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Corbett Announces Liquor Store Privatization Plan

Gov. Tom Corbett announced his plan to privatize the liquor system in Pennsylvania and committed $1 billion in proceeds from the process to education funding. How do you feel about the plan to privatize the state stores?

Gov. Tom Corbett, joined by state Rep. Mike Turzai, R-Allegheny County, on Wednesday announced his plan to privatize the liquor system in Pennsylvania and committed $1 billion in proceeds from the process to education funding.

Corbett said the $1 billion will be used to create the Passport for Learning Block Grant, which will provide flexibility to schools, allowing our public schools, instead of Harrisburg, to decide what their students need.

The grant will focus on four priority areas: school safety, enhanced early education programs, individualized learning and science, technology, engineering and mathematics courses and programs.

“Our proposal is part of my commitment to changing Harrisburg, streamlining
government and moving Pennsylvania forward,” Corbett said. “Our plan gives
consumers what they want by increasing choice and convenience, and helps to
secure our future by adding $1 billion in funding toward the education of our
children, without raising any taxes.”

The $1 billion in revenue will come from the three to four year process of selling the LCB: $575 million from the wholesale license process, $224 million from the wine and spirits retail auction process, $107 million from the wine/beer license
application process and $112.5 million in the enhanced beer distributor application process.

“Pennsylvania and Utah are the only two states in the country who have fully state-controlled liquor systems,” Corbett said. “Our plan sells both the wholesale and retail arms of the state-run liquor business.”

He continued: “I want Pennsylvanians to enjoy the same convenience that virtually every other American today has today. My plan gets the state completely out of the liquor business. The state will no longer be a marketer of alcohol; instead, it will now focus on its role as a regulator. It also creates an unprecedented opportunity for economic expansion for private sector employers while remaining revenue neutral for the state.”

Currently, there about 600 state stores in Pennsylvania, the governor’s plan allows for 1,200 wine and spirits stores.

During the previous decade, the state stores’ expenses have grown faster than their revenues, Corbett added.

He said his plan will offer Pennsylvania consumers greatly increased convenience and choice, because they will be able to buy the products they desire in a simpler, more accessible and more rational way. For example, consumers will be able to buy beer and wine where they shop for groceries, buy six-packs of beer at a distributor instead of being forced to buy an entire case, and buy a six-pack of beer at a convenience store.

Currently, Pennsylvania has far fewer alcohol retail establishments per resident than the average state. This proposal would allow the number of establishments to be naturally driven by the market, as it is in other states.

Corbett said his plan balances the increased amount of retailers with additional enforcement measures.

The governor’s plan calls for significantly enhanced fines for selling to minors and visibly intoxicated patrons, with penalty ranges increasing from $1,000 to $5,000 to $5,000 to $10,000. The additional money from license surcharges and increased fines will be designated for enforcement efforts of the Pennsylvania State Police, Bureau of Liquor Control Enforcement, who will see a 22 percent funding increase under this plan. Corbett also proposes a 75 percent funding increase for alcohol treatment and prevention efforts.

New alcohol retailers, such as wine and spirits stores, grocery stores, pharmacies and convenience stores must all use an ID scanner device before they can sell alcohol.

Corbett also explained that his proposal is fiscally neutral. Every dollar not returned to the state due to the divestiture of the LCB is returned to the state through restructured fees. He also noted that history in other states shows that many of the private sector jobs created will have comparable compensation.

Corbett also noted that his plan includes measures for affected LCB employees,
including tax credits for businesses that employ separated workers, educational
credits, civil service credits, individual employment plans and a multi-agency
committee to help displaced employees find re-employment.

What do you think about privatizing the state liquor stores? Leave your opinion in the comments section below.

