UFCW gives up

After getting some real blowback by killing off a representative family in a series of cringe-inducing commercials, the State Store clerks' union, the UFCW, has decided that they no longer need to try and protect us with half-baked lies on their UFCW PA Wine and Spirits Council website. Not willing to openly admit defeat, they quietly let the sun set on their "proof" of the evils of privatization, and scuttled away into night.

So what does this mean for privatization?  Not much, since almost everything on the website had already been disproven. The UFCW still tells the clerks (I mean, surely no one else is bothering to look, right?) to "Learn more on UFCW PA's Wine and Spirits Council Website." I guess now that they can't squeeze dollars out of people who don't want to be involved with the union through "fair share," they must be trying to save their pennies like this.

Meanwhile, in another example of normal operating incompetence, the PLCBoard admitted under oath at the House Appropriations Committee hearing in February that they didn't have a clue about the costs of CRM (Customer Relationship Management) when they were pitching it to the legislature. That pretty much means that they read about it somewhere, thought it was a great idea, and never did even the minimal amount of research into it. At least this time they didn't hire some consultants to tell them it was expensive to do correctly. We'll be seeing the typical PLCB half-assed slow roll-out as they try to figure it out. Sounds like a plan....a PLCB plan to me.

Lastly, the PLCB hasn't gotten back to us about the number of industry-recognized wine specialists they have. It has only been three weeks, so we weren't expecting much...and that is exactly what we got.

Privatize.

Gene Gene the wishing machine.

In an opinion piece in Thursday's Inquirer titled "Math supports modernization of liquor sales." , Representative Gene DiGirolamo (R-Bucks) demonstrates how much he enjoys the taste of the UFCW kool-aid, supporting his bill for "modernization" of the State Store System. He decries the "hype" surrounding his bill; there is none, but he's clearly trying to generate some. His main aim is to keep the State Stores open by any means necessary, because he's strongly anti-alcohol, and just as strongly pro-union ...and pro-union campaign support.

Gene and his bestest buddy, UFCW prez Wendell W. Young IV

Representative DiGirolamo -- Gene -- offers his piece as a discussion. "Some critics have questioned these projections, and I welcome the debate - provided it is an honest and transparent discussion that extends beyond sound bites." 

Okay Gene; let's go to the math, with an appetizer of economics first. The basis of any "honest and transparent discussion" is that the PLCB is a legal monopoly -- so any sales or "profit" increases have much less to do with the service, selection, convenience, or pricing being offered than with the fact that the citizens can't go anywhere else legally. As prices increase and population increases, sales will increase; that doesn't mean the monopoly is doing a good job, or satisfying the consumer.

On to the math. DiGirolamo says that there have been great increases in LCB "profits" over the past five years, but FY 2010 itself was horrid. Operating income was down almost 32% from the year before and was the lowest since well before 1999.  In fact, looking at operating income over the past 15 years, it declined in 8 of those 15 years (including last year) on a year to year basis and the long term rate of growth of the past 15 years is only 3.3% annually. Since inflation over that same 15 year period was 37.5% (2.14% annual compound rate for 2000-2014) the real dollar growth was only 1.16% annualized and that is nothing to brag about.

Getting down to the details of your "proposal", we can see that most of it is built -- appropriately enough -- on moonshine. Here's the specific proposals Gene makes, and the monies he projects that they will reap.

• Allowing more LCB stores to open on Sundays (currently only 25 percent can) and expanding the hours of operation on Sundays. Projected annual profit: $22.5 million.

To get an additional $22.5 million in profit means gross sales have to increase - using Gene's numbers of 6.92% profit margin - $325 million above what they currently are on Sundays, without taking sales away from any other day. This would somehow happen even though the PLCB said they would only be looking to open an additional 140-160 stores on Sunday, bringing the total to still less than half of the 605 stores they have open now. And the ones that are open on Sundays now are already the busiest ones. This seems far-fetched, if not outright misrepresentation.

• Allowing the LCB to locate more stores inside or next to grocery stores, beer distributors, and other high-traffic areas. Projected annual profit: $25 million.

The "store in a store" program has been authorized for 40 years and in place since 1981; no further authorization is needed. Less than 20 stores are taking part (fewer than were willing to take on a wine kiosk), so the odds of that somehow greatly increasing aren't good (even less for it happening quickly, since the standard lease is for 10 years). Putting stores near grocery stores should have been a no-brainer for the last 80 years, a prime example of how the PLCB has failed the consumer all this time. Gene claims this will somehow increase profit by another $25 million on top of the claims for Sunday sales. That requires another $361 million increase in sales to get there. Gene, you said you wanted to keep the State Stores to control liquor sales; looks like you want to increase them! Total sales increase needed for "modernization" to work: $691 million.

