Don't We Deserve a Better Board?

If we have to play by the PLCB rules...could we at least get a better set of players?

Back in 2015 in the Annual Report (page 2), the vision of the PLCB was stated as: "Be recognized as the best-in-class wine and spirits retailer, distributor and regulator in the United States."

Which meant that they wanted to be better than Utah, the only other wine and spirits retailer, distributor, and regulator in the United States. Not a high bar, considering Utah is practically an anti-alcohol theocracy. Four years later, how are they doing? Let's start at the top and go from there.

The Pennsylvania Liquor Control Board has three members, none of which over the past 85 years has any previous knowledge of the liquor industry or about running a 2 billion dollar enterprise.

We have a Chairman who has no experience with even a million dollar business, let along something the size of the PLCB. He did make it to Congress, and served on the Livestock, Dairy, and Poultry subcommittee, and Transportation and Infrastructure committee, before the citizens decided that he wasn't doing the job they wanted and voted him out. Since there isn't much call for somebody who's chummy with with politicians, and knows a little about Livestock, Dairy & Poultry, the PLCB was a perfect place to put somebody who was owed a couple of favors.

Governor Corbett appointed Republican benefactor Mike Negra to the board. Mr. Negra does have a history of being involved in multiple successful businesses, so at least he has a concept of what is going on, but no actual hands on with the liquor business, or anything the size of the PLCB.

Lastly we have the newest member and first woman ever to serve on the board, Mary Isenhour. Although you wouldn't know it by looking at the PLCB website. Here it is, over a MONTH after her confirmation, and the PLCB still hasn't decided if she rates being included with the other board members. (Let's see how long it takes for them to include her once this is published.)*

Keeping the public informed through transparency is sadly not the way the PLCB works.  Remember that it took over 100 days before they removed Michael Newsome, and that was only after I poked them with a stick again. Newsome might still be there if I hadn't said anything.

What are Isenhour's qualifications? She was Gov. Wolf's Chief of Staff and a campaign aide. Her business experience is like the others, desperately lacking in knowledge and size. She replaced Michael Newsome, who was Gov. Wolf's CFO in the furniture business -- can't get more qualified to sell liquor than that...or can we?

Remember how we were comparing the PLCB to Utah's State Store System of Stores? So how does the Utah DABC stack up? They have a seven member board that's appointed, but there is also an advisory board of seven members...who must come from defined specific areas of expertise. The Governor can't just willy nilly pick his favorite dog walker to sit on the Advisory Board. Utah specifies that the advisory board members are selected from the following areas of expertise.

Retail Alcohol Industry — Wholesaler Industry — Manufacturing Industry — Restaurant Industry — Utah Substance Use and Mental Health Advisory Council — Alcohol or Drug Related Enforcement — Division of Substance Abuse and Mental Health — Alcohol or Drug Abuse Prevention and Education

The Utah version of a Superstore

Another view. Pretty nice, right? 

It is almost certain that since this system was adopted every Utah DABC Advisory member is far more qualified than any that have ever been appointed to the PLCB. This doesn't mean that Utah hasn't had their share of people of limited competence on the Liquor Board. The Governor selects the seven members of the Liquor Board, so it can be and likely is as full of hacks and cronies as Pennsylvania. The difference is that the Utah board can't go off the rails making arbitrary decisions without an adult from the Advisory Board watching them. No deciding that 12 packs are cases, no robot wine armies, no variably price screwing the citizens, and no being over a Billion in debt. Oh, and they have had women on the Boards for years already.


End the PLCB jobs program - PRIVATIZE


*True to form it only took the PLCB 42 days to finally put up a picture.  Not quite as bad as the 102 days it took to take down the board member she replaced.

Privatization is Not a Piñata

Looks like the Legislature's been here...

I'm looking at HB790, the proposal that Governor Corbett has put forward for privatization of the the State Store System, and it's becoming clear what the Legislature is in this for: the money. It's not about us, it's not about doing the right thing, it's not about doing what we want, it's about the money.

It's about campaign donations from the unions and businesses, it's about the tax revenue, it's about the shiny promise of a billion bucks in "windfall" money from license fees and wholesaler fees and higher fines and continuing fees... And like I always tell people in other states when their legislators want to raise booze taxes, where do you think all that money's going to come from? Duh, guys: out of your pockets. Because the wholesalers and the retailers aren't going to eat that increase (and no reason we should expect them to), it's part of the price of goods. So the higher the license fees...the higher the prices. It's just a tax under another name. Why, much as I'm pissed about Representative Taylor's planned amendment for HB790, at least he recognizes that, and lowered those fees.

