Thursday, February 5, 2015

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.


Anonymous said...

All of the ideas put forward are actually the brain child of Conti when he was the CEO. I understand that Conti is now a lobbyist and represents UFCW.

Albert Brooks said...

I think you give too much credit to ol' Water Heater Joe. He may have proposed some of these but he isn't bright enough to come up with them on his own. You are correct that he now is the UFCW lapdog. What more could we hope for just look at all the good advice he gave the PLCB.

Geno Washington said...

The one stop shops are a nice novelty, but their selection is usually the pits. Most are definitely among the smallest PLCB stores. Some however do have the walk-in premium collection cooler. Usually the larger of the one-stop shops were opened at the same time as the supermarket next to them, but smaller one-stop shops were carved out of already small supermarkets.

Yardley in Bucks County is a very rich community, yet all three of the PLCB stores there are very small. Two of them are one-stop shops, and neither have the premium collection!

Newtown Square (Delaware County, not related to the Newtown near Yardley) also has three PLCB stores and get this... one shopping center is stuck with two PLCB stores. Why? A private winery store was originally scheduled to open inside a supermarket there, but when the winery backed out (never having opened its store), the PLCB opened a one-stop shop in the space, yet the only somewhat larger PLCB store already in the center stayed open after this point! The two do have separate parking lots, and perhaps draw different crowds because the freestanding store is next to a beer store. A third small PLCB store is also in Newtown Square, barely a mile away, but justifies its existence being next to another supermarket (which however was empty for over three years, but finally has a new tenant as of recently), and a very popular BYOB restaurant.

Anonymous said...

Very good letter from the union bosses, two well respect leaders from each side of the state. But the plan is the best part. Very much like Tom Wolfs own vision for the future of booze sales in Pa. I think Wolf will insist on optimizing the value of the PLCB. Much like he did the lottery under Rendell. There are several things the Republicans want that the Governor could use as bargaining chips to get his modernization plan. I love the way Wolfs eyes light up when he talks about getting into the liquor biz. You can tell he is a businessman, and he enjoys that role. This might take a few years. The House Repubs will probably pass a bill, again, and then hold their breath and stomp their feet for two years while nothing gets done on the issues that most Pennsylvanians actually care about. But time is on Wolfs side, the House runs again in two years the Guv not for four. Two years of obstructionism could earn them a whacking in 2016, a Prez election year that should see a high Democrat turnout. This will be interesting to watch unfold. It will guarantee bloggers will have something to write about for years to come.

Albert Brooks said...

The governor has no modernization plan or if he does it is a secret like the rest of the things he wants to do but has not released any information on. The senate is not as it was so I wouldn't count on the Rinos holding enough sway this time and like the last election there is nothing at this point in time that indicates any Democratic gains in the PA House or Senate.

Who is viewed as obstructionist when bills pass the legislature and are vetoed? Think about that.

Geno Washington said...

The Ardmore store (usually in the top four highest grossing stores in the system) is renovating right now but is still open. Hopefully the trend will be toward the largest and most popular stores (many of which are still sporting their old looks) getting the new treatment, if anything to stir up people's desire for privatization once again. Maybe it can serve as a reminder of the cause.

Anonymous said...

If you haven't heard Governor Wolf speak about his ideas to optimize the liquor asset you must have move to Pa. After the gubernatorial campaign.

Obstructionist? Speaker Turzai and the House Tea party wing hold up property tax reform, a shale tax, a pension fix, education funding, that is, issues that matter to most taxpayers, over something as puny in the minds of the public as improving the stores where they buy the buy there hooch and I believe the Rs where the O tag. Extremists that go as far as refusing to do anything at all till Wolf complies with their liquor sell off scheme would be committing political suicide.
You have to get out of yourself and look at this thing from the perspective of the average Joe. Joe don't dwell on where he buys liquor 24/7. He hardly thinks about it compared to his kids education, his retired Dad not being to afford his property tax, etc.

Albert Brooks said...

As I said, the Governor has no plan. If he did it would be easy enough to find it and post it. He may have had a preference but there is nothing in writing that he proposed. But then the Governor can't introduce legislation either.

You can hem and haw all you want about a party but to the average person they are nameless. The governor is not so when he vetos legislation all eyes are focused on him. Tax and spend is not going to work like it used to.

Getting rid of the state stores will improve the pension situation too so that would be a bonus. No matter how pretty you make the cell the people are still a slave to the state and that is not going to be fixed by any "modernization"

Geno Washington said...

Hey "anonymous"... do you realize the largest liquor store in PA (yes, one in Pittsburgh is the largest officially) is way smaller than many liquor stores in either NJ, DE, or MD? However, most East Coast states have ABC stores at least for spirits, or ban chain liquor stores even with a private system. So I realize PA isn't so alone in its backwardness.

Albert Brooks said...

I'd venture to say that every private state and a number of control states has bigger stores than the largest in PA. Washington has about 30 of them now the same size or larger then any store PA in just 2 years and that is with about half our population.

John Rz said...

"The Governor has no plan" I'm sure anonymous Albert talked to hom about this. Lol. Corbett never had a plan for privatization either. Stay tuned. It is to laugh.

Albert Brooks said...

True,Corbett had no plan but a proposal and he did have legislators who understood the wants of the public. Wolf has even less of those so let us see the proposal Wolf has published like Corbett did. What is that you say....he hasn't done that? Did he say anything about it in his inauguration speech - no. Must be a secret like so many of his "plans".

John Rz said...

It seems to me if you can't get privatization you are against improvement. I thought you were doing this for the people? I know you understand well enough to see why the either/or polls are based on a logical fallacy and that every poll that has the third option to modernize shows only 33% favor privatization. The people get it. Tom Wolf gets it. When will you and Mike a Turzai get it?

Albert Brooks said...

When will you get that no matter how pretty you make the cell the people are still enslaved to the state store system.

There is no third option, the question is if the state should be selling liquor or not and isn't if the state should be selling liquor in pretty stores.

The answer is the state should not be selling liquor. Period. If anything it is your ilk that is trying to confuse the public by interjection of "modernization" into a simple question of yes or no.

John Rz said...

So are an obstructionist!