Clarification: I don't hate the people at the PLCB

I've said this before, but some comments on the recent post made me realize I should say it again:

This blog is not a personal vendetta against the employees of the PLCB.

With a few exceptions, I don't have any personal beefs with the people at the PLCB. I've had a couple of bad experiences that were directly about one person, and I've talked to some brewers and bar owners with similar stories, but most of the PLCB employees I've dealt with, at the State Stores and in Harrisburg, have been quite helpful. Well...no, that's not exactly right. Most of the State Store employees I've talked to in the store, and asked questions, didn't know squat about the products -- or were reticent about relating what they did know -- though they were perfectly competent and friendly at the counter.

Asking questions about anything other than "How much is this?" and "How do I make a special order?" and "Do you take American Express?" is generally hopeless, I'm afraid, at least in my experience. Which brings up...are State Store System employees actually forbidden to make any kind of recommendation about wines, and how far-reaching is that regulation? I haven't found anything about that in The Almighty Liquor Code. Anyone?

Reason #13: Who Needs 'Em?

Thank you, Michael Hudson.

Who is Michael Hudson, of Pottstown, PA, and why am I indebted to him? He's a Philadelphia Inquirer reader I've never met, but he wrote the following letter to the Inky's editor that posted today, and goaded me into reviving this sadly moribund blog:

Gov. Rendell's decision to push the state's budget shortfall both down and up the food chain at the same time - i.e., on to local taxpayers and the federal government - reflects the cowardice and poor judgment that are the hallmarks of his administration. Someone is going to hurt the economy by raising taxes, just not good old Ed. The right answer for the state is to cut costs (employees) and sell assets (state liquor system) to balance the budget.

Well, hello Michael! You're my new best friend. Because you've put your finger on the dirty secret the PLCB and the State have been hiding right out in the open for decades.


Reason #13:

We don't need the State Store System to make a lot of money off booze


Let's take a look at just how much that works.

The first screech about privatizing the State Store System is always about how much money -- excuse me, how much revenue it brings to the state. We won't be able to replace that revenue flow, the argument goes, without more taxes, and contrary to popular notion, the Legislature doesn't really like raising taxes: it gets them voted out of office. Interrupts their revenue flow, you know?

Let's take a look at that flow. Here's (actually, they've updated it; that now points to the next year, but it still has these numbers; look under 52 weeks ended June 26, 07) the latest state Auditor General audit of the PLCB and their State Store System operations. There's some interesting stuff here for future posts, but for now, riffle back to page 12 (jump to page 18 in the PDF controls), and feast your eyes on some numbers:

• Right up near the top, the total taxes collected: $336,980,000. That is a buttload of bucks, incoming to the state's operating funds. Yummy revenue stream...
• Jump down a bit, to the total operating expenses: $335,427,000. That, too, is a buttload of bucks, outgoing from the state's operating funds (and please note: it appears that's just the operating costs for The State Store System, not the PLCB's lawyers and administrative staff and enforcement agents and board and CEO.)
• "Operating profit from state stores": $106,352,000. Not bad, but not as big a nut as the taxes, is it?

Pretty much every number south of that on the page wouldn't change if we shut down the SSS tomorrow, except the "Interest income," and the state can invest any money it has for interest, it doesn't need the PLCB to do it (not to mention that the PLCB gets an annual loan from the state's general fund of about $80 million for operating expenses).

There would still be income from license fees and fines, we'd still have to pay for licensing and inspections costs and enforcement costs (the PLCB shoots about $20 million to the PA State Police for that -- out of the total income, that's considered a transfer, not an expense). So the important numbers:

• $336,980,000 coming in from tax collection.
• $335,427,000 in operating expenses.
• $106,352,000 in "operating profit."

Now...I'm not an accountant, I'm a very slapdash "businessman." But it sure as hell looks to me like this is a no-brainer...for shutting down the State Store System tomorrow. If we could turn a key right now that transferred control of every State Store over to private businesses tomorrow -- completely aside from the one-time windfall that those businesses would line up to pay for that privilege, and what we would get for selling off over $185 million in inventory, and the machinery, land, and other assets -- we would still get about $336 million in taxes without any cost -- or liability or risk -- to the State. Because the onus and cost of collecting those taxes would all be on the private businesses, as it already is in states where they run things normally.