The problem is that the Legislature doesn't look at the booze business like we do: producers and wholesalers and retailers all bringing the wines, spirits, and beers we love to shelves near us, hopefully sold by folks who have the same kind of passion for it that we do (or, hey, by guys who want to make picking up the basics quick and easy). They don't look at it like those in the industry do, as a fair business that makes a decent profit and pays good wages. They don't even look at it like MADD and the neo-prohibitionists do, as the devil's handmaidens, selling pure liquid evil.

No, the Legislature looks at the booze business -- brewers, distillers, vintners, importers; wholesalers, retailers; bars, delis, restaurants, taverns, stadium concessions -- as a big piñata, stuffed full of revenue, the money that makes things work in Harrisburg. Yes, the money that builds roads (and drips down to corrupt the fat cats), and pays for the State Police, and higher education, and state parks, and so on and so on, and it's also the money that gets doled out to make friends happy, and pay for patronage work, and all the semi-shady crap that's been going on in Harrisburg...it's all revenue, and that's really how the Legislature sees the booze business: a piñata, dangling in front of them, bulging with bucks, and the stick's in their hands.

Step right up, Senator! See the beer distributors, gorged with the fruits of their semi-monopoly? WHACK! The bars, making money in cash, helped along by the limited competition the licensing system creates? WHACK! The wholesalers, a layer of markup forced onto the others by three-tier laws -- WHACK! -- the brewers, newly successful craft brewers and the roaring Yuengling -- WHACK! -- Pennsylvania's wineries, ignored by the State Store but making people happy with festival fun -- WHACK! --the new distillers, better teach them how it works before they get too big -- WHACK! -- and the grocers and drugstores, wow, new blood! -- WHACK! WHACK!

 WHACK!

And then...the piñata breaks. The revenue tumbles out! Oh boy, grab it, shovel it into your committee bags, scoop it up to take home to your campaign contributors! Don't worry about the broken shell of the piñata. Don't worry; the system has limped along for decades, made to work by dedicated people who worked within the ridiculous cage of complicated laws you made, who did their best to try to bring the citizens what other states' peoples took for granted. It doesn't matter if you don't get this right: you've been ignoring what's wrong with the State Store System for over 40 years, you can ignore the mess you're going to make with privatization, too.

Don't let this happen. Call your representatives, email them, visit them if you can. Go to Facebook, tell Representative Taylor that you want real privatization, not some watered-down "modernization." Here are some talking points, bullet points, really.

• License fees are too damned high.
• There are too many different types of license, and the mistake of the "case law" is repeated in multiples with all the different arbitrary limits on how much each license can sell in one transaction.
• Beer distributors should not be charged a special fee to sell sixpacks, and there shouldn't be a minimum sale of a sixpack: do away with these ridiculous minimum and maximum sales altogether.
• Privatize fully, NOW. Give them 6 months. 

Don't break the system to get at all the money inside. Free it up, and collect the extra taxes you'll get when people no longer feel the need, the urge, to avoid the screwed-up mess we have and buy across the border.

And most of all...there is no windfall. If the State Store System really were the "valuable public asset" the unions keep trying to tell us it is, some company would be offering you money to take it over and run it. It's not. It's an annoyance. The people of the state despise it, and can't wait to see it gone. Forcing the new licensees to pay for it is just...whacking the piñata.
 

The State Stores have had 80 years to get it right. They haven't, they won't. Game over. PRIVATIZE.

The New Proposal

Governor Corbett announced his plan for privatization on Wednesday. I want to see more details, but it goes a lot further than Turzai's flawed plan from last year. The 'unlimited' licenses for beer and wine sales alone are a huge boon for consumers, and SHOULD shut up the "all the licenses will go to big box stores, waaaahh!!!" crowd...though it won't, because they can't wait to cloud the issue.

Get the details. Get organized. Let the Governor know you support privatization, and let your legislators know, too. Tell them this is an important issue for you. Because I guarantee you, every State Store employee (and their families) is calling their representative every week to let them know it's an important issue for them, and filling them full of crap statements about jobs, and "profits," and safety, and morality, and all that jazz...all of which doesn't hold up to examination.

I'll lay it out -- I'm back on the job, now that the game is afoot -- and yeah, we'll talk about The Fall Of Conti, too, just for fun, since he's become a non-issue. Sorry to see him go, he was a real poster child for privatization.

Best shot we've had in decades. Make it happen. If you can, join our Facebook page. Thanks!

Is Privatization Dead? Not at all!