• Giving the LCB more flexibility in pricing, which would allow the agency to more quickly change prices to reflect market demand. Projected annual profit: $75 million

Be honest: you are saying the PLCB will be able to RAISE prices on popular items. That's the only kind of "change" that's going to happen, except for the occasional token lowering. That's not really going to help stanch over $300 million in border bleed or improve the notion that the state stores are competitive. How do I know that prices will go up?  If the PLCB is one of the largest purchasers of wine and spirits in the country, and are as effective negotiators as they claim to be, they should be getting the best prices on those purchases. To make any more "profit" above the 45.2% effective mark-up in place now, prices have to increase or costs have to decrease, and costs at the PLCB just don't go down. This is the keystone of Gene's "modernization" proposal; breaking the PLCB free of the regulated markup so they can raise prices. Everything else is window dressing.

• Speeding up the state process for reviewing leases for the state's Fine Wine & Good Spirits stores. This is a critical piece of the puzzle because it will allow the agency to more quickly open new stores in more convenient areas. Projected annual profit: $25 million.

I have to admit: I have no idea how opening new stores faster (with no mention of actually increasing the total amount of stores) will generate that much more income.  If the state store isn't open in one spot, the people are forced to go to a different state store. Think of the 2 years it took in Mountaintop to open a new store. Do you suppose the population stopped drinking because the store wasn't opened? That restaurants and bars no longer ordered any product? Gene thinks that sales will increase another $361 million if they open stores faster. I have my doubts. Total sales increase needed for "modernization" to work: $1.05 billion. With a "b".

• Allowing direct shipment of wine to Pennsylvania consumers while also permitting the LCB to ship products out of state. Projected annual profit: $25 million.

This one may actually make some money, but since no other state gets anywhere near 16% of their sales from direct shipments (another $361 million increase is needed) I'm not sure how realistic it is. Total sales increase needed for "modernization" to work: $1.37 billion.

• Installing lottery ticket kiosks in the stores. Projected annual profit: $3 million.

They may make some money on this, but it's all going to be siphoned off from other businesses. If the PLCB makes some money and small businesses don't make as much...they're on their way to a new monopoly.

• Allowing the LCB to join large purchasing consortiums to help lower the purchase price of wine and spirits. Projected annual profit: $10 million.

Besides the legality of this, other control states already have contracts in place, and all other control states except Utah allow private wine sales already, so this would be spirits only. That and the fact these consortiums don't exist yet may put a damper on the idea. And will the distillers give any additional price breaks? You can't stop selling Jim Beam because they wouldn't give you an additional nickel off the wholesale price. Again, I have serious doubts about this. 

So, Representative, please explain to us how sales will increase at least 62% above what they are now and how good that will be for the state. Sales in Washington - including increased border bleed - are up less than 15% and they have twice as many stores, open all day Sunday, Direct Wine Shipping by permit (the same as you propose), grocery store sales, and one stop shopping that you don't even propose: even if you double that because Washington only privatized liquor, you are nowhere near the increases you say will happen. Plus, there is no mention of cost increases for staff, admin, transportation, utilities, increased pension, medical or any other costs associated with a 62% increase in sales.

Open invite to Rep. DiGirolamo: if you respond, I'll publish it, but if you don't, I'll take that to mean you really don't want to have the debate extend beyond your own sound bites.

Fact Check, what the UFCW says, What Rep Turzai says

Below is the list that the UFCW 1776 calls "Twenty of Turzai's Lies" You can read the list here.  Not anywhere near as many as I've documented from Wendell Young IV (which nobody has refuted as of yet) but enough to see who is spinning more. I'll take them one at a time

Who is spinning more?

 01: Turzai: The PLCB has been operating in the red for the past 10 years.
      UFCW: The PLCB’s net profit for the past 10 years is almost $1 billion total

There are three ways to look at this.. The first is if everything the PLCB collects is a tax because tax is defined as "a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc." so what ever isn't specified as the Johnstown Flood Tax or Sales tax can be thought of as a use tax and not profit.

The second is that to have a profit a business has to list all liabilities and since the PLCB doesn't (not listing the over $600+ million in pension liability or $50+ million in medical for just two examples) it is questionable if a profit is made.

The third is that the PLCB as a business that is not responsible for any liabilities because the taxpayer, not the PLCB will cover them and therefore does make a profit. I'll call this one a tie

02:Turzai: The Fiscal Note for House Bill 790 said it would bring over $1 billion in upfront revenue.
    UFCW: Turzai’s own Fiscal Note says there would be at most $137.5 million in upfront revenue.

OK, there is one fiscal note listed by for HB 790 PN 1291. and it specifically says "A total of $1,123,000,000 is estimated to be generated from one-time license fees" The Rep. Turzai fiscal note does say $137.5 million. so the question is - what time period is "upfront" ?  Upfront is usually thought of as before something happens so does the money start counting before the beginning of privatization or before the end of the state stores?  This one is a tie.

