House committee makes big changes to LCB bill

HARRISBURG - Call it liquor privatization, makeover edition - and likely the first of many.

Members of the state House Liquor Control committee made big changes Monday to Gov. Corbett's plan to privatize sales of wine and hard liquor, toning down the original proposal and making the path toward privatization more gradual.

Although it is a scaled-back version of what the Republican governor envisioned, the House panel's approval of the measure - by a 14-10 vote, strictly on party lines - marked a win for proponents, who have pushed for decades to turn the state's 600-plus wine and spirits stores over to the private sector.

The measure now heads to the House floor, where it could be voted on final passage as early as this week. In fact, Republicans who control the chamber and support the proposal said they would consider scheduling debate on Thursday or Friday to get it done before the House breaks for Passover and Easter.

If the proposal passes muster in the House, it would be the farthest a liquor-privatization bill has moved through the legislature since the end of Prohibition in 1933.

Still, as State Rep. John Taylor, the committee's chairman, cautioned, the issue remains controversial in Pennsylvania and faces a long legislative battle: "I know everybody is all excited today, but this is really the first step," said Taylor (R., Phila.).

He noted that the measure could be changed again on the House floor and later, in the Senate.

Nonetheless, Corbett said Monday that he supported the amended version of his proposal, and called the vote a "momentous first step to bring Pennsylvania into the 21st century and provide Pennsylvanians with the convenience and choice that Americans in 48 other states enjoy."

Utah is the only other state with government-run wholesale and retail liquor operations.

Corbett's original proposal called for an aggressive auctioning of State Stores to the private sector, including supermarkets, convenience stores, and big-box stores. The version that came out of the House committee slows down the transition and limits what certain private retailers could sell.

Money raised by auctioning off the stores would still go to public schools, as Corbett envisioned - but the amended plan would generate only an estimated $800 million of the $1 billion his administration anticipated from privatization.

In all, the new measure calls for 1,200 liquor licenses across the state. Beer distributors would get first crack at applying - and could choose between applying just to sell wine, or just to sell liquor, in addition to beer if they did not want to sell all three under one roof.

Only after beer distributors had a shot at a license would other businesses, such as grocery and convenience stores, be allowed to compete for one.

And any retailer who wanted to sell alcohol on Sundays would have to apply for a separate permit to do so.

Also unlike Corbett's proposal: grocery stores could only sell wine - unless they also applied for a special license giving them permission to sell beer. That license would require them to have a separate seating area for food.

That tinkering was done to protect beer distributors - many small and family-owned - from competition by retail giants.

But perhaps the biggest difference is this: State Stores would not immediately shut down. Instead, they would be phased out over time, and some could remain open in rural counties.

That is because, under the revised plan, all State Stores in a county would close only if privately owned wine and spirits stores (including groceries) outnumbered them by 2-1. Some Republicans who support that change are concerned about sparsely populated areas where many State Stores do not turn a profit and businesses may be hesitant to purchase a license.

Still, under the House GOP proposal, if the number of State Stores fell below 100 statewide, they all would be shut down.

Democrats on the panel called the proposal confusing, and argued that if the goal was to give customers an easier and more efficient experience, the bill's supporters had failed.

"Can someone tell me how this simplifies the process?" asked Rep. Jake Wheatley (D., Allegheny).

Democrats also complained that the measure was being pushed through at lightning speed without proper vetting. Copies of the amended version were distributed Friday.

"The specifics here really matter," argued Rep. Brendan Boyle (D., Phila.).

Republicans countered that the issue has been discussed for decades and was studied at length last year, when a bill was being considered in the House.

Taylor, the committee chairman, noted that the issue of privatization has been around as long as the state system, which was created at the end of Prohibition. "It's been 80 years," he said.

Democrats also sought to amend the bill to ban political contributions from wine and liquor licensees, saying that was particularly necessary in light of the pay-to-play charges filed last week against eight people connected to the Pennsylvania Turnpike Commission.

Republicans nixed that effort, saying the amendment singled out only certain licensees.

It was not clear whether Republicans have the votes in the House without some Democratic support. Even if it clears the House, several key senators have expressed concerns about a full-scale sell-off of the state system. And the union members who crowded into an overflow room next to Monday's committee meeting were a harbinger of opposition the bill is sure to face from the union for liquor-store clerks.

Corbett, for one, is optimistic.

Said spokesman Kevin Harley: "The governor will be working hard, talking to everybody, to try to get the votes to pass this."