Friday, February 27, 2015

Citizens Urge PLCB to Quit Liquor Business To Improve Customer Convenience and Generate Revenue

Pennsylvania, Feb. 28, 2015 /PRNewswire/ -- Commonwealth Citizens - the people forced to shop at State Stores,  issued the following statement today after the House vote passing House Bill 466:

"We look forward to working with Gov. Wolf and the Senate to pass a common-sense free market system that we have been telling our Legislators about for over four decades. The free market will allow entrepreneurs to grow and expand their businesses, hiring more people, paying taxes, and being part of their communities all over Pennsylvania."

The Citizens added, "The PLCB is a pain in the asset that continues to set records in total sales by limiting choice, preventing us from going anywhere else, and withholding a use tax while calling it "profits." Last year alone, the agency took more than $565 million in "profits," transfers and taxes from the Citizens and gave almost nothing in return to this Commonwealth. It makes perfect sense to sell it off so that people have a choice in what to buy, not limited to what somebody in Harrisburg thinks they should buy. This will put triple the number of people to work in the industry."

The Citizens urged Senate lawmakers to support House Bill 466, and reject  State Rep. Gene DiGirolamo's outdated proposal to modernize the Pennsylvania Liquor Control Board (PLCB), saying that it will never improve customer convenience like the free market can.

HB 466 would remove antiquated caps like the paltry 600 state stores, increasing store totals to 1,800. Allow Sunday hours of operations to any who wanted to buy the license; allow 825 grocery stores to to open their own wine stores inside or adjacent to themselves, and allow family-owned beer distributors to become not only one stop shops but to also arrange direct shipment of wine to consumer's homes along with delivery services of their entire order!

These changes, among others, would generate untold consumer satisfaction, bring the state into the 21st century, provide more tax revenue through greater sales and less border bleed, and would grow annually as people got used to the freedoms denied them for so long.

- The Citizens represent most of the 12 million people in the Commonwealth who work in the southeast, northeast and central, western and all parts of  Pennsylvania in supermarkets, drug stores, food processing plants, government services, manufacturing facilities, nursing homes, professional offices, and all businesses, except Pennsylvania's Wine and Spirits Stores.

Thursday, February 26, 2015

The UFCW 1776 thinks that PLCB profit is less than minimal - We knew it all along.

One of the more outrageous claims by the UFCW in the past week has been that border bleed is "minimal". From their "fact sheet" on Speaker Turzai's recent PCN interview:

"Fact:Turzai cites an unknown statistic, but in reality border bleed is minimal and there is reverse border bleed into Pennsylvania. (See No. 6 in outline)" (The outline mentioned is not provided or listed by the UFCW.)

How they know this isn't said, but let's look at the official PLCB report of 2011 done by the Neiman Group. The PLCB doesn't list this study on their website, which is why the link points elsewhere but they bought and paid for it nonetheless.

This report only used the Philadelphia area counties of  Berks, Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton, and Philadelphia, so I'll only be using sales from those counties myself.  The following is a list of how much PLCB sales were in each of the above counties for 2013, the latest available taken from the 2013-2014 Year In Review, page 13.

Bucks $135,700,317.31
Berks $52,109,662.18
Chester $120,388,495.05
Delaware $77,696,292.72
Lehigh $70,209,394.60
Montgomery $200,801,436.82
Northamton $41,606,625.89
Philadelphia $228,424,798.19

Total $926,937,022.76

That $927 million represents 42.6% of all PLCB sales. Using the Neiman report that says 5% of people only shop out of state (page 12) that would mean $46.3 million in lost sales by itself.  However, the Neiman report also says that 40% also shop in and out of state. Since people who buy out of state spend more (page 16) it would be safe to think that the total sales amount of those that shop in both would be greater out of state. I'm going to use half, just to err on the conservative side. That would meant that people spend at least 20% of total sales (half of the 40% who shop in and out of state) out of state. That number would be $185.4 million and that's almost certainly low.

So the total minimal border bleed is $46.3 million plus $185.4 million, or $231.7 million: about 11% of the entire state store sales. Or is it? As the Neiman report says, people spend more out of state to begin with, and then you have to look at when the report was made: 2011. Things weren't so good in 2011. Gas was higher, the economy was worse, people traveled less, all things mentioned in the report as potential reasons why people might be spending more in state in 2011. That isn't as true now and the border bleed number may be in the $300 million range -- which according to the UFCW is "minimal."