The Legislative session is effectively over, and the privatization bill has died with it. No one's doing anything till after the election, at which point privatization would have to be re-introduced. Mike Turzai, the vocal champion of privatization in the State House, damaged himself badly with a gaffe about voter ID, and by failing to bring privatization to a vote. Governor Corbett has said recently that privatization is still a top priority, and that he will present a proposal next year, but the Legislature may change hands, and his approval ratings are low.

We're screwed, it appears.

Oh, shut up. That's just what the PLCB partisans want you to believe! The truth is that the PLCB's incompetence is the gift that keeps on giving. As long as they keep screwing up, privatization is going to be in the Legislature's face, and the Internet makes it even easier to keep up the pressure.

Don't believe me? Take a look at this recent Philadelphia Inquirer poll. "The poll found that 55 percent of respondents supported privatization, 28 percent opposed it, and 17 percent either did not know or did not answer." That's almost 2 to 1 in favor among those who have an opinion. It gets better: "61 percent of respondents in the bipartisan survey said they supported allowing grocery stores to sell beer and wine." Even the clueless Legislature can't ignore numbers like that forever (except they will, because the unions that represent the State Store workers continue to get right in their faces and remind them that they vote and that they give lots of juicy campaign donations).

The PLCB stepped in it again during Sandy last week, when they shut down the entire State Store System for two days. Now, some of the stores were without power, and some were in areas where it was dangerous to drive...but the PLCB drove home the problem with a stupid state-wide monopoly by shutting down every single store, regardless of local conditions. Even some of the employees admitted it was a stupid thing to do.

Want more? How about even more bad press for the goofballs who run the PLCB and the State Store System? That's right, Joe Da CEO was in the news again, and it wasn't because he's a great humanitarian. It's about that dopey Tableleaf in-house wine brand they shoved down the throats of Pennsylvanians. The Legislature wanted to know how and why this lowball wine brand came to be on the State Store System Shelves in (unfair) competition with other brands, and Conti told them that vendors approached the PLCB with wine samples. But that's not the story PLCB marketing director Jim Short tells: he says he went to the wine companies looking for cheap wine to put under the Tableleaf label. Hmmm...a falling out between two of the people at the PLCB under investigation for corruption with vendors? 

It gets worse, according to a story on the TribLive website:

Conti told the House committee that the Wine and Spirits Advisory Council, a group of consumers and liquor license holders empaneled by the LCB, tasted samples of wine submitted for consideration by a number of vendors competing for the TableLeaf brand, transcripts show. But those council members deny being involved.

...

In later interviews with the Trib, Conti changed his story again, stating that an LCB wine educator and outside sommelier tasted samples submitted by vendors.

But Judy Carroll, a wine educator for the central region of the state, said educators don’t play a role in choosing products. “I do classes and seminars with the people who work in the (state) stores,” Carroll said.She said her six counterparts elsewhere in the state all do the same thing: conduct classes to educate state store workers.

And Melissa Monosoff, the sommelier under contract with the LCB from December 2007 through November 2011, said she was not involved in the development or selection of TableLeaf wines “in the slightest” and had “no idea who was.”

Conti, once again, has apparently misspoken. That's the arrogance of the PLCB for you.

Want more? How about this: The LCB, the Board itself, is making a dumb show of its obligation to meet publicly. Check this out, again from the TribLive website:

A Tribune-Review analysis of nearly three years of LCB meeting records, along with attendance at meetings, shows many of the board’s twice-monthly meetings lasted just 15 to 20 minutes with little or no public discussion before votes. Critics speculate the lack of discussion means the bulk of the agency’s decision-making occurs out of public view.

“It appears that ... the staff and the board members have developed a way of doing business that is difficult, if not impossible, for an average citizen to follow,” said Senate Majority Leader Dominic Pileggi, R-Delaware County, an advocate for increased government openness.

“Certainly, these issues of how the board operates will be given a fresh look as we work through the legislation for changing the way citizens are able to buy alcohol,” Pileggi said.

Unfortunately, what Pileggi means here is that the Legislature is still considering the ill-advised "Modernization" program that the PLCB is advising! Does this make sense? Here's an agency that is crippled by incompetency, riddled with corruption, consumed with its own arrogance...and you think it's a good idea to let them tell you what's needed to fix their problems?! 

We have a big job ahead of us in 2013. We need to remind Governor Corbett of his promises. We need to remind the Legislature and Senator Pileggi that we want privatization, not some crappy "modernization." We need to get a good, fair bill that gives us privatization that makes sense, not the cock-eyed greedfest that got passed in Washington (that people still seem to prefer to the old state store system). And we need to get serious about it. 