03: Turzai:There is going to be an auctioning off of 1,200 wine and spirits licenses.
      UFCW: There is not one mention of auctioning licenses in House Bill 790 or his current legislation House Bill 466

This one goes to the UFCW, there is no mention of auctions in HB 466

04: Tuzai : When West Virginia went to the private sector they saw an increase in revenue.
      UFCW: West Virginia lost millions and has never financially recovered since privatizing.

Try as I might I could not find anything on line from the state of West Virgina that listed revenues from over 30 years ago when they privatized retail sales. Without verifiable information I can't make a call on this one. However, as a side note, Iowa which also privatized retail a few years later reported making more money. (1)  I have to toss this out for lack of information.

05: Turzai: There will be no increase in unemployment compensation and all PLCB jobs will be absorbed in the private sector. 
      UFCW: The Public Financial Management study states 2,302 full-time equivalent employees will lose their jobs and cost more than $64 million in unemployment costs over four years.

Since everyplace that has fully privatized has tripled employment in the industry jobs will be created, far more than are lost. If the offset is enough to make a zero balance after some of those new jobs will be filled by people already supposedly trained is a question I don't have enough information to answer. This one is a tie also.

06:Turzai: There will be open dialogue and everyone will be at the table to discuss issues.
     UFCW: There hasn’t been a House hearing on liquor privatization since 2011.

This one is tough because it is an opinion.  If you are a citizen of the state and don't know anything about the issue already I question your ability to govern the rest of us.  If you are a legislator then there is no excuse what so ever not to educate yourself. More hearings will not bring anything new to the table. THe UFCW is still using documents and statistics from as far back as 2006 so that isn't going to change. The question is if the state should sell a retail product or not.  Once you have decided that then questions like "should we have pretty stores" or "add 1,000 more "R" licenses" come into play but not before. I know that both caucuses will be meeting on this issue so I'm in agreement that everyone can discuss the issues. Rep Turzai gets this one.

07:Turzai:The PLCB produces no profit.
     UFCW: The PLCB’s net profit was $123 million alone in the last fiscal year.

This is just a rewording of #1 and the result is the same- a tie.

08: Turzai:There will not be any lost revenue.
      UFCW: Both the Fiscal Note to HB 790 and PFM show revenue gaps that need to be made up.

The fiscal note to HB 790 does say that because of the increased discount to licensees, going from 10 to 14% will reduce income it is the same proposal mentioned in some modernization plans so what is good for the goose is good for the gander.

The PFM report also shows revenue gaps but self admittedly accounts for a zero balance of the over $200 million in inventory, the sales jump as private stores ramp up before divestiture and the $200 million in other assets which can be sold although for not anywhere near the inventory value. Add to that, the complete lack of accounting for economic churn increased employment and peripheral employees will bring and the increase in sales greater access will bring it does raise questions if there will be any lost revenue in total. Since neither side can provide concrete evidence either way this one is a tie.

09: Turzai: There will not be a complete proliferation of alcohol.
      UFCW: Under Rep. Turzai’s proposal, spirits outlets will triple, including in urban areas.

Even after tripling the amount of liquor stores the state will still be well below the average for a population of 12 million - about 33% less. Since the beer distributors will get first call on licenses and they already sell alcohol where ever they are - urban or rural that aspect is a red herring.  Community zoning should take care of the additional licenses past the initial 1200. Who knows better about what the needs of the community are - Harrisburg or the people who live there? Rep Turzai takes this one.

10:Turzai:No other state taxes liquor like Pennsylvania. 
     UFCW: Almost every state has a liquor tax, as well as retail and wholesale markups.

This one will go on a technicality. No other state does tax like Pennsylvania,  We don't have a liquor tax, we have a temporary tax that is to be used to help people from a 1936 flood.  Now what it turned into and what it is used for may be like a liquor tax that other states have - it isn't. The Johnstown Flood Tax is not part of the Liquor Code. Rep Turzai wins this one too.

11: Turzai: There will be new business taxes.
      UFCW: Turzai’s proposal heavily favors existing retailers, meaning no new business tax.

Another iffy one. Obviously if a business increases sales volume there is new business tax but if there physically aren't any or many new businesses then the number of businesses being taxed doesn't increase. Pure semantics. A tie at best or completely rejected at worst

12: Turzai:There is significant border bleed.
      UFCW: Turzai cites an unknown statistic, but in reality border bleed is minimal and there is reverse border bleed into Pennsylvania.

I'm sorry, but when the PLCB itself commissions a study on border bleed and shows that there is hundreds of millions of dollars leaving the state that indicates a significant problem Rep Turzai gets this one hands down.

Wendell Young IV star of Say Anything

13:Turzai: The public supports privatization at a 70-75% approval rating and there is widespread support for his plan.
     UFCW: No poll shows this claim. Instead, recent polls show support going the other way. Also, dozens of groups oppose House Bill 790 from last session.