So if $300 million, or even $231 million, is "minimal," then the $124 million in non-tax contribution by the PLCB is less than "minimal," and shouldn't even be mentioned, based on that logic. There are very few things that the UFCW and I agree on, but it seems that this logical conclusion is one of them.

Maybe they are wrong and it isn't minimal. How many other things are they wrong about either on purpose (usually called lying) or from just not being able to read and research. I'm just one guy and can find and figure this out, they have thousands of members, entire staffs and apparently no fact checking. Why should we trust them?

Tell your legislator that you are in favor of HB 466 and get the state out of the liquor business.

HB 466 will allow 1800 liquor store licenses -- far more convenient than 600 state stores, no matter how many baskets and islands and palm trees they put in them. HB 466 will allow 825 grocery stores to sell wine, something the UFCW is dead set against (unless it involves more UFCW workers in a One Stop Shop; something that has failed for the 34 year existence of the program).

HB 466 will get the state out of telling you what you are allowed to buy -- no "modernization" plan does that.

HB 466 will give the freedom of choice found in other states -- modernization doesn't do that either.

HB 466 will benefit small business -- The PLCB modernization does not.

Modernization is a false choice because nothing changes.  Just because they paint your jail cell and allow longer visiting hours does not mean you are free.

Privatization is REAL moderniization

Wednesday, February 25, 2015

Ethics questions still percolating at the PLCB

No matter how many pieces of paper the PLCB has to sign, it hasn't changed anything as of yet.

As I reported a year ago today, Jerry Waters, the Executive Director of Regulatory Affairs still has an ongoing ethics investigation and may also be part of the Federal investigation into graft at the PLCB.  If you remember, it took almost two years for the Ethics committee to reach a slap-on-the-wrist decisions for ex-CEO Joe "Water Heater" Conti, ex-Chairman P.J. Stapleton, ex-Director of Marketing James Short, and ex-Director of  Product Selection Matthew Schwenk, all of whom are now being investigated by the FBI.

Nice to know the more things stay the same, the more you can count on the PLCB to do their part to continue be the second-most corrupt agency in PA. Rotten at the top, rotten at the core as the saying goes.

My question is, how long will it be before the next round makes an appearance? If we privatize, there won't be a next round.

Monday, February 23, 2015

Take my database — please! Inventory idiocy continues.

I'm a Scotch guy, I collect it and I drink it, which means that I look at what the PLCB has to offer and if, by some freak chance, it is something I want, I compare the price to what it would cost me to buy out of state or have it shipped in. (Lots of places will ship to PA and I urge you to search them out.) Needless to say, I've not bought a collectible bottle from the State Store System in a decade. I still keep looking, and the way to look is through the system's website, either the PLCB product search, or the "Fine Wines and Good Spirits Store" (FWAGS). Wait, either? What's the difference? Come along on a search, and learn why the vaunted "convenience" of the monopoly's database of every single bottle of wine and spirits in the state!!! not so convenient after all.

In my crosshairs this time was Highland Park. The online product catalog listed fourteen different Highland Park whiskies, one 'regular,' two 'Luxury,' and eleven SLO-only. Like the last time I looked for something, the "online exclusive" entry is listed as having no stock in the online product catalog. This probably makes sense to somebody at the PLCB but not to anyone with any real business experience. Where else would you be told, "Here is the catalog of everything we list — but don't believe the availability listings, you'd better go over there and check to be sure."

So let's go over to FWAGS and type in Highland Park. Up comes a page that says there are five online, five in-store and 28(!) available by SLO. Sure beats the 14 listed in the catalog. Maybe they haven't cleaned that part of the tens of thousands of bad entries the PLCB admits to having yet. So I look at what is available online. The first one says  Chieftain's Clynelish 14 Year Old, the second one is a Glenmorangie, the third one is another Glenmorangie, the fourth one is a  Mackinlay's...and finally the fifth one actually is a Highland Park. Well, that kinda sucked. 

Let's see what is listed as being in store. The first item listed is a GlenDronach; why, I don't know. The second item listed is the one Highland Park the PLCB actually stocks in some stores and the other three items are the Mackinlay's that were listed as an "Online exclusive!" that also happens to be available elsewhere in a store, and two different sizes of the same McClelland's. Why McClellend's would even show up in a search for Highland Park is another one of those PLCB mysteries that they have somewhat regularly.