Get started now. If you're in the Philadelphia area, please come out this Thursday to Yards brewing for our second beer laws forum: if you WANT it to cover privatization, I'm willing to expand the conversation. We had 100 people at the last one, I'd love to have an overflow crowd. We're going to be talking about how to take action. It's time to get rolling.

Next year - why we need to get this right

Privatization is over for 2012. The unions shouted and chanted and wore their matching t-shirts while their president for life, Wendell W. Young, fourth of his line, told scary tales of "the possibility of liquor stores on every corner" if privatization went through, deliberately ignoring the ridiculously inadequate license caps legislators carefully included in every proposal. The social conservatives quietly pressed for more regulation on alcohol. And the fearful legislators, mindful of the campaign contributions of these two groups -- especially those of organized labor -- gutted the privatization proposal that was before them. Then majority leader Turzai's hamhanded politicking ruined any chance that it would go anywhere. So once again, the clear will of the majority of the Commonwealth's citizens was thwarted by a gutless government.

Well, maybe not so bad. After all, the voters of Washington went for a privatization scheme that raised their already high liquor taxes, which should be a caution to all Pennsylvanians who want privatization. That caution, of course, is to be very, very careful about the privatization you get. Because all we've been offered recently is a bill -- HB11 -- that obviously was written with large corporate interests very much in mind, and an amendment to it that was clearly designed to be impossible to pass, in a nod to the power of organized labor. These were not the privatization we wanted, and I'm glad they didn't pass.

I've already made some suggestions in that direction, and you can see them here. To sum up briefly:



1. Let supermarkets sell beer, wine and liquor, purchased from private wholesalers. This competition will likely kill the State Stores anyway.

2. Charge a flat fee to any business that wants to sell booze – no cap on licenses. This will actually make more money for the State, and make it easier for non-nuisance bars to thrive.

3. Tax volume, not value. The Johnstown Flood Emergency Tax makes cheap booze even cheaper, while making better booze even more expensive. Go to a gallonage tax, like almost every other state.

4. Allow Pennsylvanians to buy wine, spirits, or beer in other states, or through the mail/Internet from anywhere, without penalty. -- End the police-enforced monopoly.

5. Allow any authorized retailer to sell beer in any volume they desire, without fake restrictions. -- End the case law. Now. The Legislature has fiddled around for years over this simple change. Shut up and do it.

6. Open up the wholesale market to more competition. -- More wholesalers means more competition, which means better prices and service.

Start planning for next year. Ask your legislator now where they stand on privatization. Tell them that you're in favor of privatization, that you're in favor of doing away with all vestiges of the case law, and that you need to know if they're in favor of those two things...and if not, you want real good reasons why not. We need to be clear with the Legislature that this is an important issue for us, and that it will affect how we vote next month.

The PLCB has shown abundantly how riddled with incompetence it is, and now their corruption is coming to the surface as well. Their ludicrous "modernization, not privatization" campaign is pathetically self-serving. Here's a thought: how about someone in Harrisburg thinks about all of us and what we want instead of making another damn skeezy deal to get some other small group what they want?

This is far from over, though PJ Stapleton's early resignation is a welcome gift. The day after the election, remind Governor Corbett that he owes us privatization.

More on Contigate

Monica Yant Kinney scorched the two apparently ethically-challenged heads of the PLCB -- Joe Da CEO Conti and PJ "PJ" Stapleton --  this morning in her Inquirer column. It made me think more about this, because she brought up some good points, not least of which was this: why were these guys dumb enough, cheap enough to do this stuff on their State-supplied email and computers...after Bonusgate and the conviction of Bill DeWeese?

Putting in an order for more Phillies tix

It's worth pausing to shudder that Harrisburg remains so clueless about the need to separate public business and political enrichment in the aftermath of Bonusgate and Computergate, the scandals and trials that led disgraced former House Speakers John Perzel and Bill DeWeese to share a prison cell.
Have those who run this state learned nothing about relegating greed to their home networks? Surely these guys can afford a second BlackBerry. After all, Gmail is free.

Apparently they haven't.

I posted this on Facebook, and some have brought up that this kind of thing is common in many industries. Well, sure. I have to say, the booze companies think nothing of this kind of stuff. It's open knowledge that I accept samples -- practically everyone in the business does, even journalists at newspapers with solid ethics codes (when you get samples from everyone, there's no influence to be "nice" to anyone in particular) -- and I've been on junkets to production facilities. Those were only when I had an actual story to write, and believe me, the Caribbean rum trips and cognac trips I've turned down, jeez, I woulda liked to have gone....but that didn't pass my personal sniff test.

