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A plan we can toast: Why the drastic steps when the LCB could be sold?
Monday, February 26, 2007

Pennsylvania clearly has big challenges and Gov. Ed Rendell has big -- read onerous -- solutions. His recent budget proposes raising seven taxes. Moreover, his administration, told by a bipartisan task force that the state needs $1.7 billion in funding for roads, bridges and mass transit, has solicited proposals for privatizing the Pennsylvania Turnpike.

And yet sitting completely unconsidered as another possible financial option is the Pennsylvania Liquor Control Board, the huge state monopoly that oversees everything to do with the sale of wine and spirits in the commonwealth. If that were privatized, the state's coffers would receive a influx of funds that would go a long way to addressing many immediate challenges .

Pennsylvania's liquor retail system is an anachronism dating back to the end of Prohibition, when the fear was that the demon rum and its cousins, made legal again, needed the strict control of the nanny state.

Most other states long ago grew out of this backward mindset and today only Utah has a system comparable to Pennsylvania's. Far from bringing moral ruin, more enlightened attitudes have allowed adults in other states to be treated like adults with better consumer choices and much more convenience.

Any Pennsylvanian who takes a trip down to Florida, for example, and sees wine and beer sold privately in supermarkets, knows firsthand that what is considered daring and shocking here is routine and reasonable there. (A few supermarkets in Pennsylvania are outlets for liquor sales but the LCB runs the in-house stores).

So why has nothing been done? Because an unholy alliance of the state's Bible Belt and the system's 2,800 unionized employees continues to hold politicians in their thrall. One group basically doesn't like liquor. The other doesn't like private enterprise if it hurts union members. In recent years, two Republican governors, true to their private enterprise beliefs, tried to sell the state stores but Gov. Dick Thornburgh and, most recently, Gov. Tom Ridge got nowhere.

To his lasting shame, Democratic Gov. Ed Rendell isn't interested. Although he said when campaigning for governor back in 2002 that privatization was "basically a good idea" (if unlikely), his one contribution to the cause since has been to unwittingly remind people how politically vulnerable the system is: He triggered the resignation of the most reform-minded chairman in the system's history, Jonathan Newman, by bringing in a ex-politician as CEO at twice the salary.

In a recent story about the LCB, Post-Gazette reporter Bill Toland didn't find much support for privatization, despite estimates that the state could fetch as much as $1 billion in a sale. To be sure, that would be a one-time infusion of cash but the state isn't about to get out of the tax collecting business. Depending how the deal was structured, a privately run system could also remain a cash cow even if the individual farmers were different.

Quite part from the financial considerations, Pennsylvania should privatize its liquor business as a matter of principle. The state's proper function is in policing the sale of liquor, not doing the selling itself. The state already trusts private beer distributors to sell beer and that principle could be extended to private wine and liquor stores without doing harm.

If the intoxicating whiff of free enterprise smells sweet in Harrisburg, then it's time that Pennsylvania looked to the obvious before considering the outlandish. Would it really lease out to a private company a vital state function like the turnpike -- but keep the unessential function of liquor merchandising in state hands? Like everything to do with the liquor business in this state, the idea is absurd.

First published on February 26, 2007 at 12:00 am
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