PLCB Math

So here we are, about to be screwed again by the PLCB. What is it this time? More nepotism? More corruption? No, this time it's just plain monopoly gorilla tactics (yeah, gorilla, not guerrilla). They wanted to force a private business to lower their margin so the PLCB could raise theirs.

Once again, they're just playing at being a business. A real business increases profits when it reduces costs through innovation or consolidation, they change benefits, they leverage productivity, they control operating costs. The PLCB does none of that; well or even at all.

For every dollar the PLCB spends buying booze, they make just over $1.45 selling it. (PLCB Financial Report 2015-16), but that isn't enough apparently. How can that be? Back in 2013 when Bailment was put in place -- that "nifty little system" that was going to make such a big difference -- the PLCB saved enough to no longer need a tax and interest free loan of $110 million from the state to start up their operation every year.  So where did that $110 million saved per year for the past 4 years go?  It isn't zero sum as some PLCB supporters suggest. 

For instance, if you start the year in debt by $100 million, and over the course of the year you make $500 million, your net is $400 million for the year. If you have no debt to begin with, then your net is the full $500 million. The PLCB no longer has that debt every year and so should be making $110 million more every year. Are they? Not according to their own financial reports.

In 2012, the PLCB contribution to the general fund was $80 million. In 2014, with bailment in full swing...it was $80 million. Maybe they spent it on improving the stores? Nope, store operations only went up $25 million over the two year period - still missing over $195 million. ($110 million times 2 years minus $25 million) Maybe they paid down some of the non-reported (at the time) pension debt. Hard to say, but if they did then they didn't continue it in 2015-16 when they had to report pension debt. That only went down just over half a million on almost $240 million of debt - a 400+ year payback plan.

Now we have "flexible pricing," which is of course all about "our need inside this building." Since none of the top 10 sellers of wine or spirits went down in price (except pints of Nikolai Vodka, which decreased a whopping 30 cents, and let's not talk about what a whopping display of hypocrisy it is for the PA Liquor Control Board to lower the price on The Drunkard's Friend), one can only assume that the PLCB kept all the negotiated differences of the most popular items. Now the question arises: how much more do they have to squeeze us by the balls to make the projected income increase of $165 million (or $137 million, depending on who you believe)? Raising the prices on 424 items isn't going to do that. Keeping all the $2.1 million in Jack Daniel's profit — as I'm sure they are doing or anticipating doing — still leaves a long way to go. 

By the PLCB's own admission of saving $110 million a year from bailment, and $165 million from price gouging the consumer, my math says that even with paying $195 million to the general fund, the pension debt should decrease by at least $50 million, and if you count that $110 million from the 4 previous years, there shouldn't be any pension debt.

Of course, that would assume the PLCB is an efficient, well run business organization with knowledgeable leadership and people who take initiative. None of which is true. It is a political pig sty stocked with innumerable incompetents that have no real business experience and run like a old boys club, hoovering up the hard-earned dollars of the citizens while giving almost nothing worthwhile in return.

So much for the Chairman's statement of:"...we can both generate additional revenue and achieve more competitive retail prices through cost reductions, rather than broad price increases." As a businessman, let me clue you in, Tim. You NEVER achieve more competitive prices by raising the price for consumers. The idea is to gain competitive advantage over other places selling the same or suitable substitute items. I'm betting you don't have a friggin' clue what that means.

Speaking of the Chairman, he was so proud saying that the PLCB didn't initiate any price increases during the period of 02/14 to 10/16. Well, guess what? They don't have to. ANY price increase gives the PLCB more money no matter who initiates it. I bet the suppliers never initiated 424 price increases all at once, though, did they, Tim? If you listen to the fearmongers at the UFCW and their lapdog bureaucrats in Harrisburg, we are told that there are 20,000 products available from the PLCB!! Yet Ol' Chairman Timmy is complaining that suppliers tried to increase prices on about 4% of them over two and a half years! Da noive o' dose guys!

You gotta ask why the $110 million from bailment PLUS the $137-165 million from screwing the public with "variable pricing" PLUS the $80-100 million or so they have been contributing the last 7 years or so doesn't total up to at least $337 Million being turned into the state ABOVE the taxes collected. Just what black hole of incompetence is it disappearing into? The answer is that it is all a lie. While they might make something more than before, the state, the General Fund, we the citizens are never going to see it. The PLCB needs it to keep their ship of mismanagement and incompetence afloat. They always have said that the PLCB will make more, not that the state or the consumer or the citizens would ever benefit from it.

It's OUR money; not yours.

What we need now is another border bleed study next year to see what damage has been done by these idiots. My money is that real border bleed is over $500 million by then, if it isn't there already.

Now more than ever we need to be rid of the PLCB.

Privatize, now.

"Given our need inside this building..."

Pennsylvania Liquor Control Board member Mike Negra may have inadvertently told the truth (he'll probably be fined for that). Quoted in a story about the PLCB's recently announced price hikes that ran in several state newspapers, Negra let it slip that the PLCB's main mission is the survival of the PLCB, its jobs, stores, and cushy bureaucratic positions. How else are you supposed to interpret this quote?

"Given our need inside this building and throughout our agency due to rising costs of employee benefits and so forth, a lot of that is out of our hands, we felt it was something we needed to do," said board member Mike Negra. "That's what is behind it."

Any PLCB bureaucrat

You see that, right? "Given our need inside this building..." None of the usual window dressing and self-sacrificing bullshit about how the PLCB does so much for the state. Nothing about the General Fund, nothing about the state's financial crisis, nothing about the State Police, nothing about actual alcoholism prevention (what about the children???), and certainly nothing about you, you poor shlub. No, the prices are going up because the bureaucracy needs to fund their ever-increasing operating costs. 

We told you, over and over, that "flexible pricing" would mean "higher pricing." We take no joy in being right, we just wish someone would have listened.

Now can you finally call your rep and tell them it's time to privatize this mess? All of it?