I've turned down offers that were just plain over the line. Like Phillies tickets, and concerts. Only time I've ever been in a Phillies box is when I was hired to do a beer tasting in one; only free tickets I've ever accepted were from the Red Cross as a thank-you for platelet donations. I don't do that. I keep it to stuff that will actually, honestly help me do my job by getting me into relevant facilities and areas that I wouldn't otherwise be able to visit. And when I do, I make a point of noting that it was paid for, and I try to write about it as honestly as possible.

The difference is, by the rules these guys acknowledged when they took the jobs, all of that kind of thing is illegal and unethical. They are government officials, in charge of a retail monopoly, and therefore have to play by different rules. Apparently they forgot that, and yes, that does make you wonder about the "culture" at the rest of the agency...especially an agency that's been the subject of multiple special audits in the past few years for possible ethics violations (that found that while the agency had met the letter of the law, the spirit of the law was bent or broken).

Does all this have anything to do with privatization? Does it say anything about the agency and its mission? Or is it, as one State Store clerk and union rep told me, simply an ad hominem attack on the people at the top, and has nothing to do with the State Stores? Stepping aside from his misunderstanding of the ad hominem fallacy, I would argue that even so, there is a direct relationship between the agency and the behavior of its leaders...particularly given that the same kind of ethical violations took place at another, very similar agency (the North Carolina ABC, see below), and that, as I mentioned above, this isn't the first ethical question that has come up at the agency.

This is an independent agency. It answers to no one directly. The Governor can't fire Joe Da CEO, he can only ask the Board to do so, and has made it clear that the Board has defied him on that (something they did to Ed Rendell fairly regularly). The Legislature can't make the PLCB do anything without changing the Liquor Code, something they've shown very little stomach for -- at least, any effective change. The PLCB has its own judges (lazy though they apparently are), its own police agency (yes, under the State Police, but at the PLCB's beck and call; it's called the Bureau of Liquor Control Enforcement, after all), and most importantly, its own budget. The Legislature can't even cut off their funds, the usual method of reining in a rogue agency.

The PLCB has grown to be lazy, arrogant, and wasteful. The administrative costs of the retail operation are out of control; there are fewer stores and more employees than there were in 1999, for example. It is a patronage pit; Conti's job alone proves that. Privatization will cure that. The regulatory functions will run cleaner without the contradictory retail function, or they could easily be assigned to other agencies (as suggested here and here), which would save even more money.

We'll have to take it to the Capitol before this is over.

The Legislature may have dropped the ball...again. Doesn't mean we have to. I'm working on a plan of action, and hope to have it up here shortly. This is opportunity, people: Turzai's shit plan HB11 has failed. We need to press our desires home to the Governor's office, but they won't give a damn if we don't give a damn.

Read that quote up to the right, the one that's been here since the day I started this blog. It's the truth, and it's the only way we'll get this done.

"...there was [in 1997] no overarching passion within the General Assembly, or in the public at large, for privatization. Unless and until there is a general hue and cry, it is very unlikely there will be a privatization initiative that succeeds." -- John E. Jones III, former PLCB chairman

Will Corbett Give Conti The Axe?

Check this out, from John Micek's Morning Call politics blog "Capitol Ideas." 

"Absolutely," Corbett told reporters this morning when he was asked whether he wanted to scrap the six-figure position now held by Joe [Da CEO] Conti, a former Republican state senator from Bucks County. Conti, who is paid $156,000 a year, was appointed to the job by ex-Gov. Ed Rendell.
"I have never saw the reason for the initial appointment for the CEO. I still don't see the reason for the appointment of the CEO," Corbett said. "But I need two votes. I need two votes on the board to change that."

"Absolutely." And with the ethics issues that came out today, I'm guessing that the board member he's looking to replace to get those two votes...is PJ "PJ" Stapleton. That will shake things up.

"Shit! We all just got fired!"

This is a great solution. I've been concerned about Conti's gaffes and screw-ups. They're great for privatization, the man is The Gift That Keeps On Giving, but...he's been delivering too much lately. I was afraid that he was finally going to get canned, and then they might replace him with someone who's actually got the chops for the job. That would give us The Newman Problem: a PLCB that's just good enough to lull people to sleep and keep stumbling along, when we could get rid of the thing and get the good booze access other Americans enjoy -- at least, that some of our neighbors do.

But dump Conti and the whole CEO position? Brilliant, why the hell didn't I think of that? It's because governments rarely allow any position to go away, but we might get lucky. If Corbett started cutting a top manager from the PLCB every month...well, it would be a start!

