Criticism poured on state store privatization plan

Democrats, labor rap Turzai proposal

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HARRISBURG -- Though no official action will be taken until the fall on a recently proposed plan to privatize the state's liquor stores, Democrats and union members are already aligning themselves against the Republican- and business-community-supported plan.

Proponents, such as the bill's author, House Majority Leader Mike Turzai, R-Bradford Woods, say the plan could both bring in about $2 billion in upfront revenue and get the state out of a business it shouldn't be in.

United Food and Commercial Workers Local 1776, which represents the state's liquor store workers, said the plan would result in significant job loss, an increase in alcohol consumption and a reduction in state revenue.

Mr. Turzai's proposal would replace 621 state stores with private ones by auctioning off 1,250 licenses to private retailers. Of these, 750 would go to larger stores, such as grocery stores or Walmarts.

The plan would eliminate the state's 30 percent markup, the 18 percent Johnstown Flood Tax and the handling fee that now ranges from about 70 cents to $1.50 per bottle. A gallonage tax, based on volume and alcohol content, would be imposed, and retailers would be allowed to set prices based on market demands.

Ed Cloonan, policy director for the Independent State Store Union, which represents store managers, says Mr. Turzai's bill would increase access to alcohol and hence "increases consumption and alcohol related problems for the drinker."

"The bill will affect the drinker's family, their friends and acquaintances, in addition to victimized strangers," Mr. Cloonan said in a statement.

Antony Davies, associate professor of economics at Duquesne University who has studied the privatization issue, described this reasoning as misguided and hypocritical.

"If our goal truly is to curtail DUI fatality rates and underage drinking, then the state should not be in the liquor business [and] liquor should be outlawed," Mr. Davies said. "So what we've got is a hypocrisy," with proponents saying liquor needs to be controlled by the state because of potential bad consequences while still encouraging its sale.

Pennsylvania has the lowest alcohol-related death rate in the nation, according to Wendell Young, president of the state store workers union. He attributes this to Pennsylvania being one of only two states, along with Utah, to have full government control over wine and spirits sales.

Mr. Davies said he has "seen no compelling evidence that state control has a real, positive outcome," noting that for every study that says privatization will have negative effects there is one that says there would be either positive effects or none at all.

Several state business groups have come out in support of privatization, saying it will enable state government to focus on its core functions while improving cost and convenience.

Mr. Young contends the proposal would put 5,000 liquor store employees out of work. About 370 full-time employees and 250 part-timers work in state stores in Allegheny County.

"We're not gonna take for granted 5,000 Pennsylvanians who work for the state of Pennsylvania, do a good job of it every day, work for an agency that's profitable and they are not a burden on the taxpayers ... [and] we shouldn't turn it over to a few well-placed, deep-pocketed special interests just because Mike Turzai wants to go trolling for contributions this summer."

That job-loss number is inflated, said Mr. Davies.

He believes the change would mean some job loss due to efficiency in the private sector, but should also create new jobs: if the plan leads to an increase in consumption -- which most agree it will -- there would be an increase in jobs, he said.

At the plan's introduction on Wednesday, Mr. Turzai said he does not think it will be hard to pass the bill in the fall.

Democrats have been quick to contest that time frame.

Sari Heidenreich is an intern with the Pennsylvania Legislative Correspondents Association.


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