That's $336 million free and clear. We don't have to pay anyone to collect it and send it to Harrisburg. We just pass a law that says they have to, put enforcement and inspection clauses in it and hand it over to Department of Revenue to handle with their existing sales tax collection mechanism (with an added widget for collecting the damnable Johnstown Flood Emergency Tax), and whoosh, you got revenue flow.

We have this big state-owned retail store system for collecting taxes from sales we don't need to be making, and all it's netting us is $106 million? A system that is unresponsive to the citizens of the state, a monopoly system that most people who buy booze in the state despise?

The PLCB should be abolished because it costs us money. The operating costs are so high that it's probably one of the major reasons we have so few State Stores: if they opened a reasonable number of stores, the state would be bankrupt. Yet somehow, liquor stores in other states manage to run at a profit, and deliver a constant flow of taxes to the states. If we went all private and sold more licenses, my God, how the money would roll in. Just think of the money we'd make from people no longer crossing state lines to buy booze in states with rational booze retail and real selection! Think of the boon to Pennsylvania's restaurants! Think of the jobs created!

And please, don't lean on the weak reed of "more stores would mean more alcohol abuse!" Prove it, convincingly. There is no definite link between the number, the density of booze stores and the amount of alcohol-related problems. Pennsylvania does not rank particularly low in alcohol problems among the other states; we're about average.

We have private, licensed beer distributors, hobbled though they are by the case law. They work. Selling wine and spirits is so much different?

North Carolina Shows Why State Stores are Actually a Great Idea

It's tempting to post this with no comment, but... I can't. So read the comment after the post (and thanks to the amazing Mark Brown for the clip).

North Carolina: State shuts down Pembroke ABC store
Source: Fay Observer
The state Alcoholic Beverage Control Commission has shut down the Pembroke ABC store because of misconduct and gross negligence, according to a state official.
The state's Division of Alcohol Law Enforcement (ALE, is that just too funny, or what?) took possession of the store and its contents Monday. The store, at 203 N. Vance St., will remain closed until the commission can determine whether the operation of the store is justified, said Michael Herring, the commission's administrator.
The ALE has been investigating the disappearance of public funds at the store. A recent audit showed more than $20,000 worth of inventory was missing during fiscal 2007-08, Herring said. There have been problems in previous years with missing inventory and money from the same location.
"Preliminary findings reveal a clear lack of fiscal controls to safeguard public monies and unacceptable management practices for conducting public business in accordance with state ABC laws,'' Herring said in a letter to Pembroke ABC board Chairman James Maynor. The commission notified the board of its decision Monday.
The state ordered that the store be closed immediately because of "gross negligence and misconduct,'' the letter stated.
The ALE investigation is continuing and charges could be filed, Herring said

See, the reason that this incident proves that State Stores are such a great idea is that when your State Store employees start screwing you blind (even though they're under your control and keeping that dangerous booze away from those uncontrollable private business types), you can shut them down "immediately," without worrying about any kind of consequences. Cuz, you know, you control it. With a capital K.

If You've Got a Problem...

A point for the PLCB: they're trying to be responsive. Tucked away in their website is this Customer Satisfaction Form. They ask if you found everything you wanted (and if not, what "specific items" were not there; so don't bother putting in something like "a good selection of premium bourbons"), if you found the store hours satisfactory, and how you found the store's appearance, quality of service, and the convenience of the store's location. There's also an open field for suggestions on improving service.

At least they're trying. Though again, as I pointed out, why bother? You've got us over a barrel, we'd have to buy booze at the State Store System anyway. Oh, wait...if things really suck, we might go over the border more. Wonder what percentage of Pennsylvanians live within 15 miles of the border? Wonder how many liquor stores are on the other side of that border?

PLCB's Joe Conti: MIA?

Check out this "happy talk" story in MarketWatch about PLCB Chairman PJ Stapleton being confirmed to his 4th term as a PLCB board member (by a vote of 47-0 in the Senate). A couple pertinent quotes:

"As I continue to work with fellow board members Tom Goldsmith and Bob Marcus, as well as the more than 4,000 valued employees of the PLCB team, I will remain mindful of the confidence and goodwill the Governor and the Senate have shown me.

Hey, that's funny...no mention of the contributions of PLCB CEO Joe Conti? Or even a mention of his name?

"The next four years will be exciting for the PLCB. We are planning many changes to our statewide network of 620 Wine & Spirits stores. These will be highlighted by vast improvements in the look and feel of the stores, and a renewed commitment to customer service and employee education.