Roger February 01, 2013 at 01:53 PM
I've seen articles that say the state brings in about $500M each year from the liquor store operations. Included in those statements is the phrase, "profits and taxes." Can anybody point to information on the split? In other words, is $100M in profits, and $400M in taxes, or $400M in profits, and $100M in taxes? I would presume the tax piece would remain as cash flow to the state. The profits from operations piece would disappear. In total, the $500M is about half of the expected auction sale. Clearly, some portion of the $500M would remain coming to the state, but not all. This is why the split on profits and taxes is important. However, having asked that question, the move to privatize should be made. The question only revolves around how long a transition would take for revenue neutrality. The state has no business managing these operations. For those suggesting otherwise, tell us what other business should the state be managing. Objectors to the plan may skip the arguments about "curbing drunken driving," "not letting teens get more alcohol," and other similar arguments. These are failed arguments that have no basis. The state-managed stores have no more power to enforce rules than anybody else. Also, you may skip the arguments about "putting people out of work." It is not the charter of the state to manage profit-oriented businesses to put people to work.
ExpatBurghGal February 01, 2013 at 05:29 PM
It's about time Pennsylvania joined the 20th century...oh, wait.
Sara February 01, 2013 at 07:17 PM
Yes, finally. In California (and Europe) you can normally buy wine and beer at a grocery store. Of course, PA must be so behind. :rolleyes:
Logan Wheatcraft February 01, 2013 at 08:11 PM
Who cares about the People's Republik of Kalifornia? And definitely who cares about Europe? As the article states, PA is one of only 2 states in this country with a totally state-controlled liquor scheme. I know that when I lived in that terrible Commonwealth that I found it very inconvenient to go to a different store for beer/liquor&wine. I would much rather have purchased at Giant Eagle or Trader Joe's (which has cheap, good wine in most states).
Bill February 01, 2013 at 08:14 PM
The state stores turn a profit, It employes many many pa. Residents, these people pay taxes, spend money and have hospitalization. When the state stores are sold and the workers are laid off, have no hospitalization and go to the hospital as welfare cases who picks up the tab. This system is not broken leave it alone the selection is good prices are fair and pa residents make a fair living.
Roger February 01, 2013 at 09:26 PM
Bill, in wanting to clarify your statements, are you saying that anybody now working in a state liquor store will be unemployed after a privatization? Are you saying any private store will be operating sans employees? That seems to be your message. Right, or not right? What other business should be operated by the state government? If the state-managed business works so well for the liquor industry, what other industry should be state-managed? Is there a good reason for ANY private ownership?
Jaws February 01, 2013 at 09:53 PM
Oh please, of course it is tough to make shift in employment. Many many people have to do it. Of course they may not be accustomed to the sanctuary of state employment. Join the rest of the workers who are at risk every day, who knows, you may get a promotion if you work hard and help turn a real profit based on EBIT, ROI and incentivization. If you want a safe job, why should the tax payers have to bear the brunt of it. Please privatize these stores quickly. Thanks Governor for encouraging private sector growth, risk and profit taking.
Bob February 01, 2013 at 10:02 PM
My question is the same. What happens to all those state workers who will be without a job? What about their pensions? Privatization does not guarantee these people will have new jobs. How will the state make up the loss in revenue? More for us to pay?
Frannie Table February 02, 2013 at 12:35 AM
we are talking about THOUSANDS of people being put out of a job. of those people, many of them have gone through extensive training to be able to help consumers pick out a quality wine that pairs well with their meal, select a unique bourbon out of dozens and dozens of options, recommend a vodka that tailors to unique dietary requirements, etc. when is the last time you stood in a grocery store with a clerk for 10 minutes debating the choice between ritz crackers or townhouse? the people of pennsylvania are constantly talking about "convenience", but when select grocery stores opened up wine kiosks, the selections were slim. 88 options of low cost, low quality wines with a few moderately priced options thrown in for good measure. at least half of the people who approached the kiosk complained (loudly) about the selection, despite the convenience. unfortunately, you simply cannot have both. if you are in a chain grocery store, you will be able to shop in one aisle ONLY for your wines and MAYBE spirits, depending on what the states plan is for the two. the only way to have the same selection you currently have now would be to leave the grocery store and head to an independently owned and operated store. also, if your local liquor store now has a small selection and you want something that another store carries, the PLCB will make sure your product is transferred to your store SPECIFICALLY FOR YOU. does your grocery store do that? NO. be careful what you wish for....
