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Pa. Liquor Control Board shelves 'handling fee'
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Rep. Mike Turzai: "I think they recognized they were taking advantage of customers."
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The Pennsylvania Liquor Control Board Thursday temporarily set aside a plan to increase handling fees paid by wine and spirits manufacturers, placing a six-month moratorium on the controversial decision.
The fees could have meant an additional charge of about $1 to $1.50 per bottle on several thousand varieties of wine and spirits sold at 640 state-owned liquor stores. They also could have resulted in higher prices for drinks at restaurants and bars.
The change was scheduled to start Jan. 4, but the LCB announced Thursday it was holding off on the increase until June 30.
The board also said that during the next six months, it will not approve any price increases by the makers of the products sold in its stores.
LCB officials said the moratorium would give Gov.-elect Tom Corbett and the Legislature "time to pass legislation that would enact long-sought business-practice reforms that would enable the PLCB to generate higher levels of profit for Pennsylvania."
The announcement was lauded by local business owners who peddle liquor as well as by Mr. Corbett, who had pledged last week to examine the change.
"Their action today, it's got to be applauded," said Kevin Joyce, owner of The Carlton restaurant Downtown and past president of the Pennsylvania Restaurant Association. "We're very happy. It's a big win."
Kevin Harley, spokesman for Mr. Corbett, called the decision "a victory for the consumers of Pennsylvania."
"The last thing that the Liquor Control Board should be doing is imposing additional taxes on consumers," Mr. Harley said.
It was the first time in 17 years that the board had decided to increase the fees for "logistics, transportation and merchandising," citing higher costs for shipping, storage and marketing.
At a state Senate committee hearing in late September, LCB chief executive officer Joseph Conti said he saw the price changes as "reasonable and necessary" adjustments that could generate $87 million in additional annual revenue.
He told the panel that the board faced increased operational costs "and continuing upward pressure on prices" from liquor suppliers.
The fee increases were opposed by restaurant and bar owners.
"We basically never had any say in the matter," said Sean Casey, owner of Lawrenceville's Church Brew Works. "They just arbitrarily tried to ram it down everybody's throats."
Mr. Joyce estimated that the fees would have translated to $15,000 of additional costs per year for him.
"In a time when almost nobody else can raise their prices, I certainly can't," said John Graf, one of the owners of the Priory Hospitality Group, the Priory Hotel's parent company.
Partly because of such outcry, the change -- originally set to take effect in October -- was delayed until Jan. 4.
Thursday, the board said in a news release that it was able to further delay the increases because of one-time operational shift that would save $105 million.
State Rep. Mike Turzai, R-Bradford Woods, said he was not surprised by the board's reversal.
"I think they recognized they were taking advantage of customers," Mr. Turzai said. "And it's clear that people are paying attention, and they don't think it's right."
In the same announcement Thursday, the LCB made several pleas to state legislators and to Mr. Corbett's incoming administration, asking them to consider legislation that would save money in other ways. The LCB also suggested the state consider phasing out of the Johnstown Flood Tax, a now-18 percent charge on wine and liquor that was enacted 1936.
Mr. Corbett has made reforming the state liquor store system a priority, said his spokesman, Mr. Harley.
In particular, the governor-elect has promised to examine selling the state stores to private owners. Such a move could raise at least $2 billion, supporters say, helping Mr. Corbett plug a state budget deficit of at least $3 billion by June 30.
But in the past, two other governors who tried to privatize the system saw their efforts stall.
One reason is that the LCB turns over a hefty chunk of money each year to the state general fund to help balance the budget. For the fiscal year ending June 30, that amount was nearly $482 million.
Also contributing to maintaining the state system are the political clout of the store clerks union and concerns about sales to underage buyers possibly increasing if stores are in private hands.
First Published November 19, 2010 12:00 am