If I might be permitted...WTF? You don't need to improve the stores: you've got a frickin' monopoly, Pennsylvanians have to shop there. And you don't need to educate your employees...they're not even allowed to recommend specific wines! At least, that's the excuse we've always been given for them knowing next to nothing. Maybe that's all lies. On the other hand, if you're educating them on how to handle customers who ask for things they've never heard of, without being a jerk about it, more power to ya.

"We will also maintain our focus on vital regulatory functions, ensuring that the beverage alcohol industry adheres to the laws of the commonwealth; and on
alcohol education programs, helping to reduce the serious problems of underage and high-risk drinking. Finally, we will continue to look for ways to operate more efficiently and economically, to generate revenue that will benefit all citizens of the commonwealth."

Well, God forbid you should focus on regulatory functions that benefit the ability of the citizens of the Commonwealth to get a good drink at a fair price. And yo, I think you know what you can do to operate more efficiently and economically: get the State out of the booze business.

I cannot understand why we put up with this one day longer. This is a bureaucracy that simply should not even exist.

And again: it's about the money

Even in other states, even in other counties, "control" of booze sales is not really about safety, or consumption, or morals. If you believe that, you've bought into a lie. It's about the money. Read this story from the DelMarVa Times about why the Wicomico County Council decided to keep their County Liquor Control Board and county-owned liquor stores. I'll bold the important parts.

Liquor vote fails
Privatization booted back to discussion
By Greg Latshaw -- August 20th

Advocates of liquor stores run by the government in Wicomico County won a victory Tuesday when a vote to get state legislators involved failed by a wide margin. County Council members voted 6-1 against a resolution that asked the General Assembly for the power to hold a controversial county referendum on privatizing area liquor stores.

Permission is needed because state law created the Wicomico County Liquor Control Board under Article 2B. Despite bearing the county's name, the liquor board is considered autonomous from the county, other than the law that requires it funnel annual profits to the county. The other three government-run liquor stores in Maryland include Montgomery, Somerset and Worcester counties.

Privatizing retail and wholesale liquor stores is an issue that has polarized council members who say they are split on the value of eliminating an agency that contributed $400,000 last year and an average of $288,000 during the last 13 years.

On Aug. 5, a task force made up of business members, public officials and service organizations issued a report that stated while oversight shortcomings exist with the liquor board, there is no guaranteed way to match its revenues.

Tuesday's vote will likely send the debate back into months of work sessions. The earliest any referendum could take place, if given state approval, would be November 2010, Council President John Cannon said following the meeting.

"What substitute there will be for the revenue stream is our greatest concern," said Cannon, who is opposed, in principle, with government competing with private enterprise. "(The) council recognizes that we have more time and will take advantage of it."

Wicomico County Liquor Control Board Chairman Stewart Haemel praised the vote, saying the council made a wise decision in not tampering with a system that has a $1 million net impact. He pointed to the six-figure contribution to the county coffers, as well as the agency's payroll for its 30 employees of about $600,000. (That's a $400,000 "contribution", and a $600,000 payroll. "Payroll," as in 30 jobs that the county is paying for to collect booze taxes, when they could be paid for by private companies...that would also collect booze taxes. Am I missing something?)

"This might come up again," Haemel said. "But it seems to me that there are many people who want the system to stay how it is."

Council Vice President Stevie Prettyman, a vocal critic of the liquor board and the lone vote for Tuesday's resolution, shrugged her shoulders when asked after the meeting about the vote.

"It boggles my mind," she said.

Indeed it does, Stevie.

Once Again: Sauce for the PLCB Goose Ain't Sauce For the Beer Gander

I've told you how the PLCB interprets The Almighty Liquor Code to their own benefit. Well, they're at it again. The upcoming Pittsburgh Whiskey and Fine Spirits Festival (Nov. 14, 6-9, a benefit for the Nat'l MS Society, details here) is sponsored by the PLCB. Now, when there's a licensed wine festival in Pennsylvania, PA wineries can sell bottles of their wines. At this festival in Pittsburgh, the PLCB is going to have an "On-Site Store," from which you can "Take home a bottle of your new favorite spirit, many not available anywhere else in Pennsylvania".

I'll remind you that you are absolutely not allowed to purchase beer at a beer festival; not from Pennsylvania breweries, not from any brewery, wholesaler, or importer. Not allowed. Does this make sense? Why do you ask? It's a State-mandated and supported monopoly, silly, it doesn't have to make sense.

Abolish the PLCB. Re-write the Code. Treat us like adults. Treat us fairly. Is that so much to ask?