This gets a bit tricky. The primary question is if the state should sell a retail product.  Given that there are 40 years of scientific polls that say the citizens do not want the state store system and some of them are in the 70% range and there has never been a poll saying they want to keep the state store system over a private system that indicates there is widespread approval for privatization.  Later polls give a third option of modernization which is a dependent option and not a primary option. You have to agree that the state should sell a retail product before you can choose how they sell it.

What dozens of groups believe or not has no bearing on what scientific polls say. To believe otherwise is to succumb to "We know better than you what is good for you"  The majority of citizens want a private system as Rep Turzai says.

14:Turzai:Beer distributors will do well under his proposal.
     UFCW: The Malt Beverage Distributors Association opposes Turzai’s plan.

It is true that the MBDA opposes this plan it is also true that they represent less than half of all beer distributors. Their disapproval does not negate if some beer distributors will do well or if most will do well or if any do well.  It has no real bearing since how well an individual distributor will do is dependent on how hard he works at his business and not his membership in the MBDA. Another that is a tie at best

15:Turzai:There are only 3,500 employees at the PLCB we need to worry about. 
     UFCW: There are more than 5,000 employees at the PLCB and mostly all will lose their job

According to the state itself there are 3,074 full time employees and 1,519 part time employees as of 1/15/15.  This doesn't count any seasonal employees which may push the total over 5,000 but would also be stretching the truth a bit. Since the UFCW continually uses the PFM report I'll use it too and it says that between 2,436 - 2,678 Full Time Equivalents or 3,210 total employees  would be unemployed depending how the PLCB retail and wholesale was disassembled.

Now you can make a case for people won't be working in the same state job but a number will still be working for the state. Rep Turzai has the facts on his side for this one but semantics are with the UFCW - they get it.

16: Turzai: Operational costs have increased by 70% at the PLCB over the past decade.
      UFCW: Operational expenses have only grown at a 1.7% compound annual growth rate in the last five years.

I've a mind to throw this one out.  Answering a question with a statement that doesn't match the question is just not being honest.  According to the FY 2005 Audit by the Auditor General operational costs were $289,810,000 and in 2014 were $424,478,913 which is a 45.6% growth so Rep Turzai is wrong.  However. the 2010 Operational costs were $381,801,000 which comes out to a 2.15% compound annual growth rate to 2014 so the UFCW is wrong too.I didn't include COGS in my operation computations because the PLCB has no real control over that but if I did then operation costs from 2005-2014 would have gone up 56%  and the compounded annualized rate would be 2.79% I'm not counting this for either side.

17: Turzai: Private wholesalers sell to the PLCB wholesale system currently. There is a duplicate system in PA.
      UFCW: Producers sell to the PLCB wholesale. There is no duplicate system.

There is a duplicate system.  While for major items the PLCB may go directly to the producer, for the vast majority of items available in the system they go through a private distributor. This is easy to see because every SLO item has a vendor code and that code is not the Wild Turkey Distillery or the Conundrum winery, it is a distributor. and since SLO items outnumber in stock items by at least 4 to 1 there is a duplicate system. Rep Turzai is correct

That is the end of the list, why they called it 20 lies and then only listed 17 is a question you'll have to ask the UFCW.  I've always said they weren't very good with math.

The totals are
Rep Turzai - 6
UFCW - 2
Tie - 6
Tossed out - 3

Who do YOU believe?


(1)Privatization was deemed successful from a revenue standpoint, with profits increasing by $125 million over the first 11 years of privatization compared to estimates under State control of the stores. At the time of the 10-year review, the conclusion was that most of the increase in profits was the result of eliminating the state stores and the costs associated with them. PFM report pg 111

Wanna Talk Washington? Fine, Let's Talk Washington

The latest claim by some union members and supporters is that Washington state is making less money this year than when they had a state run system, and the implication is that it's because they privatized. The truth is that they are about $46 million ahead of the last year of state-run stores.  Even though I explained and pointed out where to find all the numbers in "Why Johnny can't read or do math Part 3", they seem to still have difficulty with addition.

One more time, then: the Washington State Department of Revenue collects liquor taxes. The total for Fiscal Year 2014 was $267,374,563. The Washington State Liquor Control Board collects spirit fees, license fees and beer and wine taxes. That was $227,320,000 for Fiscal year 2014. That means the total state booze-related revenue collected in FY 2014 was $494,7 million. In the last year of state-run liquor stores (FY2012), the total returned was $448.7 million (including store "profit") which also included the one-time $31 million income from the sale of the old state stores and was still $46 million less than this year.

Now, here's the crucial part that brings all the crowing about the State Store System's "record sales" into perspective. Compare what the PLCB, with control of both wine and liquor and twice the population and over twice the total sales of Washington State, did over that same period. They didn't even come close to  increasing the contribution to the state by that amount. Their increase was only $33 million, and yes, that includes the so-called "profit" and taxes, too. Washington does not charge regular state sales taxes on liquor, but includes a Spirit Sales Tax in the price, the same way PA includes the Johnstown Flood Tax in the retail price. I did include PA sales tax in the above comparison; it's revenue from booze sales. But still...they couldn't match the increase Washington saw when it privatized (and remember; Washington only privatized liquor!).

