ELEPHANT CORNER: Getting Rid Of The LCB

The privatization of the Liquor Control Board has become a priority of the Corbett Administration. Many believe that successful privatization of the Commonwealth’s liquor business is important to improving the Governor’s weak approval ratings. According to a recent poll, roughly 70% of the people in the Philadelphia-area five counties want the cheaper prices and expansive selection that competition could bring to the wine and liquor markets. Opponents include primarily some but not all unions, the elected officials supported by those unions, beer distributors and those concerned about substance abuse.

GOV. TOM CORBETT has tasked LT. GOV. JIM CAWLEY with getting the privatization done. As the keynote speaker at Commonwealth Club luncheon last week, Cawley noted the details of the bill have not been worked out, but he is confident a deal will be cut that is acceptable to legislators. Currently, the bill is in the House Liquor Committee, chaired by Philadelphia STATE REP. JOHN TAYLOR. Taylor, although a Republican, enjoys the support of a number of unions including the Teamsters. The Teamsters are rumored to be divided on the issue. Some Teamsters see additional hauling opportunities from the private-sector stores. Others are concerned about members of other unions losing their jobs. There approximately 4,500 people working in LCB operations.

Corbett’s 2013-2014 budget calls for the privatization of the LCB. The plan which was outlined last month is expected to raise $1 billion from the sale of store licenses and the proceeds will be used to finance the Passport for Learning Block Grant. The grant will be for school districts and may be used for school safety, enhanced kindergarten programs, individualized learning, and improved math and science classes. Approximately $200 million of these funds will be allocated to fiscal 2013-14.

While the State does profit from the sale of wine and spirits, the Corbett Administration expects it will make as much from income taxes and sales taxes from increased sales. The privatization is to be phased in over a four-year period.

HOUSE MAJORITY LEADER MIKE TURZAI proposed HB 790 this week, which was on the whole compatible with the Administration’s plan. Turzai had 28 cosponsors of the bill. Late Tuesday, Committee Chairman Taylor circulated a potential alternative to the bill. Taylor’s plan would keep state stores open. Grocery stores could sell beer and wine, and beer distributors would have the opportunity to get licenses to sell liquor and wine.

Conservative voices almost immediately have called for people to protest Taylor’s amendment. MATTHEW BROUILLETTE, president of the Commonwealth Foundation, which supports Corbett’s plan, said this “proposal keeps the government in the business of selling wine and spirits. Pennsylvanians want the ease of purchasing alcohol in grocery stores and convenience stores — the same conveniences afforded to the citizens in most states. The proposal maintains the PLCB’s conflict of interest. The PLCB should serve as the regulator of wine and spirits, not the purveyor. Pennsylvanians do not believe the sale of alcohol is a core function of government.”

Turzai would like to bring the bill to a vote on Mar. 18. However, given the material difference between the Taylor amendment and Corbett’s wishes, the process may be lengthier. While I expect Corbett’s plan to be modified, I think the final version will involve the widespread private ownership of liquor stores.

Pennsylvania and Utah are the only states that require state-owned stores to be the sole purveyors of wine and spirits which are not consumed on premises. It is not surprising that Utah, the home of the Mormon religion that shuns alcohol, would have significant controls over the sale of liquor. However, the fact the state-store system still exists in Pennsylvania, where most of its citizens want it abolished, is stunning.

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