Wednesday, August 7, 2013

RECORD PROFITS FOR THE PLCB!!!!

The PLCB announced the results of the 2012-13 fiscal year this week, and they were clearly happy with them. They had net income of $128.4 million (what they used to call "profit", but apparently we've trained them out of that), an increase of $24.9 million over the previous year, and "transferred" $512 million to the state's General Fund in taxes and fees, like the Johnstown Flood Emergency Tax and sales tax. The PLCB credits "robust sales and cost controls" for the increase, and a 6% increase in wine sales.

Happy control freaks immediately rejoiced, and one dropped a comment here this morning:

$128 million is hard to overlook.

Here's my response. 

What's that? The amount that was wasted on the wine kiosks? The cost overruns on the new POS system? Oh, the so-called profits for 2012! Well, hell, it's against the law to buy booze anywhere else, they ought to be making SOMETHING.

Seriously, glad you brought this up. The PLCB is doing some bizarre sack dance right now about the "record" amount of money they siphoned out of the pockets of Pennsylvanians the past year...and all it took was millions in advertising, national growth in wine and spirits sales, and a police-enforced monopoly. Wow, pretty impressive.

Except when you look at the gross sales vs. profits over the past few years. Five years ago, the PLCB's gross sales were $1.778 billion; this past year they were a record $2.171 billion, an increase of 22.9%.

Five years ago, the "profits" were $112.2 million; this past year, they were $128.4 million. That's an increase of 14.4%.

Profits not keeping up with sales? Well, their costs must have gone up, right? Actually, they closed about 30 stores in that time; I have to assume stores that were losing money (why close them otherwise?). So what the hell, PLCB? Where'd all the money go? Fatter salaries for bureaucrats? Courtesy contracts? De luxe wine tasting rooms? Or just failed programs, like the wine kiosks?

I know what some of your "cost controls" were that put profits up 24% this past year: not filling positions. Board member Robert Marcus admitted that earlier this year in legislative hearings, saying roughly 250 positions, many of which he described as essential, remain unfilled. Marcus tried to blame the Governor, saying he would not permit the jobs to be filled, but that's malarkey coming from an agency that has its own source of revenue and is all too independent. Corbett spokesman Kevin Harley noted (in this story in the Inquirer) that the LCB is an independent agency that controls its own finances and hiring, and said he was not aware of any open positions that the administration had refused to fill.

Meanwhile, up in New Hampshire, where they KNOW how to run a State Store System, they made $145.6 million in profits on less than a third of the gross sales the PLCB did. Oh, and they did it while charging a bit less than the PLCB. Kind of looks like the PLCB is -- as I've been saying -- grossly mismanaged and inefficient. Are these the people we want to trust to come up with "modernization" ideas?

I have one modernization idea: PRIVATIZE.

43 comments:

  1. It sounds like your argueing in favor of the New Hampshire state operated system but yet you say privatization is the answer.
    Governor Corbett may need to look at NH as a model where they know how to operate rather than governing with a sledgehammer.

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  2. Privatization IS the answer, I'm firmly convinced of that. New Hampshire's system is a lot better than the PLCB, and I'd take it over the PLCB in a heartbeat, but I'd rather have privatization than either. I actually believe privatization is more likely to happen in PA than going to the New Hampshire model.

    Corbett needs to learn how to work with the Legislature. He's failing on that...but the Legislature is almost non-functional anyway. Tough row to hoe.

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  3. Oh boy. I guess your still playing make believe that the Plcb owned the wine kiosks. They were, and still are as far as I know, owned by the manufacturer. Inventory system costs including overruns will pay for it self in just a couple years through the new bailment warehousing system it makes possible. All state hiring is through approval of the Governors Office of Administration. You should well know that people will lie to push this issue.

    But the most outrageously disingenuous statements are about how New Hampshire outperforms Pa. In 2011-12, the last period I can find a complete breakdown for, NH had sales of 564.7 million dollars, made a profit of 126.7 million and collected 13 million in taxes for a total transfer of 139.6 million. Notice something odd? Only 13 million in taxes? Not a typo. NH has very low taxes and a very high markup. But you already knew that. If Pa restructured it's sales and charged a 2% tax and 46% markup...well you can see where this is going. Bottom line, NH returns a little over 25% on sales, Pa a little less than 30%. I'm sure it wasn't intended but thank you for pointing out the efficiency of state control.