Freedom of choice, free enterprise, free interstate commerce...those are things the country was founded on, and these are the things denied the citizens of Pennsylvania by the State Store System. Washington State now has greater selection, more convenience, more taxes collected, and lower DUI fatalities. Looks to me like Washington is winning. We can be winners too. Privatize.

Privatization Is Modernization.

You can't fix stupid

Yes, it is true: you can't fix stupid. No matter what the clerks' union comes up with, it will never get away from the image of what was quite possibly the most inane advertisement ever to be put on Pennsylvania's airwaves. It is so bad in so many ways that the entire nation is laughing at the state, and the idiots who put this together for broadcast.



That bunch of idiots would be the UFCW Local 1776 media office and an outfit called Strategic Communications (the link is provided in case you want to put this gang of ham-handed 'communicators' on your company's Do Not Call list). It is so bad that one of the union's own members said on Facebook, "I work for this system and I personally find this ad embarrassing. Their true intentions are to keep our jobs (which I do not mind), but Ads like these are utterly ridiculous." Obviously he wishes to remain anonymous.

I have not seen one positive response anywhere. I would like to read one just to get an idea of what kind of person thinks this was a good idea.  Those that don't are legion,  If you haven't seen the stories, here are a baker's dozen of them. Be sure to read the comments: they just don't get any better.

1.) http://www.forbes.com/sites/kellyphillipserb/2014/05/04/union-privatizing-the-sale-of-alcohol-will-kill-children-lower-tax-revenue/

2.) http://fermentationwineblog.com/2014/05/worst-alcohol-related-ad-history-world/

3.) http://thelibertarianrepublic.com/unions-panicking-possible-liquor-privatization-pennsylvania-video/#axzz30tTcJtUY

4.) https://www.againstcronycapitalism.org/2014/05/state-liquor-store-union-pulls-out-the-stops-new-ad-explains-that-selling-beer-in-grocery-stores-kills-children/

5.) http://www.nationalreview.com/corner/377162/union-monopoly-protects-pennsylvania-children-drunken-slaughter-tim-cavanaugh

6.) http://philadelphia.cbslocal.com/audio/1562-chris-stigall-show/the-chris-stigall-show-wendell-young/

7.) http://tinyurl.com/njtuhwc (About 7 minutes in)

8.) http://www.philly.com/philly/blogs/entertainment/television/WATCH-UFCWs-hilariously-bad-anti-liquor-privatization-ad-.html

9.) http://reason.com/blog/2014/05/02/pennsylvanians-cant-buy-beer-and-wine-at

10.) http://www.commonwealthfoundation.org/policyblog/detail/will-more-choice-and-convenience-really-kill-your-kids

11.) http://www.nationalmemo.com/watch-the-craziest-political-ad-of-2014/

12.) http://philly.barstoolsports.com/around-barstool/video-anti-liquor-privatization-ad-says-pa-selling-beer-at-convenience-stores-will-kill-one-child-every-week/

13,) And my own lambasting published here last week.

Enjoy, have fun and don't laugh too hard. Remember: this year privatization killed the little girl; last year, they killed her father. If this drags on one more year...that's going to be a pretty lonely ad campaign. But it's still going to be stupid, because there's just no way this line of reasoning is ever going to make sense.

Why can't Johnny read or do math — Part 3

If you remember in Part 2 of this saga, one anonymous poster — we’ll call him Business Rep 23 — was not able to figure out how Washington State collected more money after privatization. He couldn’t add the numbers from the Washington State Department of Revenue and Washington State LCB, and he said that the money from the old state stores wasn’t included.  If you look at the WSLCB Annual Reports, none of them list “Store Profit.”  It’s just part of their income after expenses and since they turn over everything else to the State or Local governments, they seem to not feel the need to do reporting the PA way.

Let’s see what the real numbers were in Washington, and how they compared pre and post-privatization. The last annual report before privatization was for FY 2012, which went from June 1, 2011 to May 31, 2012. This would include the big run on liquor that happened before privatization took effect on June 1, 2012 and the auction sales of the old state stores.

Total liquor sales were $900.47 million or about 42% of what PA does (it bears repeating: Washington only privatized liquor sales; they already had private wine sales). Washington State LCB does collect the beer and wine taxes, and some tobacco taxes too, but those obviously weren’t affected by privatization. If you do include all of that, the total is $448.7 million returned to the state. That number is what Business Rep 23 and his cohorts like to use when comparing Washington’s old liquor income to Washington’s new liquor income.  The key number here would be $448.7 million turned into the state for everything, including any profit made in the old state stores.

