Bill would remove state from liquor business
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HARRISBURG -- The Liquor Control Board is dead. Or so House Majority Leader Mike Turzai would like to proclaim.
Next week, Mr. Turzai plans to unveil a sweeping bill to kill off the state liquor system and replace it with private enterprise.
Although details remain unresolved -- such as how to keep small retailers from being shut out by chains -- the plan is already drawing fire from Democrats who say the current system works fine and provides a steady stream of state revenue.
Mr. Turzai, though, says government has no business selling alcohol.
The Bradford Woods Republican advocates auctioning hundreds of wholesale and retail store licenses while revamping the tax structure to ensure the state continues to profit from sales. He has estimated that the licenses could fetch as much as $2 billion, but opponents say an auction would draw far less than that.
"The numbers just don't add up," said Rep. Dwight Evans, D-Philadelphia.
The votes don't, either, he contended. He does not believe that Mr. Turzai will be able to garner enough votes, even in a Republican-controlled statehouse, to push privatization through the Legislature.
In any case, lawmakers are on summer break, so no votes will be taken until September at the earliest.
Republicans have been trying for three decades to privatize the liquor stores but so far haven't been able to make it happen. The resolve is as strong as ever and Mr. Turzai is trying to sustain the momentum.
Gov. Tom Corbett, like Republican governors before him, favors privatization, too. He has commissioned the Philadelphia consulting firm PFM to study the benefits and drawbacks of turning over wine and spirit sales to private retailers. PFM's report is due later this month.
Mr. Evans, who opposes privatization, said neither Mr. Turzai nor anyone else has made a compelling argument for scrapping the current system, which provides a reliable revenue stream.
The state system, he said, kicks tens of millions of profits into Pennsylvania's coffers, provides good-paying, "family-sustaining" jobs and ensures that liquor is sold responsibly.
Liquor Control Board officials have consistently said the state stores provided excellent service and selection, as well as competitive prices. They also tout the agency's mission to sell liquor responsibly. The state store system has been in place in Pennsylvania since 1933, when Prohibition ended.
Last week, board officials announced that they had a banner year with sales for the 2010-11 fiscal year, setting a record at nearly $2 billion. That allowed the agency to transfer a record $496 million to the state treasury.
Mr. Turzai, argued Mr. Evans, has not been able to prove that any privatized model for selling liquor would reap the same financial benefits.
Turzai spokesman Steve Miskin said proposed changes in the tax structure would compensate for the loss of revenue from net profit without increasing the cost to customers. He said details of the tax plan were being worked out and would be released next week.
"It's going to be beneficial to the consumer in terms of prices, selection, location and convenience because the marketplace is going to decide. There will be no more bureaucracy in Harrisburg making decisions" about where stores are located and which products they carry, Mr. Miskin said.
"We think the state should get out of the business of advertising and encouraging drinking booze. That's the issue," he said.
Wendell W. Young IV, president of Local 1776 of the United Food and Commercial Workers, said there was a reason Mr. Turzai is introducing his bill in the dead of summer. With the Legislature on a two-month break, he can say he did something and then walk away without having to bring the bill to a vote.
"He drops the bill now in a recess period, and then he uses it to raise [campaign] money all summer long," said Mr. Young, whose union represents most of the states 3,500 liquor store clerks. "He can't get criticized for not getting a vote on the bill -- they're not here to vote! It's an old game in Harrisburg, time-tested."
Mr. Miskin rebutted that claim.
"We didn't want to do this in the middle of the budget debate" which ended June 30, he said. "It's not like we've kept this idea a secret. This has been a priority of the majority leader, and it's been a priority of the governor."
One of the recent driving forces behind privatization was the state's $4 billion deficit and Mr. Turzai's contention that a license auction would wipe away half of that.
"The deficit was dealt with, and the $2 billion was a myth," said Mr. Young. "So all the reasons people thought this was a good idea are gone. Now all that's left is a philosophical debate without the facts to back it up. That makes it less likely for him to succeed."
Mr. Miskin disagreed.
The economy is still faltering and pressure to maximize revenue hasn't diminished, he said.
First Published July 9, 2011 12:00 am