I'm beginning to not have any faith that the 28 SLO items listed for Highland Park are really Highland Park. Surprise! I'm right. The entire first page has no Highland Park on it.  Jeez, how bad was this BEFORE they updated the search engine? On to page two where there are eleven Highland Park entries and three more that don't match the search criteria.  But wait, the online catalog says there are 14 and the FWAGS website only lists 13. Which one is missing?  Here it is: "Highland Park and Bowmore Distilleries Double Barrel Blended Scotch Whisky 10 Year Old 92 Proof"  Explain to me why that doesn't show up in a search for Highland Park, will ya? After some digging I did find it; somebody just decided that the name in the catalog wasn't to their liking so they changed it, thus guaranteeing nobody would be able to find it. Or buy it. Wonderful.

The PLCB uses Oracle for their database, which is not a dumb flat file system. Now, the people who program it might not be that swift, or the people above them may not know how or what to ask of the system, but that isn't Oracle's fault. Compare the somewhat worthless search for Highland Park at the FWAGS website with a retailer who has to compete and really provide customer service - Binnys in Chicago (notice they often have better prices too). Binny's doesn't have 24 wrong entries when you search but PA does. The first, last, and all the items are what you are searching for at Binny's, but not in PA — and this is after they claimed to have greatly improved the system. "Modernization" at its finest; a preview of what to expect if  they don't privatize. More lipstick on the PLCB pig.

I guess I was lucky that it wasn't on sale. The FWAGS website spits out a list by type and item number. Who the hell knows PLCB item numbers? How about a list by the alphabet that is actually easy to use instead of this item number idiocy? Just more proof that there isn't a warm body in the entire organization who knows squat about retail. Of course, that is what we have come to expect for the past 80 years so I don't know why I'm surprised.

Oh, and that bottle I was looking for? The PLCB does list it, but I was able to buy it overseas; even after paying international shipping it came to 23% less than the state store price*, and only took 10 days to get here, delivered to my door. Shorter than the 2-4 weeks for SLO, so as long as I had to wait anyway, I might as well save some money. Thanks for nothing, PLCB.

Like all other retail goods it pays to shop around....unless you visit the state stores that are all the same. You don't have to put up with this.  Write your legislators and tell them to support HB 466 so we can finally have what most of the country has - freedom of choice based on what we want and not what the unqualified in Harrisburg allow us to have.

Privatization is REAL modernization.

(* I know it is only a 700ml bottle instead of the 750ml here so the effective price is only 17.5% less but still....)

Thursday, February 19, 2015

Cars & Bars

Just imagine if PennDot (the Pennsylvania Department of Transportation) were run as badly as the PLCB. I know, PennDOT's pretty bad — getting license, title, and registration seems to be unreasonably difficult no matter where you go — but every now and then, the PLCB does something so totally, flat-out stupid that it exceeds anything PennDot could dream up. Like the wine kiosks, for instance; EZ-Pass isn't perfect, but it certainly works a lot better than the PLCB wine kiosk fiasco did.

And then there is this story, an absolutely hilarious decision by our fine Liquor Gestapo — hilarious if it wasn't so freakin' sad. Imagine that you just bought a used car, got insurance, made sure your license was up to date, got plates, and now you are happily tooling down the highway, singing the song of the open road. Suddenly, a state trooper shows up behind you, lights a-flashing, and they impound and tow your car away...for a violation THE PREVIOUS OWNER COMMITTED FIVE YEARS AGO!!
PLCB Towing, at your service whether you deserve it or not!
That is what the PLCB did to Rubb BBQ in Philly; they decided that the new owners of the liquor license should have to endure the license suspension that was handed down to the previous owners in 2010, because they'd gone out of business before the suspension could be imposed. What?

Now they can give all the reasons they want as to why this follows the rules but guess what? They make the rules (and before you say, no, the Legislature makes the rules, ask yourself: how did beer delivery suddenly become OK even though no law was changed?), and just like they scurry to spruce up stores and get courtesy training when faced with the possibility of privatization, if nobody complains about what they do, they aren't going to voluntarily try to fix it. Apparently a liquor code violation has no statute of limitations, unlike, say Assault and Battery, 2 years; Burglary, 5 years; Involuntary Manslaughter, 2 years; or anything that resembles a real crime. This is even longer than the statute of limitations for graft (2 years) that the PLCB should be so familiar with.