    "Figures lie and liars figure"

    If that's true give yourself a pat on the back and celebrate by knocking down a few extra. You performed like a champ today!

    cc: all pasenate.gov
    bcc: all pahouse.gov

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  4. Oh, where to begin? How about with your pathetic lack of understanding on how this works: "cc:" doesn't work on blog comments; this isn't email. If, however, you ARE sending an email to the entire PA Legislature directing them here, well, all I can say is thank you. They need to see something other than UFCW crap occasionally.

    So...I never said the PLCB owned the wine kiosks. I said they wasted money on the hugely embarrassing failure, and they did: millions. The bailment system you fellas keep peeing yourselves over mainly serves to eliminate the yearly loan you had to float from the State; great business model, welcome to the 20th century.

    And all state hiring is through the approval of the GOA? Right, so if you can show me actual examples of hires that were specifically denied by that office, you'll have something. But approval is rubber-stamp; the PLCB hires through Civil Service.

    Are you really implying that PLCB jobs were not filled solely because the GOA denied them for political reasons, and then the governor's spokesman lied about that? Hey, if you actually have something there, and can back it up, you should take it to the newspapers, not this blog. No? What a surprise.

    You need newer figures on New Hampshire? Here you go: http://www.unionleader.com/article/20130722/NEWS02/130729767/0/news03

    What? Not a "complete breakdown"? Not an official report? You're just ducking the issue. The PLCB's official report isn't out yet either. So let's go apples to apples and just compare the figures that are currently out there, not last year's.

    Of course there are small taxes in NH, everyone in New England knows NH is a no-tax state. Wow, what a revelation.

    Your "bottom line" is pretty disingenuous too, because you're avoiding the issue, which is that New Hampshire's State Stores profit is a much higher return on gross than PA's, indicating the huge amount of overhead and gross mismanagement in PA. If it weren't for the huge taxes PA charges, you guys would be screwed...kind of like the way we, the citizens, are by those huge taxes.

    If you think you win this one, you're deluded; more than usual.

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  5. Oh, by the way, forgot something. It doesn't really matter who said no to filling those positions. It's still money that was saved. Maybe you should close more stores, lose more hires through attrition; maybe by the time you get down to 300 stores you can make profits like New Hampshire.

    Because, you know...you'll never be as good as the State Stores in New Hampshire. They beat you like a gong.

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  6. Just to be fair I checked out your link. New Hampshire transfer went down to less than 25%. I don't get your point. Meanwhile the total transfer in Pa, including the transfer to the PSP, local governments, education, and the additional 1% in sales tax to Philadelphia and Allegheny counties went up to about 30%. Would have gone over but the Governor only requested 80 million out of the 128 million available. You can keep playing kid games concerning what is profit and what is tax, but the grown-ups know that it's all going back to the taxpayers so it doesn't matter. So do the fiscally aware elected officials.

    Thanks too for pointing out that the money saved through bailment went to pay off the revolving loan. Next year it will all be profit. I guess that means another record year is coming up. Isn't modernization grand!

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  7. A few questions:
    How will the costs of services provided by LCB revenue be made up? Who will bear the brunt?

    What will happen to local economies when liquor store employees are working for far less money with less benefits?

    What happens when money that now fills state coffers disappears completely into someone's bank account?

    What is the actual intent of this? To improve service? Or is it just to get smaller government for the sake of doing so?

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  8. The interest-free "loan" is not going to be "profit" next year. You're going to get a loan from the suppliers in the form of goods instead; they'll be using your warehouse instead of their own. This is just shoving money around; there won't be any more created.

    My point. Is simple. New Hampshire's system makes MUCH more profit off gross sales than PA does. It does this because it is a more efficient system, it is a better-run system, it is a more modern system, and it has a more pleasant stores to shop in. Hands down. New Hampshire doesn't have a border bleed problem, it actively attracts shoppers from other states.

    And it does all this while contributing $145.6 million to NH (which is 26% of the PLCB's total transfers to PA, according to the newspaper reports, not your math, thank you) off $603.5 million in gross sales (which is 28% of PA's gross sales).

    Now...as you've pointed out, that's a smaller percentage. However, as I'll point out, New Hampshire does that with practically zero tax, AND does it while bringing IN sales from outside the state, effectively easing the tax burden on New Hampshire residents. This is in sharp contrast to the PLCB, which sucks so bad that it regularly drives hundreds of thousands of citizens out of the state to buy booze, losing more than enough taxes and "profit" to make up the difference with New Hampshire. On top of that, the people of New Hampshire actually like their State Stores (and their unionized employees) so much that no one seriously brings up privatization.

