Thursday, March 19, 2015

Fact Check, what the UFCW says, What Rep Turzai says

Below is the list that the UFCW 1776 calls "Twenty of Turzai's Lies" You can read the list here.  Not anywhere near as many as I've documented from Wendell Young IV (which nobody has refuted as of yet) but enough to see who is spinning more. I'll take them one at a time

Who is spinning more?
 01: Turzai: The PLCB has been operating in the red for the past 10 years.
      UFCW: The PLCB’s net profit for the past 10 years is almost $1 billion total

There are three ways to look at this.. The first is if everything the PLCB collects is a tax because tax is defined as "a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc." so what ever isn't specified as the Johnstown Flood Tax or Sales tax can be thought of as a use tax and not profit.

The second is that to have a profit a business has to list all liabilities and since the PLCB doesn't (not listing the over $600+ million in pension liability or $50+ million in medical for just two examples) it is questionable if a profit is made.

The third is that the PLCB as a business that is not responsible for any liabilities because the taxpayer, not the PLCB will cover them and therefore does make a profit. I'll call this one a tie

02:Turzai: The Fiscal Note for House Bill 790 said it would bring over $1 billion in upfront revenue.
    UFCW: Turzai’s own Fiscal Note says there would be at most $137.5 million in upfront revenue.

OK, there is one fiscal note listed by for HB 790 PN 1291. and it specifically says "A total of $1,123,000,000 is estimated to be generated from one-time license fees" The Rep. Turzai fiscal note does say $137.5 million. so the question is - what time period is "upfront" ?  Upfront is usually thought of as before something happens so does the money start counting before the beginning of privatization or before the end of the state stores?  This one is a tie.

03: Turzai:There is going to be an auctioning off of 1,200 wine and spirits licenses.
      UFCW: There is not one mention of auctioning licenses in House Bill 790 or his current legislation House Bill 466

This one goes to the UFCW, there is no mention of auctions in HB 466

04: Tuzai : When West Virginia went to the private sector they saw an increase in revenue.
      UFCW: West Virginia lost millions and has never financially recovered since privatizing.

Try as I might I could not find anything on line from the state of West Virgina that listed revenues from over 30 years ago when they privatized retail sales. Without verifiable information I can't make a call on this one. However, as a side note, Iowa which also privatized retail a few years later reported making more money. (1)  I have to toss this out for lack of information.

Turzai: There will be no increase in unemployment compensation and all PLCB jobs will be absorbed in the private sector. 
      UFCW: The Public Financial Management study states 2,302 full-time equivalent employees will lose their jobs and cost more than $64 million in unemployment costs over four years.

Since everyplace that has fully privatized has tripled employment in the industry jobs will be created, far more than are lost. If the offset is enough to make a zero balance after some of those new jobs will be filled by people already supposedly trained is a question I don't have enough information to answer. This one is a tie also.

Turzai: There will be open dialogue and everyone will be at the table to discuss issues.
     UFCW: There hasn’t been a House hearing on liquor privatization since 2011.

This one is tough because it is an opinion.  If you are a citizen of the state and don't know anything about the issue already I question your ability to govern the rest of us.  If you are a legislator then there is no excuse what so ever not to educate yourself. More hearings will not bring anything new to the table. THe UFCW is still using documents and statistics from as far back as 2006 so that isn't going to change. The question is if the state should sell a retail product or not.  Once you have decided that then questions like "should we have pretty stores" or "add 1,000 more "R" licenses" come into play but not before. I know that both caucuses will be meeting on this issue so I'm in agreement that everyone can discuss the issues. Rep Turzai gets this one.

07:Turzai:The PLCB produces no profit.
     UFCW: The PLCB’s net profit was $123 million alone in the last fiscal year.

This is just a rewording of #1 and the result is the same- a tie.

Turzai:There will not be any lost revenue.
      UFCW: Both the Fiscal Note to HB 790 and PFM show revenue gaps that need to be made up.

The fiscal note to HB 790 does say that because of the increased discount to licensees, going from 10 to 14% will reduce income it is the same proposal mentioned in some modernization plans so what is good for the goose is good for the gander.

The PFM report also shows revenue gaps but self admittedly accounts for a zero balance of the over $200 million in inventory, the sales jump as private stores ramp up before divestiture and the $200 million in other assets which can be sold although for not anywhere near the inventory value. Add to that, the complete lack of accounting for economic churn increased employment and peripheral employees will bring and the increase in sales greater access will bring it does raise questions if there will be any lost revenue in total. Since neither side can provide concrete evidence either way this one is a tie.

Turzai: There will not be a complete proliferation of alcohol.
      UFCW: Under Rep. Turzai’s proposal, spirits outlets will triple, including in urban areas.

Even after tripling the amount of liquor stores the state will still be well below the average for a population of 12 million - about 33% less. Since the beer distributors will get first call on licenses and they already sell alcohol where ever they are - urban or rural that aspect is a red herring.  Community zoning should take care of the additional licenses past the initial 1200. Who knows better about what the needs of the community are - Harrisburg or the people who live there? Rep Turzai takes this one.