Retail Booze Privatization: why HB11 doesn't cut it

HB 11, a bill proposed by House Majority Leader Mike Turzai back in July, is still the standard bearer for privatization. Privatization currently has the support of Republican Governor Tom Corbett, who has majorities in both houses of the legislature (although the Senate Republicans are stalling, possibly trying to squeeze out a deal on a Marcellus Shale "tax"). To make things more likely, the PLCB has obligingly stumbled badly in the past two years with: 

• two contracts of questionable ethics and effectiveness – one for the wine kiosks, the other for 'courtesy' training
• the embarrassing public failure of the wine kiosks (and a clumsy attempt to cover up a strongly negative internal review of the idea)
• a disastrous install of a $66 million inventory system that led to a gross overbuy of inventory (which then had to be stored in trailers in summer heat) and a shutdown of licensee deliveries pickups (the PLCB doesn't deliver...what was I thinking?!) for a week
• a still-simmering corruption debacle at the Philadelphia warehouse in which over 20 employees were suspended (and another cover-up)
• a complete fiasco over beer registration raids on three Philadelphia bars that led to very uncomplimentary hearings on the subject
• a frustrating inability to promptly close nuisance bars
• and a baffling failure to turn significant 'profits' with a police-enforced monopoly on sales of wine and spirits

This is the time to strike on privatization, and as you know, I've been all for it. I've called for it, argued for it, howled for it. 

But unless substantial changes are made in HB11, I cannot support it. 

It is not a question of the perfect being the enemy of the good; this bill has fundamental flaws that are simply not in favor of the citizens of Pennsylvania. I believe that they will result in the replacement of an unresponsive public monopoly with a poor selection of goods…with an unresponsive private oligopoly with a poor selection of goods, and I cannot support that. We have one chance to get this right, because changing the laws again will be even tougher. Let's have a look.

First, and most important to me, HB 11 does nothing about the intolerable police-enforced monopoly. If it passes as is, Pennsylvanians are still forbidden by law to bring home a bottle of wine from New Jersey (or Maryland, or Delaware, or New York...). I've been assured directly by Representative Turzai that the police will no longer enforce this, but that's not good enough. You're a legislator; don't tell me the police won't enforce a despicably un-American law; change the law. When so much of the state's population lives in the tight pocket of the southeast, just across the bridges from huge liquor stores, to do anything else is simply ridiculous. Kill the monopoly, encourage competition. The only reason this is even faintly legal and constitutional is because of the overboard interpretation of rights granted to the states through the 21^st Amendment by federal courts; there is no such monopoly on any other goods. The police-enforced monopoly is insulting and intolerable. I cannot and will not support HB11 or any other privatization proposal that does not end it, and neither should you.

Second, the proposed wholesaler fees for exclusivity of brands pretty much guarantee a smaller selection of wine and spirits. Nathan Lutchansky (of the PLCB Users Group blog) has explained this in greater detail than I'd care to replicate; read it there. You'll soon realize that this is a non-starter. Why is this here? Well...maybe this is the reason (and Turzai's general counsel Jim Mann is extremely protective of the bill as written, BTW). Clean bill, please: do-over time.

Taxes are another issue: they're too high. Turzai has replaced the insulting “Johnstown Flood Emergency Tax” with a more rational gallonage tax, but it attempts to replicate the revenues from the onerous Johnstown tax – plus state sales tax, plus the PLCB's “profit” that goes to the state (not really "profit," but a somewhat arbitrary number set each year by the legislature; didja know that?) – by boosting it to crazy high levels...more than twice the taxes in neighboring states. Again, Lutchansky hasthe numbers on this; have a look (see his "Issue #2"). The taxes on wine and liquor simply do not have to be that high. They're unfair at those levels; why should I be paying so much more to fund state programs that benefit everyone just because I drink -- moderately!? Now's the time to make these taxes more equitable, instead of some of the highest in the nation (which is weird, because we have one of the lowest beer taxes...). Replace the revenue with a shale gas tax if you have to.

A huge problem: what about beer?  Why hesitate when we can fix some of the most egregious problems with a couple quick penstrokes (see below) Get rid of the insane case law, now! While we're at it, do away with ALL limitations on sales by licensees: “distributors” can sell anything from a single bottle to a keg, and so can taverns (and delis, and supermarkets with deli licenses), and fix the tax laws so that all retail outlets are on the same footing (right now, bars pay more taxes than distributors...say what?). Then, allow beer distributors to add wine and liquor to their licensed sales; allow the new wine/liquor licensees to sell beer. The artificial separation of sales is all about protecting business status quo; rewrite these laws for the benefit of Pennsylvanians, citizens, and voters for a change! Hell, if Joe "CEO" Conti can say “I'm for the people of Pennsylvania,” so can I!