Do you feel safer? I know I don't, as long as there are people in the PLCB who think this way.

Privatize and help fix stupidity like this.

(PA Title 42, Part VI, Chapter 55, Subchapter C was used to find the above limitations.)

Monday, February 16, 2015

Liquor & Guns

The people's right to trade freely with their neighbors and those in neighboring states shall not be infringed. 

One line like that in the Constitution would have rendered the PLCB largely impotent, but it didn't work out that way. The right to bear arms is guaranteed by the Constitution. The right to buy alcohol is not. Both have laws governing their sale and use, but only one has the state trying to make sure you can get it: Liquor. 

Proponents of the State Store System are always pushing for and bragging about having more sales. They want to make sure that all the citizens can buy booze, but they don't want to make sure you can buy a Constitutionally guaranteed item, or have freedom of choice or be allowed to participate in interstate commerce. That, of course, would puncture their precious monopoly, and show how non-competitive they really are.

But this is -- supposedly -- all about control. Let's look at that whole concept from a different angle. If you are like me or most people I know, you probably think guns are more dangerous than a bottle of Captain Morgan. But according to State Store-style thinking, you would be wrong. I drink, and I also shoot. I probably drink more often than I shoot, but it's close, since my range is only a mile away. Let me tell you: I worry more about the guy next to me at the range than I do about the guy next to me at the bar. Just think about these comparisons.
  • What takes longer to buy: a special order bottle of liquor or a special order gun (even with the federally-mandated wait time on gun sales)?
  • As a private citizen, you can sell guns, but you can't sell alcohol beverages.
  • Sell a bottle and you can get fined $4 an ounce and go to jail.  Sell a gun...and you get cash.
  • If you're 18, you can buy a gun; if you're 14, you can get a hunting license. Buy a beer when you're 18, and you can LOSE your license.
  • Most places you are allowed to open carry a gun on the street in PA ; most places you are not allowed to carry an open bottle.
  • If you are a resident with the proper permit, you can have a loaded gun on the front seat of your car. If you have an open bottle, there is no permit you can get.
  • If you are visiting from out of state and have a gun in your trunk and want to stop and take in any of Pennsylvania's scenic attractions as you pass through the state -- it is perfectly legal.  Have a bottle of wine from New Jersey in your trunk and make that same stop? You can be fined, and your wine will be seized and destroyed. 
  • You can bring a number of guns into Pennsylvania without any special licenses or forms and shoot.  You can't bring any bottles of wine, beer, or spirits into the state -- legally! -- without special licenses or forms which the PLCB does not even make available to you.*
People who use guns professionally in their job have to be licensed, but people who sell alcohol professionally (like bartenders) don't. They don't have to be certified by the state in any way, unless and until they make an illegal sale, which seems to me like closing the barn door after the horse ran away. Our State Store alcohol sellers don't even have to be certified in any way at all, nor are they ever checked for illegal sales (they rely on 'self-reporting'). Does anybody find this strange based on all of the above?

Most states have figured out how to regulate the sale of alcohol and not treat their citizens like children. If the liquor laws in the state were even close to being like the gun laws, there wouldn't be a privatization effort (or a modernization one either) because the dead hand of leftover Prohibitionism wouldn't be on the backs of the residents. Since that isn't going to happen, we have to take control away from the state through our legislature. Give retail back to private industry where it belongs, because when the state decides what you will get, it also decides what you want and does it without any input from you.

We are not safer, we are not better served, and we are not satisfied. Privatize.

* I challenge any reader to try to find the form or forms needed to pay the taxes on 6 bottles of liquor you want to bring into the state. Good luck. 

Thursday, February 12, 2015

Wendell Young Lies And I Can Prove It.... Again.

Wendell W. Young IV, president of Local 1776 of the UFCW (the union that represents the State Store System clerks (whether they want it or not)), sent a letter to the York Daily Record recently stating that doing what the majority of people want -- privatizing liquor and wine sales in Pennsylvania — would cost the state a fortune. Just to make sure everybody knew he was lying he said the same things again on February 11 after the new privatization legislation was announced. As I have done numerous times previously, I will prove that he lies and will say anything to prove his point. His letter is even more proof of that.

