Wednesday, October 20, 2010

Corbett Officially Announces Support for Privatization of State Store System!

Big news today on the PLCB front: the front-runner in the Pennsylvania gubernatorial* race, Tom Corbett, announced yesterday that he supports "privatization of the state-run liquor store system." Here's the statement, from his campaign website:
“It is no secret that Pennsylvania and the next governor of this commonwealth will be faced with massive economic challenges left behind by the current administration.  As governor, I will present a plan for the privatization of the state liquor store system that helps to address the state’s need for additional funds, insures ongoing revenues and minimizes the impact on current workers,” said Corbett.  “Given the current economic climate in Pennsylvania, state government can no longer be in the liquor store business. We need to move our state out of the 19thcentury and refocus state government on its core functions and services for our residents."   
Of course, presenting a plan and getting the Legislature to pass it are two different matters, but having push from the governor will help. We'll certainly do our best to fuel the debate. 

What about the Democratic candidate, "Danny Boy" Onorato? He's been against privatization in the past, and when asked about Corbett's new statement, responded through a spokesman (in the Pittsburgh Post-Gazette: that he 
"would "consider any proposal" but currently does not support the privatization of liquor stores. "The current system generates hundreds of millions of dollars of revenue to help balance the budget..." said Brian Herman. Mr. Onorato plans to make the state system more "consumer-friendly," but is looking elsewhere for savings, he said."
Actually, the current system generates under $200 million; the taxes on booze generate "hundreds of millions of dollars of revenue," and that would continue. It would almost certainly increase as we eliminated "cross-border bleed," the PLCB euphemism for "people going to NJ/MD/DE to buy booze instead of at the annoying State Store System."And I'd love to know how he "plans to make the state system more 'consumer-friendly,'" given the current level of arrogance at the agency; they told Fast Eddie to piss off, do you really think they're going to listen to some jumped-up county commissioner?

As I've said before: I wouldn't suggest that anyone vote based on this single issue. But if you're wavering on who to vote for -- and in this particular race, it's like deciding to vote for Mr. Avuncular or Rendell Lite -- here's one candidate who's taken a solid stand on an issue you probably care about.

*And isn't that a great word? Goobernatorial?


Winethropology said...


Great news! Or is it?

As a long time resident of Ohio, which "privatized" its liquor stores about 20 years ago, let me share what "privatization" has meant for this state.

Yes, the announcement from the ODLC that it was doing away with state owned liquor stores was met with great excitement. Retailers lined up to apply for licenses and customers rejoiced that they wouldn't have to deal with state employees in the gestapo-like atmosphere. I can assure you that the ensuing realities were, well, sobering.

The so-called "big change" amounted to the closure of the state liquor store system, which really means that the state no longer paid rent or salaries, instead shifting that cost burden to privately owned retailers. In return, retailers were allowed margins on liquor consignments. Woo-hoo! Oh, wait. How much are those margins? At least when I worked for the first retailer to hold a liquor license they were 6% on retail sales and 4% on wholesale (restaurants and bars) sales. No, I'm not kidding. As added bonuses, the state controls pretty much everything except what light bulbs retailers use including: prices, inventory, wholesale customer allocation, dedicated physical location within store footprints, cash-only sales, and so on. Once word got around that the margins were nowhere close to covering the costs driven by state mandates, retailers back pedalled. Now you practically have to drive to the hood to get a bottle of single malt, because it's the only place where commercial rent is low enough to make the numbers work. But since the ODLC still controls what brands come in to the state, your choices are still limited to what some bureaucrat thinks you ought to have a taste for. Single malt? Maybe.

So, "privatization" - at least in the case of Ohio - only lowers the state's cost basis without impacting their top line or, more importantly, freeing up the market. But, hey, at least no one has to buy their wine out of a vending machine here.

Keep fighting the good fight!


Lew Bryson said...