Now let’s look at the 2013 Annual Report, the first one after privatization.  There is no income from

Gross Liquor Sales any longer, but the License Fees have gone up from $33.91 million to $257.6 million and that the total returned by the WSLCB  to the State is now $318.32 million.  (License Fees are the actual cost of licenses, plus the 17% Retail License fee and the 10% Wholesale License fee that were added as part of the privatization bill.)

AHA! you say, that’s $130 million less than the year before, Business Rep 23 was right!  Er, well, no, he isn’t.  When Washington State was the only source to buy liquor, they collected all the state liquor taxes: the Spirits Sales Tax and the “Spirits Liter Tax.” But now that Washington State has a private system, those tax collections are now part of the Department of Revenue, and not the WSLCB. (Imagine: the Department of Revenue collects the taxes, instead of some dinky enforcement bureau. Makes sense, right?)

To get the total tax numbers, you have to look at the spreadsheet the Department of Revenue so kindly keeps updated here.  Looking at the Summary FY2013 tab and adding the monthly tax collections, you see approximately $228.6 million was collected from consumer sales and $37.3 million was collected from licensees through distributor sales, a total of $265.9 million.

This gives Washington State approximately $318 million from the WSLCB, and $266 million from taxes, for a grand total of $584 million in liquor/booze revenue.  Even Business Rep 23 has to admit that $584 million is more than $448 million. Okay, he doesn’t have to, and I’m sure he will make a bunch of statements trying to tear that fact down without any proof, but…come on. $584 million is at least 23% more than the $448 million that was collected the year before, just like I said in part 2.

So to sum it all up:

The WSLCB Beer and Wine taxes, tobacco seizures, other income, and all liquor revenue including store “profit” collected in FY2012 before privatization resulted in a total of $448.7 million being returned to the state, while in FY 2013, the first year after privatization, it was $584 million.

The moral of the story?  

Don’t believe Business Rep 23 or anybody else unless they have the facts to back up their statements.

Would Privatization Kill Children?

To go with last year's “Non-union employee-sold booze killed my Daddy” commercial, you may have seen the newest propaganda from the State Store clerks union about how increased availability of beer and wine will lead to the downfall of civilization as we know it. Among other lying lies from the big fat liars at the UFCW media lying office, the ad says that North Carolina put in "a similar law" and it's killing one "child" every week from underage drinking.


The idea that they can trace the death of one underage drinker (who are, BTW, usually 18 and older, hardly the toddlers pictured in the ad) per week directly to this law and ONLY this law...is ludicrous. But here are some even bigger things they don’t tell you about crazy loose boozy North Carolina vs. wonderfully 'controlled' Pennsylvania.

• North Carolina has a lower rate of high BAC fatalities than Pennsylvania 
• North Carolina has a 39% lower rate of women 18-44 who binge drink than Pennsylvania
• North Carolina has a 26% lower alcohol use rate for women 18-44 than Pennsylvania 
• North Carolina has a lower Fetal Alcohol Spectrum Disorder rate than Pennsylvania 
• North Carolina has a better rating from MADD than Pennsylvania 
• North Carolina's DUI fatality rate is the same as Pennsylvania 
• North Carolina's overall binge drinking rate is 17% lower than Pennsylvania’s 
• North Carolina is also one of the 17 alcohol control states, like Pennsylvania 
• North Carolina liquor stores are checked for underage sales. Pennsylvania's are not. 
• North Carolina allows beer and wine sales in grocery stores.  

It would be an improvement if Pennsylvania were more like North Carolina, but it will be even better if we privatized.

Sources:
http://www.cdc.gov/ncbddd/fasd/data.html
http://responsibility.org/sites/default/files/files/TCC-AIDF_2012.pdf
http://www.madd.org/drunk-driving/state-stats/
http://www.americashealthrankings.org/WI/Binge/2012

I am sick and tired of the characterization of privatization supporters as "lazy drunks"

I've been reading the letters to the editors from people who think the world will end if liquor sales are privatized, or if beer is sold at gas stations, or if beer and wine are sold in the same place. What's worse, I've been reading the comments people leave on the web versions of those letters and stories. I shouldn't, I know, because they just drive me crazy...and here's why. 

I am sick and tired of hearing people who are just asking for the same kind of convenience they see in other states being called "lazy," or "alcoholics." We're "lazy" because we'd rather make one stop to buy our groceries...which in most other states includes the beer and wine? Am I supposed to believe that the people who call us lazy never stop at a convenience store for a bag of ice or a cold drink, instead of going to the grocery store? Man, that's lazy! Are we "alcoholics" because we'd like to buy our booze on a Sunday, or at the grocery store/drugstore/gas station...like normal people do in other states? Are they all alcoholics? I don't think so.