About the only true thing Wendell "My Daddy Was President Too" Young says is at the beginning, when he states the PLCB makes a "profit." That so-called profit (really an unspent use tax) is less than 0.4% percent of the state budget; less than Governor Wolf has asked the state agencies to save. That sounds like a good point for the PLCB. But can you really say you're making a profit when you owe over $600 million as your part of  the pension debt, or over $50 million in medical coverage charges? These costs are conveniently left out of the PLCB's accounting; real businesses have to make a profit without such bookkeeping magic.

Oh, yeah, baby, it's gonna be terrible. Trust me.
It goes downhill from there for The Man With the Silver Haircut. Young tries to tell us that losing the state monopoly would cause catastrophe, "Selling off this asset to big chain retailers, grocery and convenience stores would be a financial disaster for the state," he blusters. "Thousands of family-sustaining jobs would be lost and hundreds of millions in state revenue would vanish." Scary stuff, but how true is it? 

Not very. First, the Legislature decides how many licenses there will be, and how many licenses any particular business can own. For instance, Maryland doesn't have liquor in grocery stores (to be fair, there are four exceptions; four, in the entire state, which is about how many gas stations sell beer in PA, where that's, you know, supposedly against the law). There's a lot of "big chain" fear taken care of, and it's an easy fix, all you have to do is put license limitations on ownership...say between three and ten licenses per person or business entity, so there will still be some real superstores in PA, but also plenty of licenses for smaller enterprises.

Next, every place that has privatized has increased employment. In Washington State, the most recent to go to full privatization, category employment tripled under full privatization. The Washington State Office Of Financial Management report on Liquor Privatization (see that? Wendell gives you bluster and fear, we give you reported facts) from this past January says employment in the industry has increased 91%. That's just direct retail jobs; it doesn't count secondary jobs like transportation and warehousing, for example, which are not to be overlooked: warehousing jobs for just two distributors totaled more than the entire previous WALCB workforce  It isn't "spin," or "mythical," as Young claims; it is reported fact and it can happen here without obstructionists like Young and his troops. What the State Store System has done is cost us thousands of new jobs.

What else does he have wrong? Windy Wendy likes to keep quoting the report Governor Corbett commissioned back in 2011, even though it represents assumptions that are no longer valid; it doesn't match HB790 (the privatization bill that actually passed the House in 2013), any other proposal the Legislature has considered since then, or the real world examples of Washington or the province of Alberta (which privatized back in the early 1990s).

Still, if he's talking about it, we have to address it, and it's pretty easy. The UFCW's President For Life claims that the "transition costs" of privatization as laid out in the PFM report would be $1.4 billion over 5 years. That sounds expensive! What he leaves out is the part that says Operational and Transition Costs (page 180). The Operational part — keeping the state stores running while they're being phased out — is almost $1.2 Billion  While I have my doubts that Young actually knows what transition costs are, that same report shows that keeping the PLCB will cost OVER $2.2 Billion. Why? Because Operational costs will be higher since they won't be phased out. Is he dumb? Or deceitful?

If you're not scared yet, try this Wendell Wowser: "hundreds of millions in state revenue would vanish." Really? How's that? Just because the PLCB isn't collecting the Johnstown Flood Emergency Tax doesn't mean it won't be collected. In fact, it could be done at the wholesale level to make it easier, as Alberta did (and like Pennsylvania does with beer). Washington has increased their tax collection more over the last two years than we have, even though they have half the population, and only privatized liquor, not beer or wine (sales were already private). Not only that, they lowered their beer tax by almost 300% and still increased tax collections. (These numbers which can be found on the Washington State Department of Revenue website for taxes and the Washington State Liquor Control Board for fees: Google it.) The revenue ain't gonna vanish.

It's a record-breaking year!
Then he gets to the main course of his Dinner of Deceit. He boasts about how the PLCB "set new records for sales and profits" in each of the past four years. Check the Pinocchiometer: whoa, the nose grows! Sales records? Sure! It would be news if the police-enforced monopoly didn't increase sales. It has nothing to do with the job the PLCB is doing. Gross revenue increased every year back when the state had counter stores too. When you have a captive population that grows and the price of the product goes up, of course revenue from sales goes up every year. But profits? No, sorry. Operational income went down in FY 2014 compared to FY 2013. In fact, it has gone down in eight of the past fifteen years on a year to year basis (according to the PLCB's own financial reports; not all of them are still available on the PLCB website, but I have them if you need copies)...even though every year had "record sales."