CorbettISwrong February 02, 2013 at 01:56 AM
Corbett is a corrupt moron. State stores are the one profit generating centers the state runs successfully !!! Selling off state stores leads to higher taxes, higher prices, lower quality product, and greater financial loss. Please launch a criminal investigation of this whole administration - his proposal smells like privatization kick back schemes . Other states should convert to the state store system. Then maybe teen DUI fatality numbers will drop. Privatization is wrong, wasteful, harmful & will absolutely lead to more DUI deaths and injuries of young people.
Bob February 02, 2013 at 03:47 AM
I concur wholeheartedly!
Grip February 02, 2013 at 08:53 AM
PRIVATIZE NOW!!! Why should tax payers be responsible for insuring the careers and retirement funds of state liquor store workers,or any state employee for that matter?? Isn't it time that PA begins to wake up and curtail the untold hundreds of millions of dollars dumped into state pension funds annually? Let them fend for themselves just as those of us in the private sector must do. Hundreds of thousand of private sector employees have lost their jobs and have no pension of any kind much less bale outs from the tax payers. Where is the equality in this picture? Government control equals Socialism. Who can argue with that
Frannie Table February 02, 2013 at 01:22 PM
tax payers ARENT responsible - thats just yet another uninformed notion. the PLCB stores are maintained, staffed, and stocked WITH ABSOLUTELY NO CONTRIBUTION FROM TAXPAYERS. it is completely self sufficient entity. then AFTER the revenue covers all costs, the rest of the money is a direct profit to the state. without the stores, PA will be broke. Corbitt can talk all about the cost to run a store growing faster than the revenue generated in the store is growing, but that doesn't mean the revenue isn't growing! a great number of stores have been upgraded to provide a better shopping experience for customers in the past decade, and thats not free. however, its not paid for by taxpayers either. a one-time sale might seem like a great solution and huge money maker for the state, but its nothing compared to what the stores consistently bring in. it is a huge, huge mistake that can never be undone. privatizing has been kicked around so many times in the past, and yet its never been done. want to know why? IT DOESNT MAKE SENSE. leave things the way they are.
Roger February 02, 2013 at 01:45 PM
Bob, is it the role of state government to give people jobs? Speak to us about what you mean in the "loss of revenue" comment.
Roger February 02, 2013 at 01:48 PM
Please provide us with some background on the statements regarding "higher taxes, higher prices, lower quality product, and greater financial loss." You must have sources to back up these assertions, sources that have not been used by others. Enlighten us with this information so that we can understand your statements. Oh yes, please provide us with the background on "lead to more DUI deaths and injuries of young people" Again, you must have background information and sources not available to others for this kind of assertion. Please share. Thank you.
Roger February 02, 2013 at 01:53 PM
Frannie, I applaud you for your passion to the cause. You have made it clear that you believe state-managed liquor stores provide profit to the state. Since this is the case, tell us what other business entities should be state-managed. If the liquor industry is profitable, as you so clearly state, then the opportunities must exist for other state-managed businesses to bring in more profit to the state coffers. The state needs money, and if the state has demonstrated how well they manage liquor stores, why not put many other businesses under state ownership/management for even more cash flow into state coffers? All we ask is for a list of a few, say 10 other businesses or industries that the state should own and manage. This should be an easy list for you to provide. Thanks.
Oren Spiegler February 02, 2013 at 03:05 PM
Why not have the Commonwealth seize monopolistic control of automobile sales? After all, it already interferes with commerce by making it unlawful for these businesses to engage in transactions on Sundays. Imagine how easy it would be to secure new vehicle registration when purchasing a car directly from Big Brother!
Tiny February 02, 2013 at 05:25 PM
Grip, you should get educated on how the Liquor store employees get paid before you run your mouth. Tax payers does not pay for the employees salaries. The Liquor store employees generate their own income and not only that profit goes into a general fund and it pays for a lot important things like road ways, libraries etc. Yes it is 5000 employees that would be out of work and then unemployment rate would go up and of course it would be Obama fault.
BennyB February 05, 2013 at 03:33 AM