That's exactly why I'd want the State completely out of it. They set the (please God, make them reasonable) taxes, they issue licenses, they do enforcement, but otherwise get the hell out of the way. No state-as-wholesaler, no legislated margins, no brand registration. None of that has any effect on alcohol abuse, which is the only reason the State should be involved.

You got screwed. No wonder Ohioans are the only people who come to PA to buy booze.

Winethropology said...

Hey, if you can ween the state legislature off controlling the taxpayer teet, more power to you.

True privatization would, realistically, translate to a) greater diversity of product (yay!), b) lower prices (yay!), and c) easier access(yay!). Unfortunately, legislators read those as a) loss of control, b) loss of tax revenue, and c) people drinking more devil's juice. And to that they say, "boo!". Or, since we're in an election season, "Our children need proper oversight of an industry that could easily corrupt our future. Like it has in New Jersey."

(And when I'm shopping for good deals on wine/booze, I drive right through PA to get to New Jersey.)

But like I said, more power to you!

sam k said...

Yes, but unfortunately, Corbett is taking the (totally unreasonable) party line on a Marcellus shale extraction tax, which far outweighs any benefit we'd get from privatization.

As you say, don't vote on a single issue, cause once again, they're both goobers.

Lew Bryson said...

phillywinefinder: I apologize, I clicked the wrong link and accidentally deleted your comment. Early morning, pre-coffee, and I apologize. Please feel free to re-post!

phillywinefinder said...

The PA buying power does in fact bring in wine prices that are lower than anywhere in the country, including highly rated wines and not just on wines no one else wants. You can look the prices up on and compare them. This does not hold true for all wines or for ordinary everyday wines, but those wines also go on sale periodically. People need to be more aware of the great deals available because of the state monopoly, and stop thinking of privatization as some kind of magical alcohol utopia.

Anonymous said...

Thornburgh and Ridge said it too.

Good way for the GOP to pull in a couple thousand votes. They (GOP governor hopefuls) say it before each election and a bunch of sheep pull the GOP ticket based on a single issue.

If the new governor makes any real move to do it, the letters from the LCB employees warning of rampant underage drinking hit the papers and the governor backs down.

It will fail again.

One difference this year is it may solve a budget problem. But based on history my guess is it is another false campaign promise.

If Corbett eliminates the CEO job, I'd be impressed. It would save money. I've always thought it was an unneeded patronage position. If Corbett just replaces Conti with a GOP supporter then it will be same old same old for the next 4 (6?) years.

Sorry for being such a cynic. I'd love to see a big change, but I cannot see it happening.

Unknown said...

How about the state focus on the real issues before deciding to take another shot at privatizing the stores?

We have a full time and oversized legislature. Pennsylvania has a full 130 more legislatures than California (29th largest) and 50 more legislatures than Texas (11th largest) (the two biggest states in the nation)

In addition that it's a full time legislature. Members get paid between 75 and 100k depending on seniority and leadership positions. Let's not forget about the COLA increase that they will be getting this year, and the $160 a day per diem they get when working in Harrisburg.

We also have the worst property tax structure in the country. We have crumbling roads and schools.

Marcellus Shale is another issue. How about the we tax that and get some money out of it? I agree Rendell's $0.40 tax was over kill, but a lesser tax of between $0.10 to $0.15 would be doable. Otherwise we are the only state that is not taxing this resource.

All of the above problems will not be fixed by privatizing the PLCB. So far the only viable reason for getting rid of the PLCB is that we have a $5B budget deficit (privatizing will not even come close to closing that gap).

So let's just take our time and fix the REAL issues facing Pennsylvania before we start in on the PLCB.

Lew Bryson said...

Oh, yawn.

The PA legislature specializes in focusing on crap. If we're going to re-do their direction, why not throw the PLCB on the heap? I hate this "if we can't have everything done perfectly, let's not do anything" attitude. Let's fix everything that needs it; the PLCB is definitely on that list.

JJS said...

Add fuel to the fire. Good article! Check this out:

23rd and Washington Avenue PLCB warehouse is being investigated for employees apparently stealing money and booze.