Then the Big Man In Harrisburg starts beating his favorite (broken) drum: the majority of the people don't even want private liquor sales! He says that either "modernization" or leaving the System as it is is what the people really want. Modernization is a false choice. The question is not whether the people should shop at pretty state stores, but if the state should be selling a retail product at all. Given the choice of keeping the state store system or having a private system the citizens have always chosen the private system in every single scientific poll, every single time. There has never been a poll that shows the people want the state store system — ever.

In honor of Presidents Day, let me paraphrase Abraham Lincoln to remind you of this Wendell

You can fool all the people some of the time,
and some of the people all the time,
but you cannot fool all the people all the time.
And you can't fool us at all.

Let's tell some truths instead of Wendell's bold-faced lies.

We are not safer because of the State Stores. Look at the DUI stats and the alcohol related incidents compared to our border states. Alberta has over double the amount of liquor stores of Pennsylvania (1,361 vs 605), with about one-third of the population — a lot higher "outlet density," to use the bugaboo term of anti-alcohol types — yet they have a DUI fatality rate that is 40% lower than ours. Washington's DUI fatality rate has gone down faster since privatization (and it started lower that PA's to begin with).

We are not better served. One only has to go to State Line Liquors, Joe Canal's, Roger Wilco, Total Wine, Shop Rite Liquors, and a host of others to see that (and you'll also see the hundreds of satisfied Pennsylvania shoppers who have taken privatization into their own hands).

We are not satisfied
with a system that mainly benefits the people who work there, with a system that owes over $600 million in pension costs, with a system that thinks bureaucrats in Harrisburg should decide what wine and spirits we should be allowed to buy, with a system that punishes people for having the desire to buy things not provided by the state, or with a system that is corrupt, ill-managed, non-responsive and generally incompetent.

We deserve better. After 80 years, it is far too late for the PLCB to try and show they can deliver that. 80 years shows that they can't.

Privatization is the ultimate modernization.

Tuesday, February 10, 2015

Feel safe, Pennsylvania: the Keystone Kops are on the job!

The BLCE recently covered itself in glory again by arresting someone who was looking to resell a bottle of Pappy Van Winkle bourbon, and by shutting down an alleged speakeasy operating in an American Legion post in Roaring Spring, near Altoona.

Eh? Buying better booze in Delaware, you say? We're on it!
I understand that — by the letter of the law — neither of these things are legal in Pennsylvania, but you can tell when a bad law is in place by the lack of enforcement. Tracking down one "whiskey flipper" on Craigslist (when hundreds of them are driving the high cost of Pappy), or closing down a rural veteran's hall because they were selling sixpacks and highballs (in a town with NO current bar licenses; though you could go up the road to the U.S. Hotel in Hollidaysburg, which I highly recommend) is not really doing anything to make the citizenry safer. Do you think some 18 year old kid was going to shell out $800 just to get a bottle of booze for the weekend, or that the American Legion was selling 6 packs out the back door to high schoolers?  I seem to remember PLCB employees selling things out of the back door in Philly, but that place wasn't closed down, was it?

The BLCE at least used to put up a front like they were doing their job, with over 200 arrests per year for illegal importation; now it is just a few poor slobs who get made an example of. Do you think it is because they have stemmed the tide of people coming in from Delaware with bottles in their trunk? Maybe it is just easier for them to rely on tips so they know where to look (sure makes it easier for someone to rat out an enemy and get them in trouble).

Arresting people for selling booze that the incompetents at the PLCB don't, won't and can't supply to the people of the state? They should give them medals, they're doing a public service! Just because the State Store System doesn't have it, doesn't mean that we don't want it. If the PLCB is doing such a great job, and their prices are so competitive, then it shouldn't matter what people bring in, because as many or more would be shopping here and not across the border.

The mere fact that PA's border bleed is one of the largest in the country indicates that we don't have the best selection, we don't have the best service, we don't have the best prices, we don't have the best stores and we certainly don't have the best run system that can respond to what the public wants. It's not even the best control state system; New Hampshire kicks our ass in customer service and cool stuff for its citizens (and much of the rest of New England; their prices are better, too.) In short, the PLCB and its State Police-run enforcement arm, the BLCE, are only protecting their own incompetence and lack of ability.