    Face it. New Hampshire is better. They do a better job. And all you can think of for "modernization" is longer hours (which you could do anyway, NOW), more stores (which you could do anyway, NOW...only that would increase costs...), and "flexible" pricing (which essentially means raising prices in the metro areas, which will increase the effective "rural discount" and drive EVEN MORE sales over the border).

    Great plan!

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  9. How will the costs of services provided by LCB revenue be made up? Who will bear the brunt?

    Considering the services we're talking about are less than 1/10 of 1% of the total state budget...I'm all in favor of making up those costs by scrapping two of the four printing offices run by the Legislature. You could easily pay for it out of their "surplus" funds for operations. While we're at it, why not shrink the Legislature itself? Next!

    What will happen to local economies when liquor store employees are working for far less money with less benefits?

    Probably not much. Privatization in Washington State has created many more jobs than were lost, so the overall income is likely the same. Plus the convenience will save consumers money. Next!

    What happens when money that now fills state coffers disappears completely into someone's bank account?

    Rhetorical noise. The PLCB's contribution drips into state coffers, it doesn't "fill" them. And it won't disappear completely: the taxes will still flow in, and the profits will be taxed, and the wages will be taxed, and the property will be taxed. Next!

    What is the actual intent of this? To improve service? Or is it just to get smaller government for the sake of doing so?

    I can only speak for myself, of course. For me, it has nothing to do with getting smaller government, though if that argument convinces some people to support privatization, that's fine by me. For me, it's about improved service, improved selection, improved convenience. It's about not having to go out of state for the service and selection I've grown accustomed to there and cannot find here. It's about not having a small committee in Harrisburg decide what my local liquor store is going to stock. It's about having a choice. If you think it's about ideology, you're dead wrong.

    What else you got?

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  10. If you're fine with people working for less, straining the state budget even more, sending revenue away from our local economies, being fine with McDonalds starvation wages spreading through our communities, having to expand our taxpayer social services the working poor will now need then I'm sorry I've lost respect for your type.
    The previous poster posed meaningful questions that effect working citizens and the communities we live in and you meet that with sarcasm, disrespect and rhetorical noise to borrow one of your phrases.
    Lew, your arguments hold no weight are so embarasingly self-centric.

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  11. What I'm "fine" with is people working for the kinds of wages and benefits that are normal for retail work, not an artificially inflated island of higher wages for protected workers that does nothing to better the lot of those retail workers -- the McDonald's workers you scorn so callously -- that's what I'm fine with.

    As for "sending revenue away," the State Stores do that every day by being so grossly mismanaged and out of touch that people choose to drive out of the state to buy the booze they want at a fair price, breaking the law as they do so. That's sending revenue away; if the State Stores didn't suck so fiercely, that money would stay in state.

    I answered the previous posters questions with about as much respect as they were asked with and deserved; I gave honest answers.

    And...I strongly doubt you had any respect for me before. If you did, you'd use your real name; you'd have the guts to do that. I do, every time I speak out on this. What's the matter, your positions too self-centered? Do they embarrass you?

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  12. My favorite part of the Wine kiosk fiasco is the PLCB begging "Swell" Mart to put them in their stores and "Swell" Mart told them to take a hike.

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  13. Once again, I have some Anonymous comments that either repeat themselves, adding nothing to the conversation, or are smear attacks on me, personally. I don't pass those; said so many times. Stick to the topic, say something new, and I'll post it.

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  14. This is fascinating...utterly fascinating...

    How can anyone who considers themselves a USAmerican, justify the government-controlled sale of any (legal) product, for whatever reason?!

    ....even if gazillions of dollars and jobs would be lost, or gazillions of gazillions of drunks will be created (and I am quite sure there won't be-incidentally, I see more drunks around PA than I did in CA - and we could buy pretty much any alcoholic-beverage at the local Ralph's!), is that reason to control the sale of a product - any product? Maybe PA should add butter and cheese to the list!

    "....we are stupid...and we'll die...."
    Priss
    2019





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  15. ....Pris.....sorry about that....

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  16. For someone who drops a chronologically accurate BR reference...I'll forgive an extra s.

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  17. Not only does the govt control the price of milk through the federal milk marketing order the govt actually gives millions of dollars in taxpayer subsidies to the dairy industry, anonymous. It's infact a180 from the govt control your opposed to by losing millions of dollars!! I don't see how you can be in favor of govt contol and give aways to certain industries but be opposed to govt working for us to gain revenue for state projects.
    After all you and I are the government.
    And how does a USAmerican not care about losing gazillions of dollars and jobs? I'm afraid to even start this conversation. Unfathomable, you must really be on the fringe. Scary.