Turzai:No other state taxes liquor like Pennsylvania. 
     UFCW: Almost every state has a liquor tax, as well as retail and wholesale markups.

This one will go on a technicality. No other state does tax like Pennsylvania,  We don't have a liquor tax, we have a temporary tax that is to be used to help people from a 1936 flood.  Now what it turned into and what it is used for may be like a liquor tax that other states have - it isn't. The Johnstown Flood Tax is not part of the Liquor Code. Rep Turzai wins this one too.

Turzai: There will be new business taxes.
      UFCW: Turzai’s proposal heavily favors existing retailers, meaning no new business tax.

Another iffy one. Obviously if a business increases sales volume there is new business tax but if there physically aren't any or many new businesses then the number of businesses being taxed doesn't increase. Pure semantics.
A tie at best or completely rejected at worst

Turzai:There is significant border bleed.
      UFCW: Turzai cites an unknown statistic, but in reality border bleed is minimal and there is reverse border bleed into Pennsylvania.

I'm sorry, but when the PLCB itself commissions a study on border bleed and shows that there is hundreds of millions of dollars leaving the state that indicates a significant problem Rep Turzai gets this one hands down.

Wendell Young IV star of Say Anything

13:Turzai: The public supports privatization at a 70-75% approval rating and there is widespread support for his plan.
     UFCW: No poll shows this claim. Instead, recent polls show support going the other way. Also, dozens of groups oppose House Bill 790 from last session.

This gets a bit tricky. The primary question is if the state should sell a retail product.  Given that there are 40 years of scientific polls that say the citizens do not want the state store system and some of them are in the 70% range and there has never been a poll saying they want to keep the state store system over a private system that indicates there is widespread approval for privatization.  Later polls give a third option of modernization which is a dependent option and not a primary option. You have to agree that the state should sell a retail product before you can choose how they sell it.

What dozens of groups believe or not has no bearing on what scientific polls say. To believe otherwise is to succumb to "We know better than you what is good for you"  The majority of citizens want a private system as Rep Turzai says.

Turzai:Beer distributors will do well under his proposal.
     UFCW: The Malt Beverage Distributors Association opposes Turzai’s plan.

It is true that the MBDA opposes this plan it is also true that they represent less than half of all beer distributors. Their disapproval does not negate if some beer distributors will do well or if most will do well or if any do well.  It has no real bearing since how well an individual distributor will do is dependent on how hard he works at his business and not his membership in the MBDA. Another that is a tie at best

Turzai:There are only 3,500 employees at the PLCB we need to worry about. 
     UFCW: There are more than 5,000 employees at the PLCB and mostly all will lose their job

According to the state itself there are 3,074 full time employees and 1,519 part time employees as of 1/15/15.  This doesn't count any seasonal employees which may push the total over 5,000 but would also be stretching the truth a bit. Since the UFCW continually uses the PFM report I'll use it too and it says that between 2,436 - 2,678 Full Time Equivalents or 3,210 total employees  would be unemployed depending how the PLCB retail and wholesale was disassembled.

Now you can make a case for people won't be working in the same state job but a number will still be working for the state. Rep Turzai has the facts on his side for this one but semantics are with the UFCW - they get it.

16: Turzai:
Operational costs have increased by 70% at the PLCB over the past decade.
      UFCW: Operational expenses have only grown at a 1.7% compound annual growth rate in the last five years.

I've a mind to throw this one out.  Answering a question with a statement that doesn't match the question is just not being honest.  According to the FY 2005 Audit by the Auditor General operational costs were $289,810,000 and in 2014 were $424,478,913 which is a 45.6% growth so Rep Turzai is wrong.  However. the 2010 Operational costs were $381,801,000 which comes out to a 2.15% compound annual growth rate to 2014 so the UFCW is wrong too.I didn't include COGS in my operation computations because the PLCB has no real control over that but if I did then operation costs from 2005-2014 would have gone up 56%  and the compounded annualized rate would be 2.79% I'm not counting this for either side.

Turzai: Private wholesalers sell to the PLCB wholesale system currently. There is a duplicate system in PA.
      UFCW: Producers sell to the PLCB wholesale. There is no duplicate system.

There is a duplicate system.  While for major items the PLCB may go directly to the producer, for the vast majority of items available in the system they go through a private distributor. This is easy to see because every SLO item has a vendor code and that code is not the Wild Turkey Distillery or the Conundrum winery, it is a distributor. and since SLO items outnumber in stock items by at least 4 to 1 there is a duplicate system. Rep Turzai is correct

That is the end of the list, why they called it 20 lies and then only listed 17 is a question you'll have to ask the UFCW.  I've always said they weren't very good with math.

The totals are
Rep Turzai - 6
UFCW - 2
Tie - 6
Tossed out - 3

Who do YOU believe?

(1)Privatization was deemed successful from a revenue standpoint, with profits increasing by $125 million over the first 11 years of privatization compared to estimates under State control of the stores. At the time of the 10-year review, the conclusion was that most of the increase in profits was the result of eliminating the state stores and the costs associated with them. PFM report pg 111


Anonymous said...