With tens of thousands of people crossing the border with out of state liquor and thousands going to BYOB restaurants with bottles not bought at state stores, maybe the BLCE needs a bigger tip to get them to spring into action. So here it is, our public service to help out the Police-Enforced Monopoly.  People buy liquor and/or wine at Total Wine, Moore Brothers, Joe Canal's, Benash, Wine Legend and even Wegmans and Shop Rite, and bring it back to Pennsylvania because — overall — the price, selection, service and convenience is better in New Jersey.

Now that you have a tip, go and infiltrate the state of New Jersey. Make it fair, arrest every citizen of the Commonwealth you see — including us if you see us, that's fair (and would make great blogfodder!) — and see what happens when that starts to hit the newspapers, social media, airwaves...and legislators' inboxes. Bring it on, BLCE, let's enforce the hell out of those laws and really let Pennsylvanians enjoy control as it should be enjoyed. To paraphrase the great Bard of Baltimore (and free liquor patriot) H.L. Mencken: Liquor control is the theory that bureaucrats know what's best for the common people, and should give it to them good and hard.

Oh, by the way...Pennsylvanians are bringing booze home from Delaware and Maryland, too. So get on it.

We think you know what that will lead to. Abolish the PLCB, make it about regulations and not retail, and rewrite the code to best serve what the people in 2015 want...not what one man in 1933 wanted.

Monday, February 9, 2015

Breaking News: PLCB signs new ethics pledge...again

I swear I won't take any more graft ever again and I really mean it this time.. Sincerely, the PLCB
After beating out everyone in Harrisburg except the Turnpike Commission for disgraced employees, the Pennsylvania Liquor Control Board (PLCB) unanimously voted on Friday to close loopholes in its code of conduct to prohibit employees from accepting any and all gifts from vendors or contractors. The move was to support Gov. Tom Wolf’s recently signed executive order that banned state employes from accepting gifts. PLCB employees were already prohibited from accepting alcoholic beverages offered by vendors or contractors, but there were exceptions that were not covered, such as T-shirts, pens, and other gifts.

"The Pennsylvania Liquor Control Board already had one of the most restrictive codes of conduct in Pennsylvania state government, but these modifications make it even stronger,” PLCB Chairman Joseph "Skip" Brion said.  "No longer will vendors be able to give out 5,000 pens to senior management and get away with it like before. Outfitting our families for the next 3 generations with t-shirts will no longer be accepted, and will force the PLCB to revert back to the time when cash was the only acceptable form of coercion, just like in Grandpa's day!"

PLCB board member Tim "Rex" Holden fully agreed with the Chairnan's statements when caught during one of the board's 22 exhausting work days for this year. When asked what was in the box marked "Bic" this reporter saw him pushing under his desk with his foot, he replied it was "official PLCB business."

Member Mike "Sparky" Negra declined to comment on why the little league team he sponsors suddenly changed their name to the "Captain Morgan Spiced Rum Pirates," saying it was a personal decision not involving board policy or procedures; he noted that his other grandson is playing for the Erie Fireballs and his granddaughter was an American Honey cheerleader.

Pennsylvania citizens can now rest easy knowing that PLCB management, unlike before, now knows that taking graft of any kind is no longer acceptable and has signed a pledge saying so just like they did previously and that big liquor can no longer push the board into deciding what product to sell or brands to feature. [leave this out of the final copy - editor]

PLCB Executive Director John Metzger added, "Look, it's simple.  The longer we can keep unqualified people at the top doing things they perhaps shouldn't be doing — like golf weekends, pointless rebranding campaigns, wine kiosks, or what have you — the more we can promise we're gonna fix things, and the more window dressing we can put out to look like we are. This pledge is just one of those steps." 

Yeah, this is satire, but really, over the long run, nothing significant changes at the PLCB — everything remains the same (and hats off to the Philadelphia Inquirer for recognizing that in today's lead editorial). The only way fix that is to Privatize - the Ultimate Modernization.

Saturday, February 7, 2015

Modernization Explained

All you need to know about "modernization"

Thursday, February 5, 2015

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.

The Union Scheme to keep PA in debt

(Another chapter in the continuing Wendell Young IV lies and I can prove it series)

On January 29th, the two unions that represent the State Store System clerks sent out a letter that, among other things, seemed to guarantee that 'modernization' will make $185 million MORE in its first year.