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  18. Couldn't wait to let that one post. Always love it when a raver cuts loose. Milk price controls...are the equivalent of the PLCB's actual retail monopoly on booze. So weird, on a few levels. Milk...is sold at grocery stores. Wine, in Pennsylvania, is not. Get the difference.
    Rave on, Anonymous!

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  19. Both are forms of govt manipulation of markets. One wastes millions of taxpayers dollars the other creates millions of dollars of state revenue. Its not a difficult concept Anonymous.
    And you still haven't answered my question. How does a USAmerican not care about losing gazillions of dollars and jobs as you've said?

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  20. The question everyone must ask themselves is if their freedom of choice worth more than the $10-12 each the state stores collect for the general fund. The answer should be no, not if it was 100 or 1000 times that amount otherwise you are just a slave to the system of inefficient government known as socialism.

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  21. You know, it's very tempting to throw the switch on Blogger that disallows "Anonymous" posting.

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  22. To Anonymous asking about milk programs.

    The state store system does not create millions of anything. Taxation is not money creation in any way shape or form it takes money out of the consumers hands. A subsidy is used to provide a good or service at reduced cost to benefit the citizenry.

    Clearly the state stores do not provide the good or service at reduced cost. Their labor costs are above the norm for the industry, the administration costs are above the norm for an entity of that size and the $500 million in unfunded retirement the PLCB owes puts them in the same financial area as Chrysler and Detroit before they went bankrupt.

    The 3/10ths of 1 percent the PLCB contributes to the state budget is not enough nor will it ever be enough to replace what a government controlled monopoly takes away.

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  23. This has gotten way too ideological for me. I think the fringe types that do not care about revenue and those that want to play games about whether said revenue came from taxation or profit (does not matter, the revenue exists) or whether the money was created or collected (ditto) are just running around in circles. The thread starts with the blogger praising New Hampshire and ends with a poster arguing that its all tax anyway. Both are for privatization but contradict each other. Leads me think the first anon was spot on. That and the fact that New Hampshire has a mark-up more than 50 percent higher than Pa.

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  24. Yeah, well, it's not all that complicated (unless you're used to getting orders on what you're allowed to think from Wendell W. "$287,386 and a Car" Young IV).

    Here it is, real simple.

    1. "Record profits" aren't that impressive when you have a legal monopoly and spirits and wine are both growing nationally...even though your overhead is flabby as hell.

    2. New Hampshire's state stores are better-run than PA's, and much more popular, and bring sales INTO their state instead of driving them away. They're pretty much everything the PLCB isn't.

    3. You're right on one thing: taxes vs. "profit"/markup is an unimportant distinction in terms of the revenue. So, going with your terms, regardless of what New Hampshire's markup is, their system brings in almost as much money (as a ratio of gross sales) as the PLCB, with the not insignificant bonus that their citizens are so satisfied with the system that they don't even think about privatizing it, and people flood in from out of state to buy from them (and their prices beat the PLCB).

    4. None of us are saying that we want a New Hampshire-style system. We're just pointing out that you can't even do it right...which is another reason to privatize.

    Nothing fringe or ideological about it, Control Freak. Pretty darned common sense stuff, when you get down to it.

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  25. We understand your beef with PLCB, why would you rather have privatization than the New Hampshire model?

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  26. Because the New Hampshire stores, while they're leagues beyond the PA State Stores, are still nothing compared to a Total Wine, or Binny's, or...well, you know. If I'm going to get it, I'd rather get all of it.

    Besides, the PLCB will never be able to field stores like the one in New Hampshire. Not really an option.

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  27. "We understand your beef with PLCB..."

    Ahhh, who is "we"?

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  28. Albert, anyone who follows these blogs should be able to understand the authors beef. So collectivly yes we all understand the beef.

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  29. I didn't realize you had the authority to speak for all of the opposition.

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  30. First anonymous here. Just want to thank Mr Brooks for backing me up on the first post. And I believe the anonymous collective well understands the bloggers beef. Follow him on twitter. Always playing footsies with the Commonwealth Foundation between drinks. this is all about the money. Transferring public money to the pockets of the private booze business that pays his salary.

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  31. Yeah. I agree with the Commonwealth Foundation because they too are in favor of privatization. I do agree with them on that point. You'll see me agreeing with Jon Geeting of the progressive blog Keystone Politics for the same reason; he's smart enough to realize that privatizing the State Stores is a separate issue from privatization in general, and is actually a progressive idea (http://www.keystonepolitics.com/2013/05/putting-the-liberal-in-alcohol-liberalization/ for example).

