Pennsylvania Senate committee chairman to introduce liquor-privatization plan
June 18, 2013 7:20 PM
State liquor store in Penn Circle.
By Karen Langley Pittsburgh Post-Gazette
HARRISBURG -- Senate Republican leaders stood beside their committee chairman Tuesday as he unveiled a liquor privatization plan, but -- with less than two weeks to the governor's June 30 deadline -- said they are still searching for the votes to pass a bill.
An effort to end Pennsylvania's state sales of wine and liquor has been in the Senate since the House passed a bill in March. After a series of hearings on the topic, Sen. Chuck McIlhinney, R-Bucks, on Tuesday described components of a plan that would delay a sell-off of the state's wholesale purchasing operation while allowing consumers a chance to buy wine, beer and liquor in grocery stores and other outlets.
But Senate Majority Leader Dominic Pileggi, R-Delaware, and Senate President Pro Tem Joe Scarnati, R-Jefferson, said they are still looking for the votes to pass such a bill. The task is difficult because uniform opposition by Senate Democrats leaves Republican leaders to cajole 26 affirmative votes from their 27 members.
"We do not have 26 votes for this proposal," Mr. Pileggi said. "We're optimistic we'll get there in the next few days. But we certainly do have votes to move the bill from committee, which is the first step in the process."
Ending state liquor sales is a priority of Gov. Tom Corbett, who has asked legislators to send him by the June 30 budget deadline a bill on that topic, as well as legislation increasing funding for transportation infrastructure and reducing the cost of the pension systems for state employees and public school teachers.
Both Mr. Scarnati and Mr. Pileggi described the new proposal as a step in the legislative process, and neither offered his own support for the proposal as it stands.
"Clearly there's things in the bill all of us can find that we like and there's things in the bill we can all find that we'd like to maybe change or tweak," Mr. Scarnati said. "I think the question is whether or not we can get to 26 and move this product forward."
Mr. McIlhinney's plan differs from the House bill in several areas. Instead of disbanding the state's wholesale purchasing of wine and spirits, it requires the Pennsylvania Liquor Control Board and the Legislative Budget and Finance Committee after two years to conduct separate studies assessing the wholesale value. Lawmakers would need to pass a future bill to divest the wholesale system.
In the House, Majority Leader Mike Turzai, R-Bradford Woods, has said selling the wholesale system is an essential part of a liquor bill. Mr. Corbett has said in recent days that he believes the state should leave the wholesale business, although he has not said a delay in wholesale divestiture would make a bill unacceptable.
Both Mr. Pileggi and Mr. Scarnati said Mr. McIlhinney's approach would allow the state to account for how the wholesale business responds to growth in the number of retail outlets. Mr. Scarnati said the state's wholesale and retail operations have been valued at about $550 million and bring in about $100 million each year.
"If we were on a board of directors of a company and we divested of a subsidiary with those valuations, at that price, our stockholders should sue us," Mr. Scarnati said.
Mr. McIlhinney would give the Liquor Control Board greater discretion in deciding when to close state-owned wine and liquor stores. Where the House version requires the closure of state stores in a county when they are twice outnumbered by private retailers -- and allows the LCB to operate no fewer than 100 stores -- the Senate plan would charge the LCB with deciding when to close individual stores after considering factors such as profitability and access to liquor elsewhere.
"You have to look in the area and make sure people can get alcohol before you close the stores down," Mr. McIlhinney said.
Shoppers under the Senate proposal could have the chance to buy wine, beer and liquor at the same outlet, including in supermarkets. Holders of restaurant or distributor licenses would be able to purchase an expanded permit allowing them to sell all three categories of alcohol. The plan also would allow distributors to sell six-packs, as well as cases, of beer.
The House bill would allow beer distributors, and then others, to acquire licenses to sell wine and spirits, while groceries could buy licenses to sell wine but not beer, except through existing restaurant licenses.
Mr. McIlhinney said his plan would generate an additional $140 million to $170 million each year for the state. He called for revenue exceeding that collected last year to be used to freeze property taxes for senior citizens.
Senate Democrats say they are united in opposing any attempt to privatize the liquor system, though they support a package that they say would improve the state stores through measures including changes in pricing and hiring rules.
Sen. Jim Ferlo of Highland Park, the ranking Democrat on the Law & Justice Committee, said Mr. McIlhinney's plan would allow a proliferation of alcohol sales, and he questioned the effect on state coffers.
"Financially the bill doesn't make sense to me," Mr. Ferlo said. "We're throwing away a lot of revenue that we currently collect."