Pennsylvania House votes to privatize liquor stores

Governor hails bill, but Senate leaders say they plan to alter measure

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HARRISBURG -- Citing years of efforts to end the state business in liquor, House Republicans on Thursday passed legislation that would allow private sales of wine and liquor while phasing out government stores.

Supporters lauded the vote as historic, saying it was the first time a liquor privatization bill had passed either chamber of the General Assembly. But the legislation now heads to the Senate, where prominent members support more gradual change.

During hours of floor debate, House Democrats railed against the proposal, saying it would eliminate thousands of state jobs and risk social harm from a proliferation of liquor outlets. But Republican leaders were confident they had the votes, and, less than a year after another privatization effort came up short, they rallied support to clear the legislation, 105-90. A handful of Republicans joined every voting Democrat in opposing the bill.

Supporters said a private system would offer consumers more options in products and shopping hours, and argued the current system presents an innate conflict of interest as state government both regulates and promotes the sale of alcohol.

The House passed a bill that creates 1,200 licenses for the sale of wine and spirits, first available to beer distributors, with the possibility of up to 600 additional licenses as state liquor stores are phased out. Groceries could buy licenses to sell wine but not beer, except through existing restaurant licenses.

"It is an A-plus product," Rep. Mike Turzai, R-Bradford Woods, the majority leader, said after the vote. "I think Pennsylvanians, should it be enacted into law as it is, would be saying, 'Why didn't we do this 40 years ago.' "

But passage delivers the legislation to the Senate, where Majority Leader Dominic Pileggi, R-Delaware, refrained from assessing the bill's provisions but said amendments are widely expected.

"I don't think anyone expects the Senate to simply take up the House bill and move it to the governor's desk as is," he said.

Mr. Pileggi noted, too, that his chamber has not shared the eagerness of the House to end state liquor operations: "It's not something that has been an item of active interest and discussion in the Senate."

Gov. Tom Corbett kicked off this year's privatization attempts in January with his own proposal. The legislation that passed the House contains significant changes -- the governor would have allowed groceries and convenience stores to sell beer and would have set a deadline for shuttering the state stores -- but Mr. Corbett gathered with House leaders after the vote to praise the bill as a momentous step.

"Today the House of Representatives clearly made history," the governor said. "Never before has a liquor-privatization bill passed either chamber of the Legislature, so my thanks to all of them."

He acknowledged, though, that significant work remains before the bill -- or a version of it -- can become law.

"Now, going forward, we talk to the Senate and try to convince them it's time to get us out of the business of selling alcohol," he said.

In the Senate, Sen. Chuck McIlhinney, R-Bucks, chairman of the Law & Justice Committee has sponsored legislation, supported by Senate President Pro Tem Joe Scarnati of Jefferson, that would maintain the wholesale purchasing system of the Liquor Control Board while creating a new license to let holders of hotel and restaurant licenses sell wine and liquor to go.

The committee's ranking Democrat, Sen. Jim Ferlo of Highland Park, is promoting his own proposal to allow changes in pricing and hiring and alter packaging requirements for beer. Mr. Ferlo and the Democratic leader, Sen. Jay Costa of Forest Hills, released statements opposing the House bill.

While Mr. Corbett had promoted his plan, which would siphon $1 billion in proceeds to education grants, as a way to invest in schools, the House bill diverts revenue into a dedicated fund. Appropriations Committee Chairman Bill Adolph, R-Delaware, said it would fall to the Legislature to determine how the money is spent.

The absence of a commitment for the revenue was one of many aspects of the bill criticized by Democrats.

"The bill now offers nothing to education, nothing to our children," said Rep. Madeleine Dean, D-Montgomery.

House Democrats on Wednesday fell short in an attempt to replace the privatization measures with a proposal that would have expanded hours of operation at the state stores, introduced more flexible pricing and allowed direct shipment of wine.

Democrats spoke for hours Thursday against the final bill. Minority Leader Frank Dermody, D-Oakmont, said the proposal would lead to lost jobs, higher liquor prices and increased underage drinking.

Afterward, Rep. Paul Costa, D-Wilkins, the ranking Democrat on the Liquor Control Committee, noted that his colleagues in the Senate -- where there are 23 Democrats and 27 Republicans -- would need to win over only a few members of the majority to negotiate change.

"The Senate only needs three members to side with us, and we're in play," he said.

Details of the bill

• The bill creates 1,200 licenses for the sale of wine and spirits with the possibility of up to 600 additional licenses.

• Beer distributors would get the first opportunities to buy licenses.

• Grocery stores could buy licenses to sell wine only, though beer could be sold through existing restaurant licenses.

• All state stores in a county would be required to close once the county contains twice as many private retailers as state stores. Once fewer than 100 stores remained, the Liquor Control Board would be required to close them all.

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Karen Langley: or 717-787-2141. First Published March 22, 2013 4:00 AM


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