I'm not particularly a fan of him, but Bill O'Reilly (or rather, his enemy Stephen Colbert) really ought to do a segment on the PLCB. Wendell ought to be the guest...

After all, Bill O'Reilly has a "no-spin zone".

Anonymous said...

With all of the recent changes in the interpretation of the liquor code only spirits are restricted to the State Stores. Beer distributors can sell 12 packs. Grocery stores with restaurant liquor licenses sell beer up to a case and wine to go.

Acme has been the most aggressive as they sell some domestic beer (Miller Lite, Coors Light, etc) by the case and they advertise that they have wine to go and on display.

Unless you want a 30 pack, case of craft, multiple cases or a keg of beer then there is no reason to go to a beer distributor.


Lew Bryson said...

No grocery stores selling wine that I know of; that's planned under Wolf's "modernization" scheme, but it's not happening. They're still limited by the '2 sixpack' rule as well. Where's this Acme that's selling wine and cases of beer?

Albert Brooks said...

Anyplace with an "R" license can sell wine by the glass if they choose but take out sealed bottles of wine is not allowed under current law. Maybe the PLCB just "reinterpreted" the law yesterday and you are more up on it then we are so posting a proof of some kind would be good.

I'd also question the advertising aspect unless you mean only in store since they aren't allowed to do print/radio or TV.

Anonymous said...

Actually at least 2 Acme's are selling case of beer and wine to go. A bottle of Bella Sera Moscato is $11 and Louis Martin Cabernet Sauvignon is $15. Case of Miller Lite is in the cooler. Acme in Delaware County and Montgomery County do this. Easy enough to verify if you call and ask if they sell 24 pack of Miller Lite cans.

Acme's circular that comes in the mail advertises Mix & Match 6 packs for $11.99, Corona 12 packs of 12 oz bottles $16.99, etc. This is for Montgomery County, PA.

Like I said, Acme seems more aggressive in this space, but I'm certain others will follow.


Albert Brooks said...

While I have no doubt they sell beer they can't legally sell a case at a time as the law is right now. You have to buy a 12 pack or 2 six packs, leave the store and come back for another 12 pack or 2 six packs.

PA Liquor code Article IV Section 4-401: "Such licensees, other than clubs, shall be permitted
to sell malt or brewed beverages for consumption off the premises where sold in quantities of not more than one hundred ninety-two fluid ounces in a single sale to one person as provided for in section 407"

192 Oz is 16 12 Oz beers so that limits it to two six packs worth generally.

Further there is this quote from Acme president Jim Perkins "If Pennsylvania law were to allow wine and spirits to be sold in supermarkets, we’d go tomorrow.”

So until you can post a picture of an ACME selling wine or a CASE of beer or the circular listing either please don't mind if I don't believe you.

Now there is a "One Stop Shop" PLCB store inside the Acme at Newton Square (Delaware county) but that isn't Acme selling wine it is still the same old tired PLCB. That may also apply to the Montgomery stores since there are 3 "One Stop Shops" in that county too.

Since there are fewer than 20 One Stop Shops in teh entire state after 34 years of trying this is not the norm nor is it any improvement compared to the private market.

Anonymous said...

Ooh, clever. "until you post a picture". I don't believe this comment field permits the posting of pictures or attachments. I tried. I am not talking about seeing a UFO, rather it is simple to walk into Acme, pick up a circular if you don't live in the area, walk over to the wine display, or go to the cooler a pick up a 24 pack of Miller Lite. Those of us in either Montgomery or Delaware County know the reality.

Albert Brooks said...

I'm not sure what color the sky is in your reality but don't you think this would be mentioned somewher by someone at sometime. There is nothing. Nothing in the reviews of Montgomery County ACME stores, nothing mentioned anywhere on Google, nothing in the liquor regulations. No newspaper stories, no blog posts - only you. Sorry if I am more than skeptical>

I don't know if a link can be posted here I've never tried but you can always send me one by email

Lets see:

Albert Brooks said...

You can post a link. Feel free.

Anonymous said...

Regardless of this guy's claims, truth is stranger than fiction. While the in-Acme state store in Newtown Square has been a huge hit in its nine years, the larger state store from 1978 at 42 Alpha Drive (in the SAME shopping center!!!) is still open and does a brisk business!

Lew Bryson said...

It is truly amazing the business you can do when the law gives you a monopoly.

Anonymous said...

Acme only has three stores with one-stop shops, one each in Newtown Square, Horsham, and Phoenixville. These three are each in a different county: Delaware, Montgomery, and Chester.

Lew Bryson said...

Dave, can you just make it easy? WHICH Acme has the wine and the cases of beer for sale? Give us a town, not just a county, and everyone is satisfied. Thanks!

Anonymous said...

I wonder... if the PLCB staff are unionized, why have they never (at least in recent memory) gone on strike? It would almost be nice if they went on strike, because then the organization just might be forced to close all its stores for good (in fact, many supermarket chains have closed stores permanently just to escape union demands). But then the question that would arise is: would laws still get in the way of supermarkets and other private businesses being sold the remaining PLCB inventory? The 1951 Liquor Code perhaps?

Anonymous said...

They have a no strike clause in the current contract