Wednesday, August 20, 2014
Inquirer Daily News

PA liquor stores still in limbo as privatization debate swirls

HARRISBURG, Pa. — State Sen. Jim Ferlo doesn’t want to spend any more time or money talking about privatizing Pennsylvania’s state-controlled liquor stores.

“Let’s put this B.S. privatization to bed and bury it,” the Allegheny County Democrat said, calling it “baloney” to think there’d be a better selection of wines in a private system.

Though Gov. Tom Corbett isn’t counting on money from privatizing the state-controlled liquor stores to balance his next budget, the issue of privatization hung heavy over Wednesday’s state Senate Appropriations Committee meeting with the Pennsylvania Liquor Control Board.

Ferlo said the debate might not end until November, which carries the assumption that Corbett won’t win a second term. Until then, the issue looks like it will linger.

When considering “unfinished business” during his budget address, Corbett focused more on pension reform than privatizing the state stores — though he argued that New Jersey, Delaware and Maryland pick up business from people who want more convenience and a reprieve from “monopoly prices.”

That costs the state about $80 million each year, the governor said in his speech, saying 2014 should be the “last call” for state-controlled liquor.

State Rep. Joe Markosek, the minority chairman of the House Appropriations Committee, said he’s not sure how hard Corbett will push state-store privatization, but noted there’s less support for it in the Legislature now than a year ago.

“It was tried once and it failed,” Markosek, D-Allegheny, said. “I think members want to move on. They have other things on their plates.”

No matter what, it’s clear the state stores play a role in Pennsylvania’s fiscal health.

The proposed budget includes an $80 million influx from the state stores, and PLCB Chairman Joseph “Skip” Brion said that figure could be increased to as much as $100 million.

Corbett’s privatization plan, which fell apart last year, would have phased out the more than 600 state-controlled liquor stores, while auctioning off up to 1,200 private liquor licenses. A revenue boost of $600 million to $1 billion was expected.

Many Democratic lawmakers, though, argue state stores are an important asset better fated for modernization than privatization, which they say could jeopardize thousands of unionized state jobs.

The PLCB already has taken steps to improve convenience, including moving stores closer to grocery stores in hopes of attracting people who don’t want to crisscross town to do all their shopping, Brion said.

Stores that have been relocated have seen big sales bumps, PLCB Board Member Robert Marcus said.

“Can we do better? Yes. We’re trying to do better,” Brion said.

That doesn’t mean there wasn’t troubling fiscal news from the Liquor Control Board.

So far, the state has received only six applications from taverns hoping to run small games of chance. That’s a big problem, considering Corbett’s budget banks on $102 million in tax revenue from the expanding gaming.

Senate Appropriations Committee Chairman Jake Corman, R-Centre, said he’s heard complaints about an onerous application process that needs to be addressed.

“It’s making Obamacare look robust back in November,” he said, referring to the botched rollout of President Obama’s health care law.

Ferlo targeted a different chief executive when he spoke up about the dearth of applicants.

“First of all, our illustrious governor and his administration handed us a budget that is replete with imaginary figures and money that just does not exist and is not going to materialize,” Ferlo said. “And nowhere is that more clear than in the issue of the so-called small games of chance for the taverns.”

Ferlo would like to see the law allowing small games of chance in taverns repealed, just as he wants to see the discussion about privatization disappear.

While Corman said he’s comfortable with either privatization or modernization, Brion just wants to focus on running the state stores even as legislators leave their future in limbo.

Brion wasn’t about to argue for or against privatization, adding he didn’t want to lose sight of other agency responsibilities such as licensing and promoting responsible drinking.

“It isn’t all about profits,” he said. “It’s about other things as a government agency.”

Andrew Staub is a reporter for PA Independent and can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.

The Pennsylvania Independent is a public interest journalism project dedicated to promoting open, transparent, and accountable state government by reporting on the activities of agencies, bureaucracies, and politicians in the Commonwealth of Pennsylvania. It is funded by the Franklin Center for Government and Public Integrity, a libertarian nonprofit organization.

Andrew Staub PA INDEPENDENT
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