Push to privatize booze on hold in Pa.

HARRISBURG — The push to privatize liquor sales in Pennsylvania is on the rocks — for now.

House Majority Leader Mike Turzai, privatization's champion in the legislature, conceded Tuesday that he did not have enough support in the House to get the measure approved before lawmakers' summer break. He vowed to try again this fall.

"Right now, we can't get it over the goal line," said Turzai (R., Allegheny). "Consumers are expecting it. But to get to the sweet spot to garner the support in the House is going to take additional work."

Gov. Corbett, who also wants to privatize, agreed, saying, "Fall is a better time to complete this." He said other matters are taking precedence now, such as negotiating a budget for the fiscal year that begins July 1.

Corbett said he still "wholeheartedly" favors privatizing. And in the wake of a report critical of top brass at the state liquor agency, the governor said he wanted to see a change there.

Corbett, fielding reporters' questions after the latest round of negotiations in the Capitol over the budget, outlined the steps he would take to abolish the position of chief executive officer at the LCB. As The Inquirer reported Tuesday, the current occupant of that post came in for harsh scrutiny in an internal report prepared in March by state Inspector General Kenya Mann Faulkner.

That was the second of two Faulkner reports on state liquor regulators to surface in recent days. On Sunday, The Inquirer reported that her office had also sharply criticized the work habits of LCB administrative law judges, whose job it is to hear liquor code violation cases.

That confidential report, delivered to administration officials last July, said investigators found that the seven judges often reported to work hours after their expected start times, disappeared for hours during the day, and left early.

In her more recent report, Faulkner found that three top LCB officials had accepted gifts and favors from liquor vendors and others who do business with the agency.

The report, a copy of which was obtained by The Inquirer, named LCB chief executive officer Joe Conti, board member Patrick J. "P.J." Stapleton III, and LCB marketing director Jim Short. All three have declined the newspaper's repeated requests for interviews.

Quoting e-mails sent on LCB computers, the eight-page report says Conti asked Philadelphia restaurateur Stephen Starr to hire his daughter — who already had an LCB job. (Starr's catering group hired her several weeks later.) One top LCB aide is described as having devoted efforts over six months to finding jobs for Conti's brother and daughter.

Faulkner, a Corbett appointee and former federal prosecutor, noted in her report that the state Ethics Act bars officials from using their positions to benefit themselves or their families. Her office referred the matter to the state Ethics Commission, which has declined to confirm or deny that it is investigating.

Asked Tuesday about the two reports, Corbett would only say he believes Conti's $156,000 post as the liquor agency's CEO should be eliminated — and that as governor, he could set that change in motion once he names another appointee to the board.

Currently, the governor has one appointee on the three-member board: the chairman, Joseph "Skip" Brion. Only the board can terminate the CEO position, a relatively new post created by Corbett's Democratic predecessor, Ed Rendell.

"I have never [seen] the reason for the initial appointment for the CEO. I still don't see the reason," Corbett said. "But I need two votes. I need two votes on the board to change that."

He said he planned to name someone by this fall to replace Stapleton, whose term expired last month but who remains on the board for lack of a successor.

Brion, Corbett's appointee, who received a copy of the inspector general's second report, declined to say what if any action the LCB plans on taking in light of allegations contained in that report.

"We are looking into it, and have been looking into it," Brion said. "That is all I'm going to say at this point. I'm not going to discuss this in the press."

In the House, Turzai's latest proposal for overhauling the liquor system had called for closing State Stores and issuing 1,600 licenses to private vendors. He would give the state's roughly 1,050 beer distributors first crack at purchasing the licenses for fees of up to $705,000, varying by county. The rest would be auctioned off to the highest bidders.

The proposal was tantalizing because, for the first time since Prohibition, it opened up the real possibility of one-stop shopping for beer, wine, and liquor in Pennsylvania. But it ran into a solid wall of resistance even before it reached the House floor.

The opposition was roughly the same alliance that has swatted down previous pushes over several decades to get the state out of the alcohol trade: legislators who believe liquor should remain a heavily regulated industry, and others (mostly Democrats) with organized-labor loyalties who see privatization costing thousands of LCB workers good-paying jobs. For the few hours that Turzai's bill was debated last week, members of the union that represents 3,000 LCB retail clerks jammed the Capitol Rotunda wearing T-shirts emblazoned, "I won't drink to the Turzai tax."

Many in the state's beer industry also took issue with Turzai's proposal, especially small-scale beer distributors, who said it would tilt the playing field in favor of supermarkets and big-name chains that could afford the licenses and the investment needed to begin selling wine and spirits.

Whether the issue will actually be seriously considered this fall remains a question. Legislators generally shy away from controversial issues in an election year — and this is an election year.

Turzai's decision to delay the bill was "good for the 5,000 workers who didn't deserve to be hanging in the midst of this in hard economic times," said State Rep. Dwight Evans (D., Phila.). He predicted that liquor availability in Philadelphia would double under privatization.

"Just look at the social impact on our communities," Evans said. "Nobody has a problem getting a drink now."