Liquor Control Board worker contract may discourage privatization

Just as a high-ranking Pennsylvania House Republican is making yet another push to privatize the state's liquor stores, the Governor and the state store workers' union have agreed to a new contract that may discourage private sector businesses from investing.

That's certainly how the United Food and Commercial Workers union interprets a provision that they say requires any potential buyer to hire displaced Pennsylvania Liquor Control Board employees and pay them the same salary and benefits until the contract expires in June 30, 2015.

"This really renders this whole discussion of privatization moot," said Wendell W. Young IV, president of the United Food and Commercial Workers Local 1776, one of two UFCW locals representing 3,500 state store employees.

"The language in this contract is broad and very clear," Young said. "Whether [wine and hard liquor] products are sold in the same building or in a different facility and no matter what kind of divestiture takes place — anyone who operates stores that sell these products will have to use our members and honor all the terms of the contract."

Gov. Corbett, who campaigned hard on a pro-privatization platform when he ran for governor in 2010, may have signed the contract, but his interpretation differs from the union's.

Corbett spokesman Eric Shirk said the new contract has "zero bearing on privatization efforts" in Pennsylvania.

"You can't force a private employer to abide by this contract," said Shirk. "This agreement is between the state and the union. A private employer is not a party to that contract … We are not worried."

While the two sides might disagree about whether such a contract would be binding, Young said the threat of litigation would discourage potential business interests.

"Very few retailers are going to pay much for a license if they are obligated for the terms of the contract," Young said. "The reality of it is, with the uncertainty of whether there's going to be litigation — they are unlikely to invest their money."

David Trone, owner of Total Wine and More, a Delaware retailing company that has pushed to do business in Pennsylvania, could not be reached for comment. Nor could Trone's lobbyist, John Malady of Malady and Wooten in Harrisburg.

When unions typically announce a ratification, the headline item usually focuses on wages — with part of the goal being to reassure members that they've made the right decision in approving a contract.

Liquor control employees voted on Sunday in eight locations around the state.

The contract, which is retroactive to July 1, 2011, does include a four percent increase, following a first-year wage freeze, Young said. Two holidays have been replaced with personal days and there has been a cut in what Pennsylvania must contribute to health benefits for employees. "That will be a real savings for the Commonwealth," he said.

However, this announcement, with its emphasis on successor language, is intended to inform both legislators and members, Young said. He said legislators had been asking him about the provision, which has been in LCB contracts since the Casey administration in the late 1980s.

"It applies some sense of job security for a few years," he said.

Politicians campaign on privatization, Young said, "because they can raise money on it. We've been fighting this battle for 40 years. We're going to be fighting this battle with or without this language. But it's like insurance."

The Commonwealth Foundation, a free-market think tank in Harrisburg, described the publicity over the provision as a "ruse," because, spokesman Jay Ostrich said, it is unlikely that the provision would hold up in court.

"Mr. Young can wave the victory flag for special interests all he wants," Ostrich said. "This latest ploy is simply just a ruse to distract from the bipartisan broad-based support that wants government out of the booze business."

If nothing more, the new contract could give legislators in Harrisburg another reason to put off consideration of what has historically been a touchy issue.

Three previous governors have tried and failed to privatize the LCB, all defeated by a confluence of unlikely allies: moralists who believe liquor should be closely regulated, unions that want to protect LCB employees' jobs, and legislators averse to taking the financial risk of dismantling an agency that reliably kicks profits into state coffers.

And although Corbett continues to espouse selling off the state system, privatization has seemed to slip further and further down his legislative priority list.

However, the spokesman for the legislator behind the latest privatization push, House Majority Leader Mike Turzai (R., Allegheny), said the new contract will not in any way deter Turzai from trying to get a vote on a privatization bill, perhaps as early as this month.

"We are still going to move ahead," said spokesman Steve Miskin.