    And the Control Freak Collective sees ALL of this as being about money, because the Control Freak Collective is really the employees of the PLCB, the union hierarchy who collect their dues, and the Legislators who get donations from the Control Freaks. They can't understand why anyone would do anything for any reason other than money.

    As I've said, again and again, my position is not popular with the magazines I write for. I've never made any money writing in favor of privatization; this blog makes no money. I push for privatization just because I want the same freedoms that I see in states like Massachusetts, Delaware, and California: private liquor stores with great customer service, a great selection of wine, liquor, AND beer, and reasonable prices (and taxes). We get none of that here in PA. It ain't about money. You're just projecting.

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  32. To the union guy who is just repeating some facts from the knuckle head that represents the voters in Bucks county,go take a ride some day and make the rounds of some of the Bars and nightclubs in the Phila and five county area after their weekly trip to Delaware to buy their spirits.
    Get out from behind the desk,and follow one of the many cargo vans that leave Philadelphia every day and head to Delaware to buy beer and supply the many Beer distributors and shit hole Delis in the rat infested places they sell their malt beverages to,its an under ground economy unlike anything you can think of.
    Its really the only way they can compete after paying the kind of taxes put on beer and spirits to pay for your no brain jobs and managed health care system not to mention the pensions Pennsylvania will not be able to honor.Just keep raising your dues and pretending you care about the working man,you guys make me sick.

    Cheers
    Pumpkin Head

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  33. Pure undiluted P.Head.

    One thing, though: the beer tax in PA is diddley. One of the lowest in the world. Think about that.

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  34. Fourth anonymous here.
    Great customer service is part of your reasoning? Really? Ok how great do you want to be treated all mighty? Like when your so happy go lucky making your purchases at the local boxmart or a private beer distributor? Come on.
    Also you only get freedom of choice from what your private liquor conglomerate will give you. It's not your freedom it's the theirs (along with the citizenries money now funneling into their private bank accounts), what selection they give you is completely up to them. And it could be worse. It could be a similar selection we see at some low population density beer distributors.
    And price? You must not care what your dollar goes to support. The only discount you may see at the register will be coming from the disgruntaled workers paychecks, who will more be doing the same job for less pay.
    Oh things will be so peachy!

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  35. There you have it, folks, the Control Freak's dystopia. Pay no attention to what actually happens at private liquor stores across the country, across the world. This is private retail according to Das Kapital, a hell of exploitation! A spectre is haunting Harrisburg!

    Get serious. "Also you only get freedom of choice from what your private liquor conglomerate will give you." And that's a lot more than I get from my state liquor monopoly! (Or did you forget this? http://plcbusersgroup.org/2011/08/selection-report-2011-08-06.html Sure, it's two years ago, but trust me; the song remains the same.)

    Sorry, I don't have to speculate. I've been to the other side, and the grass really is greener over there. No need to guess, chummy. No more wine kiosks, no more money wasted on mismanagement and "courtesy training."

    See ya in September.

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  36. Wine Kiosks! Courtesy training! Awk! Do I get my cracker now Nathan, Matt?

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  37. Please. Those two disasters are well worth reminding people of. I am not beholden to anyone; this is an independent blog, I am an independent citizen. It's hilarious that a Control Freak would accuse anyone else of repeating arguments.

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  38. As far as that goes, let's remind everyone of another disaster: Joe Conti. Oh, he served us well!

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  39. I know a way to eliminate the PLCB, stop drinking, probably not possible for you.

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  40. How original: you accused me of being an alcoholic because you disagree with my position on wine retail. No one's ever thought of that before. Gosh, you're a real witty one!

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  41. As Mr.Bill would say, Oh No! Franklin and Marshall has done another poll and next to nobody cares about liquor privatization! We need to trash this lib school. Any ideas?

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  42. You don't find it amazing that 5% of Pennsylvanians think the State Stores suck so badly that privatizing them is a top priority for the Legislature, ahead of education and transportation? Because I do. I don't think it's a top priority, and it never will be...but as Washington State is proving, if you just do it, quick and simple, things are, on balance, just fine. If the Legislature would quit diddling around with studies and hearings about a topic we all know about, and DO THIS THING, it wouldn't be such a big deal.

    Meanwhile, where's the new poll asking if people think the State Stores should be privatized? Hmmm? That's what I want from G. Terry Madonna and Company.

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