We aren't lazy, we aren't alcoholics, though it's easier to try to smear us like that rather than address what we're really saying. This is what we want:

• We want rid of Pennsylvania's antiquated alcohol laws.
• Get rid of the case law. ANY restrictions on how little or how much beer a person can buy in a single purchase should go. 
• End the State Stores, AND the state's monopoly on wholesale wine and liquor, which limits what wine and spirits we're "allowed" to buy to those selected by a committee in Harrisburg, without any input from the customers: us!
• We'd like to see an end to the strange limits on what beer distributors can and cannot sell: it's okay to sell soda, tobacco, snacks, and beer paraphernalia (like glassware), but they can't sell sandwiches, or more substantial food, or much else of anything, really. Why not? 
• We'd like to see an end to the bizarre requirement that a supermarket must have a cafe in order to sell beer. 
• We'd like to see the state have a normal number of retail wine outlets; that would be about 6,000, comparing our population and geographic size to those of other states. 
• We'd like to have a choice in where we buy our booze, not just one store that's the same store all across the state.
• We'd like to see an end to the police-enforced monopoly, and be able to buy wine and liquor in other states if we want to. For many of us in southeast PA, there are lots of great stores not far away, but buying there and bringing it home is illegal...which is insultingly unAmerican. 

We're not lazy; we're disgusted. We're not alcoholics; alcoholics don't care about inconvenience, they just do whatever's needed to get their drink. We don't want "alcohol," we want better selections of wines and spirits, we want a real choice on where to get them, and we want better service where we shop. We just want things to be normal in Pennsylvania.

And what we really want...is for the Legislature to take this up and get it done in September. Finish it.

Just Imagine...

If you had a clean slate, could lay things down the way you think would be best for selling alcohol beverages in Pennsylvania...how would you do it? I heard that question asked recently at a small discussion of the prospects of PLCB privatization, and it gave me pause.

Some things were easy. Would I keep the state-owned stores? Certainly not. Would I ever have the State as the sole wholesaler, with a committee in Harrisburg deciding what would and wouldn't be sold in the state? Don't be ridiculous. Would I keep the police-enforced monopoly, making it illegal for Pennsylvanians to buy a bottle of wine across the river in New Jersey? Not on your life. Would any of us keep the nonsensical case law, or its equally ridiculous corollary, the two sixpack limit at bars? Hell no, done away with, along with "registration"!

But... Would I want anyone who wanted to be able to sell beer, wine, or spirits, by the bottle or by the drink, with no limit other than a small fee and maybe a criminal background check? Should municipalities (of whatever size) be able to control that through zoning? What about BYOB and corkage fees? Would I impose excise taxes? Wholesaler franchise laws, brewery/winery self-distribution, hell, the whole idea of the state-imposed three-tier system: keep it, modify it, or toss it out the window? Honestly, there are things that cause me some head-scratching. I like the idea of no license limitations and a small fee: I've already said that I think licensing limitations lead directly to nuisance bars. But if a majority of people in a town really want to put a limit on the number of licensed bars/restaurants/booze stores, shouldn't they be allowed to? It's their town! Truly, the Devil is in the details.

However...hard as it was for me to answer the question, the pro-PLCB side found it even harder. There are just too many contradictions in the current system to put it forward as the ideal situation with a straight face. Government control of retail? If it's good, why not government control of beer sales? Why not government control of by-the-drink sales? And believe me, no one wants the government controlling that. Can you imagine PLCB clerks as bartenders? The mind boggles. They certainly couldn't call it "the hospitality industry" anymore...

If you grant control, and manage to come up with a cogent argument for it, how on earth do you then task the very same agency with regulation, taxation, and regulation of booze sales with an eye towards -- literally -- controlling how much people drink? Does anyone really think an agency that's supposed to be keeping us from drinking too much, that was created "for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon," (as the Almighty Liquor Code puts it), is the agency that should also be advertising the idea of buying mom a bottle of vodka for Mother's Day?

I've said I wouldn't want to debate President For Life Wendell W. Young IV about privatization --  the man is just too glib a liar -- but it would almost be worth it to sandbag him with that question: if you could wipe away the Pennsylvania Liquor Code and build a new way of doing alcohol beverage retail from zero...would you create the PLCB and the State Store System, the beer distributors and tavern licensing, and the case law? Love to see a pro-PLCB answer to that one that wouldn't have the audience laughing their asses off.

New in-depth poll shows solid support for privatization

Today, the Commonwealth Foundation (a pro-business, conservative/libertarian Harrisburg policy group) released results from a poll they commissioned from Fairbank, Maslin, Maullin, Metz & Associates, a public opinion research group based in Santa Monica. I'd note from the beginning that FM3 does scientific polling, and is a group that mostly works with Democratic political candidates (almost exclusively, as you can see from this client list). CF president Matt Brouillette took pains to point that out, explaining that they didn't want an easy poll from a supportive group, they wanted an honest result.  I got an invite to attend a briefing on the polling data last night, and it was an interesting evening.(The highlights are presented in a slideshow here.)

