WASHINGTON STATE GOES PRIVATE!

Yesterday, Washington State voters resoundingly voted YES (looking like over 60% in favor) to privatize the state's liquor wholesale and retail operations. All liquor sales in the state will be private by June 1, 2012. Costco spent about $20 million supporting Prop. 1183 (for privatization), a spend that has been smeared as "buying the election" by anti-1183 groups. This ignores the fact that the Wine & Spirits Wholesalers Association spent over $12 million trying to defeat it. So...don't accuse the winner of "buying the election" when what really happened is that you were trying to buy it...and got outbid.

So, congratulations to the people of Washington on your wise choice and your victory! And...what's it mean for us? This definitely puts an intangible momentum behind privatization in PA; another state did it, and the sky hasn't fallen in. But tactically? It doesn't mean much. We don't have a Costco willing to step up and fund a campaign for privatization...and even if we did, it's not as simple as that. Because we have to work with the Legislature, and they've been thwarting the public's will on this for years.

Think about it. The polls consistently show the voting public in favor of privatization by a 2:1 margin, yet the Legislature still argues over whether they should even be thinking about it. They twiddle and diddle and talk about the PLCB's "modernization" plans, and the revenue, and the union, and THE CHILDREN!!!!! All red herrings. The People want the State out of the booze business. Very simple. Get the hell to work on it.

Why don't they? Well, the same polls show that only 17% of voters consider this an important issue. I'll grant that, and compared to some others, it's certainly not as important. On the other hand, the heavy lifting has already been done: there are a number of plans out there, some over ten years old, to privatize. Pick one, and do it. It's not controversial if 65% of Pennsylvanians are in favor of it.

Why else? Maybe because of the revenue coming in from our police-enforced monopoly. Prices at the State Store System aren't THAT much out of line with surrounding states -- I've never said that prices were a major issue, although selection and service ARE -- but that's because the PLCB has been willing to take a hit on profits (the governor's PFM report on privatization shows profits steadily declining; more on that soon) to keep their costs high. That's right, I said willing to take a hit on profits to keep their costs high. Because they're a bureaucracy staffed by a union, not a private company, they don't mind not being profitable (according to that PFM report, over half the PLCB's stores are not profitable), as long as they keep their jobs.

Why are the profits declining? So they can stay somewhat competitive while continuing to collect Pennsylvania's outrageously high wine and liquor taxes. But send that private, and the stiff taxes will be exposed. This is the ugly underbelly of the PLCB's State Store System: we pay more than other states on wine and liquor excise taxes: a whole lot more (jump to the link, then scroll down and take a look at the last three tables).

So we need to tell our legislators that when they take this system private, they need to take that burden off our backs and spread it around in a more fair and equitable manner. Or...pick it up in a Marcellus Shale tax of some kind...which it looks like they're already thinking about. Push for that. Because otherwise some genius is going to look at upping the beer tax, and we don't want that!

A good day for Washington State. With luck, a good beginning for Pennsylvania. Keep the ball rolling!