The real point here is that the system runs fine, people get booze. At the same time the state makes money, and gives people good jobs. It’s the most good for the most people. A little Utilitarianism is what this country needs, not more privatizing so the rich get richer.
Roger February 05, 2013 at 03:55 AM
Benny, what makes you think a private business makes people rich? Remember 8 of 10 new businesses no longer exist in five years. In most cases, they have failed financially, usually at the loss of much investment. The economic thrust of our country only exists because of private enterprise investing, taking risk, setting vision,and managing operations -- it is called capitalism. It sounds like in your work the country needs only government operated businesses. Do we hear you rightly? If you don't want the idea to be universal, then give us a list of 5-10 other industries that should be state-owned, and state-managed. If the "system runs fine," then creating a list of 10 others should be an easy task.
Ed M February 06, 2013 at 03:16 AM
Part of that profit comes from the 18% Johnstown Flood Tax that is collected on all wine and alcohol sales in the Commonwealth. It doesn't show on the receipt and it has been going into the general fund for about 40 years. Doesn't it make you wonder what that money is being used for?
BennyB February 09, 2013 at 05:17 AM
I’m not sure you really understand how capitalism works in this country Roger. Without the help of the gov’t this country would not have the wealth it does. If this was truly a “free market” we would look more like a third world country. Making a list of other business for the gov’t to run is beside the point. I’m not trying to restructure society, I’m simply saying the system is in place, over all it gives the most good to the most people. So why change it? This topic isn’t a philosophical one, it’s a practical one. You privatize, and you may get more choice and cheaper prices, but we can’t know for sure till it happens. When Washington State privatized last summer they saw prices on many popular liquors go up. You also get more convenience. What you lose is $500 mill a year and 4 thousand plus, good paying jobs. Is that really worth it? If you’re a drinker that can’t get what they want then maybe. If you’re not a drinker though, why would you ever want to change it? Within two years the PLCB will have made that billion Tom is talking about. Then what, where does the money come from to make up for the $500 mill annually? We know Tommy boy won’t tax his buddies in the gas industry. Also I wasn’t trying to say that if you open a private business you automatically become rich. What I was trying to say is that the only people that will be able to afford the license will be big companies, not mom and pops.
Roger February 10, 2013 at 10:43 PM
Benny, yes, I think I do understand capitalism. In the past 45 years, I have been involved in entrepreneurial efforts, or small business ownership. Keeping the PLCB in control of retail operations has zero to do with the wealth of the Commonwealth. No, providing a list of other businesses is hardly beside the point. Like others, you make an assertion that the present system works very well, and should not be changed. If it works so well, you must have a list of other businesses that the state government should be owning and operating. Others have tried to make a list, and I am giving you an opportunity to create such a list and justify why state-managed operations would be better. You have also advanced the argument of the $500M in revenue. This is a fact, but without the split of profit/taxes, it means nothing. Taxes will remain in place. The two years mentioned is bogus, without the splits. Why is the responsibility of the state government to provide good paying jobs, ones that are directly supported by a state-managed business? Why is the big companies vs. mom and pops, an issue? Where the licenses go depends upon the auction. What is wrong with letting the free market work on this matter? If it does matter, then I return to the former question: What other businesses should it matter?
BennyB February 18, 2013 at 04:11 AM
The list is beside the point. The point is that there is a system in place that works fine. so why change it? Just like other things work fine not in being run by government. So why change it? If the tax revenue will remain the same under the privet system then the price of booze will be higher. No business has the buying power of the state.
Laughing at Trannie Fable March 13, 2013 at 03:36 PM
Worst - Comment - Ever!! So you are telling me that the state-employeed liquor store worker has been "extensively" trained to help me select my beverage of choice? That is truly funny! They are doing a "great job" if they can even point you in the right direction of the bourbon aisle, let alone what variety of red wine will pair well with my dinner. Let capitalism and the supply/demand market work - if your local liquor store doesn't carry your favorite selection, request it, if it sells they'll stock it and if it doesn't find somewhere that will. The expenses outgrowing the revenue that the governor is speaking of is in part to you wanting the state-ran store to "order it specifically for you," it is a sense of entitlement, that only benefits you and costs the state and its taxpayers more money.

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