Wednesday, March 23, 2011

PLCB's "Secret Plan" front-page news? Really?

Lead story in today's Philadelphia Inquirer:LCB offers modernizing ideas to counter privatizing.

The "secret plan" that the Commonwealth Foundation leaked last month came out in the open yesterday -- minus the blatant 'future profits' bond issue scheme -- and for some reason, the Inky decided that this was the most important story of the day. Odd choice, made even odder when the reporter -- Angela Couloumbis -- apparently seemed to think that the PLCB's ideas for transforming the agency through a series of legislative changes were great stuff. There wasn't a negative word in the whole story, and Chairman Jake Corman's beautiful wind-up question was lost:
“I hear you saying that you want to be more like a private business. That begs the question of why not just privatize like 31 other states,” Appropriations Committee Chairman Jake Corman, R-Centre, told agency officials as they wrapped up their appearance.
Couloumbis paraphrased that as 
And while Sen. Jake Corman (R., Centre), who chairs the committee, wondered whether Pennsylvania should fall in line with 31 other states and privatize wine and liquor sales, he acknowledged: "I don't have people knocking down my door for privatization."
Well, honestly, no one's going to knock down any doors for privatization. This issue is most important to licensees; most of whom I've talked to would purely love to have private stores that would deliver to their bars and restaurants, and actually know something about wines, spirits, and business, and they're not going to chance rubbing the PLCB the wrong way; not happening. To us, well, I'd like to see privatization, but I'm not going to Harrisburg to demand it. (Write? You bet. Call? Sure, if it will help! And you should too!)

But more importantly, when a legislator says "That begs the question," it's more substantive than...wondering. "That begs the question" is the legislative, legal equivalent of "Well, duh." Corman's response is just like my response to the PLCB's wowser statements about how convenient the wine kiosks are: Really? Convenient? Compared to picking a bottle off the shelf? Get serious.

Compare this story to this one in the Wilkes-Barre Times-Leader. "Again and again, legislators grilled liquor board members on how the agency operates, on their efforts to make the LCB more consumer friendly and whether a privatized system would result in increased access to alcohol by minors." (Both stories missed this one, which I got at Statehouse "State Sen. Lloyd Smucker, R-Lancaster, said many of the PLCB’s requests would double as arguments in favor of privatization.“Those decisions are perhaps best left for business. It can be more nimble with decisions to be made in reaction to market conditions,” said Smucker.)

Meanwhile, Couloumbis just repeats everything PJ Stapleton suggested -- longer Sunday hours at more stores, exemption from civil service rules, change the mark-up, and direct shipment of wine (and good though that would be...what the hell's it got to do with the PLCB's so-called business model?) -- while adding slurp-slurp-"I love the union!" quotes like this:
Sen. Jim Ferlo (D., Allegheny) called the agency "a great public asset" and said privatizing would be financially "foolhardy." This year, the agency is kicking $105 million just in profits into the state treasury, he and others noted.
There have been pro-PLCB editorials in Pennsylvania newspapers over the past 6 months, I'll admit that. But has anyone else noticed that every single one of them was written either by a current or retired State Store employee, a union official (I'm looking at you, Wendell W. Young IV), or a Democrat (and therefore presumably pro-organized labor) legislator? I haven't seen a single one written by anyone else.

This story misses the point. Stapleton's suggestions are desperate attempts to pass the blame to the Legislature and hammer down all the nails that are sticking up: too few stores (longer Sunday hours, more open on Sunday); crappy wine selection (you can get it yourself, we don't care!), prices too high (it is not cheaper in New Jersey; we changed the mark-up and lowered the price! (for a year...till you forget all about privatization...)), and unhelpful, untrained clerks (deep-six the civil service rules so we can hire wine-savvy people...for a year...till you forget all about privatization).

People! We've seen this before!  When Newman took over as chairman, people hated the state stores. He made some small changes, gave us some deals on some good wines, and we forgot about privatization... And what happened? Same Shit, Different Governor: Rendell created a $150K job out of nowhere to run the liquor stores (apparently because PJ Stapleton was tired of being asked questions about wine) and gave it to an out-of-work legislator...and the system immediately began sliding back into the craphole Newman had started to winch it out of.