In the last week of January 2013, FM3 polled 800 randomly-selected PA registered voters (using both cell and landline phones), then did an "oversampling" of more extensive interviews with 200 voters in the "outer Philadelphia market," essentially the southeast part of the state without Philadelphia County itself. Their research found some of the strongest support for privatization in that part of the state, and they wanted to look at what made up that support.

Enough about how the poll was done. Overall, 41% strongly favored ending state-run liquor stores, 19% "somewhat favored" it. 20% strongly opposed, 14% "somewhat opposed." 61% in favor, 35% opposed, 5% don't know/no answer. Note that there was a much lower "don't know" response than in the recent F&M poll that found 53% in favor. The pollster noted that in the F&M poll, the privatization question was a much simpler one (do you favor privatization of the liquor stores), and it immediately followed the question about the very unpopular privatization of the state lottery, which likely had an effect.

In the polled folks' own words, and in descending order, the strongest reasons for supporting privatization: less government regulation (which surprised me); convenience/buying beer/wine in supermarkets; 'keeping up' with other states/seen it work in other states (the pollster noted a kind of competitive spirit here, people feeling that the state was behind the other states in this aspect); better prices (note: this is fourth on the list); private enterprise is better; more choices/variety; more money for local economy; waste of tax dollars; ability to have booze shipped to home (way down the list...). Other reasons had 2% support or less.

Another interesting point: I've always complained that newspaper articles ask the people who are actually shopping in the LCB stores if they're satisfied. If they weren't, they'd be in Maryland, I always thought. Well...the poll asked how often people purchased from the State Stores. Support for privatization was strongest (77%!) among the most frequent purchasers! I suspect this is probably the people who are not close to a border; because those of us who are generally are buying across that border... The strongest opposition to privatization -- in fact, the ONLY group of people asked this question who opposed privatization -- is among people who admit that they NEVER purchase anything at the State Stores. Teetotalers and anti-alcohol types, in other words. Only 35% support privatization.

Geographic breakdown? The ONLY area opposed to privatization is Philadelphia County, 50% opposed, 46% in favor. Allegheny County: 69% in favor. "Outer Philadelphia" as explained above: 66% in favor. "The T," that part of the state left after carving out the southwest and southeast corners, made famous by James Carville in his characterization of Pennsylvania as "Philadelphia and Pittsburgh with Alabama in between": a surprising 62% in favor! Northeast PA: 59% in favor. I talked to a representative from the T area who was at the event, whose district was not one I'd expect to support privatization for social conservative reasons. "They're rednecks," he said, "redneck libertarians." We could be seriously over-estimating the opposition to this.

What else? Well, there's very little gender split: 62% of men and 60% of women support it. The older a voter is, the less-likely they are to support privatization: in all age groups but the oldest, a majority support it (75+ year olds only support it by 49%, but only 42% are opposed). Party affiliation: support is strongest among Independents -- 71% -- and Republicans -- 69% -- but even 52% of Democrats support it. Surprisingly, support was stronger among self-identified liberal Democrats, which I think shows the truth of what I've been saying: this is not a classic privatization issue; this is not really a union issue. This is about correcting a mistake.

Union members? 52% of union members support privatization, and 58% of people in union households support it. That's compared to 61% in non-union households; almost within margin of error.

But possibly the most interesting and promising takeaway from the poll is what happened when people were presented with arguments against privatization after making their initial response. The pollster said that support for a proposition usually melts a bit after arguments against it are presented; 10-15% is normal. I'll remind you: overall, the support for privatization at the initial question was 61%. After hearing only the supporters' arguments, 61% still favored it. After hearing only the opponent's arguments -- which were essentially the UFCW talking points as presented by Wendell W. Young IV --
61% still favored privatization. And after hearing both sets of arguments, support was at 62%.

The weakest opposition argument was no surprise: people reacted very negatively to the "we should modernize rather than privatize" proposition. Only 19% found that credible, and those who did not were quite firm about it.

Is privatization an important issue for people, one that will influence how they vote for governor or legislator based on how the incumbent voted? No, it is not. Under 20% felt that strongly on either side of the issue. But...that means while there is not much upside for a politician voting for privatization, there is also very little downside on voting for privatization. There is not an army of social conservative voters, or a horde of angry union voters, who will vote out of office anyone who votes for privatization.

To sum up: about 61% of Pennsylvanians are in favor of privatization, a number that has been consistent for decades. The only group in the state that is opposed are Philadelphia voters, and even there, it's a narrow divide: 50% opposed, 46% in favor.

We had a chance to ask the pollster questions, and Matt Brouillette asked a good one. "If you had been hired by [UFCW president] Wendell W. Young, what would you advise as a strategy after presenting these results to him?" And the pollster, from the firm that has worked mostly for Democratic candidates, done polling for AFSCME, for the Sierra Club, for the California School Employee Association...said, "I'd say cut a deal."

This is NOT a done deal. This proposal needs work, and especially needs to get buy-in from the beer industry. But I feel a lot better after hearing these results. The work begins.