republican consultant who, as a member of the Thornburgh administration, was a witness to the first serious effort to overturn the Depression-era liquor monopoly -- was skeptical that this governor would have any more success.

"If he'd done it in his first year, maybe, but I think it's a little too late, and he's not pre-sold this," he said.

Commenting on the failure of earlier, similar plans to be enacted, Mr. Corbett said that times had changed. He said that a more mobile population was increasingly familiar with the convenience of private sales in other states.

"We think we have a great deal of support out there," he said.

The governor would dissolve the state store system and get $1 billion this way:

$575 million from sales of wholesale liquor licenses.

$224 million, proceeds from auctions of 1,200 state stores.

$107 million, new wine and beer retail licenses.

$112.5 million, enhanced licenses to allow beer distributors to sell spirits.

mobilehome - state

Politics editor James O'Toole: jotoole@post-gazette.com or 412-263-1562. Karen Langley: klangley@post-gazette.com or 717-787-2141. Tim McNulty: tmcnulty@post-gazette.com or 412-263-1581. First Published January 31, 2013 5:00 AM


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