Let's look at the modernization scheme point by point.

They start off well with "Remove Sunday Sales Limitation on Store Openings and Hours of Operation" This actually makes sense, so when the system is privatized private store owners will be able to decide their own hours within the legal time span. 

Things start to go downhill with the second item. "Pricing/Customer Relations Management: Allows the PLCB to use best retail pricing practices to secure the very best price for the customer."  So for 80 years they really haven't been trying to get the best prices for the consumer? Then why should we believe that will change?

Item three is even more incredible. "Right Locating Fine Wine and Good Spirits Stores"  In other words, putting the stores where the people are. It took them this long to figure that out? Perhaps the Store in a Store (or One Stop Shop, as the PLCB calls it) is what they mean. That has only been around for 34 years and has not gone anywhere.  The high point was sixteen stores; it hasn't gone above that yet. It seems that most—and I mean thousands of stores—don't want the PLCB with them. After the Wine Kiosk Fiasco, it's no surprise.

The forth item "Expedited Review of PLCB Leases by the Department of General Services" makes sense until you realize that they have had 80 years to get the proper locations of state stores. You can't blame it all on the DGS. The PLCB should know where they want to put stores YEARS in advance and work toward doing that. That is how real business runs.

Item five is a bit revised since last year; "
Direct Shipment of Wine and Spirits: Permits Pennsylvania residents to receive shipments of wine and spirits in Pennsylvania and also permit the PLCB to ship out of state." Spirits were added to this proposal. Not sure how other states will take to a different state agency shipping to their residents, but if our legislature is an example, it won't happen. It has only been a decade since Granholm and this may fix it...depending on how many wineries and distilleries sign up and pay for licenses. The current direct wine shipping program has less than 25, so for that to improve, some things will have to change. It isn't that wineries don't want to ship to PA, it is that they don't want to deal with the PLCB. That makes millions of us.

The sixth item is Lottery sales, and that makes sense also, even more so in a private system.

Item seven sounds good but..."Consortium Product Buying: Allows the PLCB to take the lead in joining some of the other 18 control states, like Michigan, Virginia, Ohio and New Hampshire, in buying product unified fashion to help secure the very best price for the PA consumer on the PLCB store shelf."  Real businesses save money by buying in bulk, and then doing the distribution of products themselves. They buy direct from the manufacturers. With the 3 tier system in place in many states this wouldn't be allowed. It would also force all the states involved to use the same distributor which may violate current distribution agreements. I can see this being a hornet's nest but hey, based on the past PLCB track record of business decisions... Keep in mind, it would only affect spirits; these other states don't "control" wine sales.

Now we come to the hook inside all this shining bait, the item that will lock the PLCB into the state budget for decades. DEBT.

The Unions think that: "
Monetizing the incremental revenue gains of the agency would allow the state to secure a bond. Securing a bond on increased profits as a result of modernization not the tax revenue - is very attractive to investors, since the agency has continued to deliver increased revenue annually to the State Treasury, during good and bad economic times. The risk is low and potential for reward high."

This means that the amount the Governor could ask for would have to be locked in, since additional profits (if any) would be used to finance the debt and couldn't be used for anything else. Rather than being discretionary, based on what the Governor thinks the needs of the Commonwealth are, it would be up to the PLCB to set the upper limit based on their needs and debt payment  So let us look at the statement "...the agency has continued to deliver increased revenue annually to the State Treasury." Remember, this isn't taxes, so any increase there doesn't count.

Using 1999 as a starting point, in the next 15 years from FY 2000 through FY 2014 inclusive, Operating Income has gone down eight times and gone up seven compared to the year before, and the amount sent to the General Fund has remain unchanged four times, gone down four times, and only gone up seven times. All with record sales every year. So the Union wants to put the taxpayers on the hook for an agency that DOES NOT deliver increased revenue annually, in an arrangement that makes the continuation of the State Store System a necessity under the terms of the bond. This is not about debt, or monetization: this is about shutting down all talk of privatization.

With the increased PLCB share of the pension obligations well over $600 million, the Unions think that increasing the Debt using future earnings (if any) is the way to keep the state store system.tied to the government. This isn't for the good of Pennsylvanians but only for the good of the state store clerks.

We are not safer, we are not better served and we are not satisfied. Privatize.