1,250 licenses is simply not enough. If the number were doubled, to 2,500, we would still be under the national average per capita, and this would help address the issue of oligopoly (see below). It will also help address the red herring issue of rural retail access.

I don’t know enough about how the PLCB sells to licensees to complain about it, so I’ll tell you what a friend of mine, a licensee, said:

“My concerns are from a licensee’s point of view. I don't want to be forced to buy from one wholesaler that has a limited selection, makes it difficult to place special orders, and charges retail and sales tax on ‘wholesale purchases.’”

To tell the truth: I don’t even know what HB11 does to address these concerns. I do know that almost every licensee I've talked to who tries to keep a premium wine or spirits inventory finds the PLCB frustrating, and that almost every one is afraid to criticize them. I’d like to hear more about what HB11 has for licensees...I suspect it's not much.

The licensing scheme in HB11 is just that: a scheme. It’s easiest to quote from a licensee who emailed me about this:

“The huge issue I see with the bill is the emphasis on large (over 15,000sf) stores. Was this bill paid for by big retailers like Total Wines? Who the hell is the state to mandate the square footage of a private business? Many of the state stores are much smaller than this. As per the bill, over half of the roughly 1200 stores will need to be over 15,000sf! These large stores often have lots of bottles, but by necessity need to focus on industrial products, not small producers. How is this going to increase selection? We don't need bigger Absolut displays. We need many smaller stores run by entrepreneurs who find and offer cool products. This bill would be the equivalent of mandating that over 50% of all restaurants be more than, say, 5000sf in size. Can you imagine what Philly would be like? A lot more Ruby Tuesdays, a lot less anything good. This aspect of the bill nearly makes it pointless to have privatization!”

I agree. The “protections” against private monopolies could be made much more effective by simply dropping the maximum licenses owned by any one company/person to ten instead of forty. Problem solved. If that loses support from big chains, well, first, too damned bad; and second, it will gain support from the people who are concerned about big chains grabbing all the licenses, and throttling selection. Who are we more concerned about? What’s good for business -- ho ho ho, don't you worry, little voter! -- is good for citizens? Sorry, that’s how we wound up with 75 years of the case law!

Finally, let the results of Granholm flow, and again: favor Pennsylvania’s citizens, not business interests who’d rather see no direct shipping of wine (or spirits or beer) because it might cut into their sales (studies show it doesn’t). Make the taxes realistic, and let direct shipping happen.

Those are the issues I have with HB11. I’d like to see them addressed, or explained, before I solidly support this bill. I've been told that some such changes are under way, but HB11 shows no changes online. Until such time as a majority of these issues are addressed and the police-enforced monopoly is done away with, I do not support this bill, and I urge you to consider these points before you support it. We have paid -- Lord God, we've paid -- for the misguided morality of our Repeal-era legislators and Governor Gifford Pinchot. We've earned a better road to privatization; one that takes our concerns into account first.

Where are we going to get that? I hope that Governor Corbett is doing what I'm starting to think of as his Swan Routine: serene and quiet on the surface, paddling like hell out of sight under the water. From the way he's talked about HB11 after the PFM Report came out (more on that soon) -- "a place to start" -- I don't think he likes it any more than I do. So here's hoping he puts leverage on Representative Turzai (and Jim Mann), or better, puts out his own version of a privatization bill that actually writes privatization for citizens.

New PLCB Chairman in Favor of Privatization

• Will new PLCB Chairman Skip Brion preside over the agency's demise? 
• Is Mike Turzai's HB11 the road to the promised land of privatization, or too flawed to survive?
• Does the PFM report on privatization change anything?
• Will Governor Corbett step in with his own proposal on privatization?
• Does anyone other than Hereditary Union President For Life Wendell W. Young IV and State Store System employees ever write anything in favor of the PLCB in Pennsylvania newspapers?
• Where's Joe "CEO" Conti disappeared to?

 There's so much going on with the PLCB that it's hard to address it in one post...especially when I'm getting back to things after two months of heavy travel and a ton of work. So I'll give it a shot in a couple of posts instead. First: the latest news.


Joseph "Skip" Brion was confirmed as the newest member of the PLCB on Tuesday, Nov. 1, and immediately became Chairman. Brion is a Chester County Republican, a lawyer (what a shock...), and openly in favor of privatization. Brion will chair his first meeting next week, and has said the Board needs to "open itself up and be more in tune with what’s going on at the Capitol." That would certainly be a refreshing change, given how totally tone-deaf the PLCB has been in recent years.

