State Store privatizing bill revived in House

HARRISBURG — Call it liquor privatization, Round Two.

Or is it Round Fifty-Two?

Though June is crunch time for the state budget — and it's nearly summer in an election year — Pennsylvania House Republicans are making another push for action on a bill to privatize the state's Liquor Control Board.

House Majority Leader Mike Turzai (R., Allegheny) says he will try for a floor vote as early as this month on a bill he introduced last summer to auction off Pennsylvania's state-owned wine and liquor stores to private owners.

Whether the push gains any momentum, particularly as legislators focus on their annual tussle with Gov. Corbett over a budget that's due June 30, remains a question mark — if not a legislative long shot.

But Pennsylvania got a reminder last week that states can get it done. Washington state just turned its liquor system private after a statewide referendum.

And in a way, Turzai is fighting a deadline. If his bill doesn't make to the governor's desk by this fall, he'll have to start from scratch in the next two-year legislative session, which begins in January.

Turzai said in an interview Friday that he wants at the very least to jump-start debate on the topic, which has historically been controversial, if not downright touchy, in the Capitol.

"People are excited about this," Turzai said of his privatization bill. "All over the state, regardless of geography or background, people can't understand why we haven't moved toward systems that look like our neighboring states, why Pennsylvania is so antiquated and behind the times."

He and other privatization proponents like to note that polls routinely show most of the public wanting the state to shelve the LCB.

But such excitement, even Turzai would admit, has not translated into legislative action in the Capitol, despite the fact that the issue has some powerful allies — chief among them, the governor.

Corbett campaigned hard on a pro-privatization platform when he ran for governor in 2010. And in the early months after he took office in January 2011, privatization seemed to be among the top items on the legislative priority list.

But as the year unfolded, the issue faded as other matters took precedence.

By year's end, Turzai's privatization bill, which called for auctioning off both the wholesale and retail operations of the LCB, had become virtually unrecognizable. Though it was voted out of committee — the first time an LCB privatization measure had even gotten that far — it had been gutted. A supporter, State Rep. John Taylor (R., Phila.), quipped that it might look like "Privatization Lite."

Wendell W. Young 4th, president of United Food and Commercial Workers Local 1776, which represents 3,000 employees in the state's wine and liquor stores, believes that is because legislators recognize that the LCB runs a good business.

"The popular press perception is if the state is running it, it can't be run well," said Young, who opposes privatization. "But if you look at reality, Pennsylvania has great prices and great selection."

"The bottom line," added Young, "is that no one has shown how to take away the tax structure we have and the profit the LCB makes, turn that over to the private sector, and end up with cheaper prices and the same revenue to the state. It's just not going to happen."

Young pointed to the scene unfolding in the state of Washington, which just privatized its liquor business Friday.

News reports there have zeroed in on how privatization will, at least initially, translate into higher prices for liquor at the cash register. To be sure, Washington's state-run system was very different from Pennsylvania's. And the privatization model there calls for additional fees on wholesalers and retailers to compensate the state for closing what amounted to a lucrative business — fees that will likely be passed on to consumers. Such fees are not being contemplated, at least for now, in Pennsylvania.

On the flip side, when Washington auctioned off its stores, there was a deluge of interest — and the financial payout far exceeded the state's expectations.

Brian Smith, spokesman for Washington's Liquor Control Board, said the state held two auctions, and at one of them, "people were spilling out the doors." He described the bidding with one word: "Wild."

But people are losing jobs in Washington because of privatization. That state's liquor board, said Smith, will go from a 1,400-person agency to 200 people by July.

Turzai's initial bill would provide tax credits for private employers who hire former LCB employees; tuition grants to those employees who want to go back to school; and preferential status if they apply for other civil-service positions in the state.

On Friday, Turzai predicted that the best employees now working for the state system would be "scooped up" by private industry if and when his bill goes through.

But that is a big if and a big when. The top Republican would give few other details Friday on what he will seek to restore to his now-gutted bill as he tries to motor it through the House; nor would he discuss whether he has enough votes lined up to do so.

Even if he does, the Senate is unlikely to take up the issue this summer. Opposition from the likes of Young's union and its Democratic allies — not to mention some conservatives who want liquor kept under state control — remains fierce. That's why every previous drive to privatize over the last four decades has failed.

Despite the odds, Turzai remains optimistic.

"Legislation always takes time," he said, "but we are going to move this process forward."