But the truth is, Stapleton's right about one thing. The real problem is The Almighty Liquor Code. It stipulates this moronic system, and if Stapleton wants to keep his plum job (why not? It's found money), and save all the union jobs, changing the code is the way to go. My question: is it simpler to change it Stapleton's way...or to cut the State Store System out entirely. Chop-chop!

Or another thought: How about we leave the State Store System in place, as is...and simply add an equal number of private liquor store licenses, and a number of private wholesalers. The State Stores can't buy booze from the private wholesalers; the private stores can't buy booze from the state. Bars and restaurants can buy from whoever they want. It's cheaper and more certain than doing endless studies; it's empirical. We just let it run in parallel for five years.

Does anyone doubt the outcome?


Nathan said...

Actually the PLCB really would like to see some resolution of the direct-ship issue. The court challenges in 2005 resulted in the state being enjoined from enforcing the existing laws prohibiting direct shipment to residences, and the legislature has never fixed the law to comply with the court rulings. So the (licensing and enforcement side of the) PLCB would like to see this addressed.

Additionally, the retail side would like the legislature's nod of approval to ship directly to residences from the PLCB's online store. Unfortunately, I imagine the unions and the neo-prohibitionists will throw a fit about UPS drivers checking IDs instead of PLCB employees.

Lew Bryson said...

With regards to your first paragraph...why does licensing and enforcement care? Don't they just soldier on, doing whatever the law says? And I don't mean that in any derogatory way at all, I'm serious: what stake do they have? They've done some smart stuff on the whole grocery store beer sales thing, but this sounds like a "not my issue" thing.

As for the second point...why? Most people seem to be oddly okay with pick-up at the local store (which baffles me, but that's what people keep telling me), and isn't the real desire among winevolk to get the tiny output wines that the State doesn't even carry?

I'm not necessarily disagreeing with you here, just questioning.

Nathan said...

Technically the PLCB is still responsible to make sure that anybody shipping wine into the state has a PLCB permit and remits the 18% liquor tax and appropriate sales tax. That part of the law remains intact. But without the requirement that all shipments go to a PLCB store for pick-up instead of directly to the customer's residence, it's basically impossible to enforce. (That's my understanding anyway; I'm not a lawyer and I've never tried ordering directly from a winery.)

Regarding the online store, the most common complaint from customers is that they get charged for shipping, yet they still have to pick their order up at a PLCB store. I know several people who refuse to use the online store at all because of this. So it's long been something the PLCB would like to address.

John said...

Lew, I have come to expect better.

1WineDude said...

"Or another thought: How about we leave the State Store System in place, as is...and simply add an equal number of private liquor store licenses, and a number of private wholesalers. The State Stores can't buy booze from the private wholesalers; the private stores can't buy booze from the state. Bars and restaurants can buy from whoever they want. It's cheaper and more certain than doing endless studies; it's empirical. We just let it run in parallel for five years. "


In other words, let the market itself sort it out. We know how that one will end, because there's no way the PLCB-run stores will be able to compete in a free market...

Anonymous said...

would the extra stores in ur plan would they be mom and pop or corporate like walmart if they are the state and a big company mom and pops would get killed

Lew Bryson said...

Well, first: I don't have a plan. I'm just an interested citizen, albeit more interested than most.
But I've made no secret of my admiration for the way Massachusetts does it. They have "package stores" that sell beer, wine, and spirits, and grocery stores, delis, and gas stations -- and WalMarts -- are welcome to buy one of those licenses. However, there are strict limits on how many licenses a company may own in the state (it's either one, or three, can't remember). This means that WalMart could only sell in a few of their stores, and it actually favors mom and pop, because mom can own one company, pop can own another, Junior can own another...and so on. I'd also make it VERY hard for legislators or family or friends of legislators to buy a license; we don't need any of those shenanigans.
How's that sound? Remember, thanks to the 21st Amendment, we can tailor this law quite precisely if we want to.

Nathan said...

I was wrong in my previous comment--limited winery direct shipping is exempt from the 18% liquor tax, regardless of where the winery is located. See this 2010 legal opinion for more info:

Lew Bryson said...

I read the ruling, Nathan, and I agree with your reading of it, but...why are these limited wineries able to sell directly without paying the 18% tax? Are PA wineries not subject to the 18% tax?

Like I said in my most recent post, I just don't know that much about wine.

Nathan said...

I believe that is the case, yes.