But is anything really going to change because of this? Not likely. Brion may be pro-privatization, but he's still a politician, and that means that when the chips are down, privatization rhetoric aside, he's looking for more of your money -- sorry, more revenue -- to spend on programs of variable worth. So don't expect the high taxes that are the most unsupportable part of HB11 (yeah; more coming on that, and soon) to change.

In fact, Brion has made noises that he's interested in "modernizing" the PLCB. And that makes my heart sink. Because I can tell you exactly what will happen. They'll get some stuff through the Legislature -- how, I'll be damned if I know, because we can't seem to get a simple thing like killing the damned case law through in 20 years! -- and the We-Know-What-You-Really-Need Committee will continue their latest course of buying every single crackpot product that comes on the market (even though no one in the system has the slightest clue on what they are or how to sell them), and they'll make a big stinking deal out of it (spending millions more of your tax dollars on marketing a police-enforced monopoly)...and we'll be satisfied just enough to let privatization fade. And within five years, they'll be back to the same lackadaisical shit job they were doing two years ago before Tom Corbett came along and made privatization an issue and got them scared.

Is that too harsh? Think I don't know what I'm talking about? Well, friend, just cast your memory back to the Chairmanship of Jonathan Newman. Remember that? Back when "Chairman's Selection" actually meant something other than "No one else wanted this stuff, so they cut us a deal on it, and we bought a whole bunch and stuck it in a hot trailer for a while"? Because things were great for a while, and Newman was energized, and enthused, and then what always, inevitably happens at this agency happened: someone noticed a buttload of money, and started screwing with it. And all of a sudden we had Joe Da CEO popped in there -- because he had so much experience in off-premise retail and running a huge wholesaling operation, right? -- fiddling with the knobs and pulling on the strings. And the wheels fell off. If you don't think that exact same thing would happen after "modernization," I've got a bridge to sell you.

Don't fall for it. Stay staunch. Let's get rid of HB11, take Corbett's report, and forge a good privatization bill. Blow open the number of stores, find state jobs for the union clerks, get beer in there, kill the case law, open the borders, lower the ridiculously high taxes, and then watch jobs get created. Watch the restaurants in Philly bloom, watch our already great beer scene blossom, and watch the state catch up to the 21st century. Don't give up now: keep the pressure on your legislators.

More to come. Shortly.

Where's Joe "CEO" Conti disappeared to?

The Fight for Privatization Starts Today

Well. I've been silent, and I regret it...but I've been really busy (and, I'll admit, doing more on Facebook and Twitter than here, which was probably a mistake and all my blogs have suffered for it). Still and all...

Hot damn! We appear to have hit the election jackpot, if only in terms of the abolishment of The State Store System. It's been a wild time since election day. Here's what's happened.

•                     Governor-elect Corbett (who is inaugurated today) confirmed that he is not only in favor of privatization, he's in favor of rapid privatization;

•                     Senator Dominic Pileggi and Representative Mike Turzai both confirmed that privatization was at the top of the legislative agenda;

•                     Turzai, who has the most comprehensive privatization legislation on the table, was elected House Majority Leader; Pileggi, who supports privatization, is Senate Majority Leader.

•                     Almost every newspaper editorial staff in the state has come out in favor of privatization;

•                     The groundhogs at the PLCB stuck their noses out into the harsh new light and decided that they didn't really need to put through that across-the-board price increase they'd told us they needed;

•                     And...the wine kiosks blew up, and the PLCB finally had to admit there were problems and took them offline right in the middle of the holidays, possibly the biggest impulse-buy season for wine in the whole year.

Whew. It's enough to make a man weep for joy. But you know...it wasn't complete until Wendell W. Young IV (president of United Food and Commercial Workers Local 1776, the PLCB employees union) came out of his cave to shake his booga-booga stick and warn us of all the terrible things that will happen if we privatize.

That's how I knew this was serious. Okay, serious in a funny kind of way, because the only players in this whole spectacle that are goofier than WWY4 are the loonies at the Independent State Store Union, the union that represents the PLCB managers (is it just me, or is the idea of a union for managers just so indicative of what's wrong with this whole clusterf – er, mess?). They babble and hoot, and release their manifestos about the evils of alcohol and long hours at the State Stores (guys...if you don't like alcohol, maybe you should consider a different line of work?), and sound a lot like late-night AM radio preachers.

But WWY4 at least plays it a bit serious, trotting out scary (irrelevant and incorrect) numbers, savage (ad hominem) arguments, and managing to insult the motives of everyone in favor of privatization. You can tell it's going to be ugly – he's decided to call people who support privatization privateers, get it? Like pirates? If that's the way it's going to be, get me my letter of marque, and give me clear seaway, I'm after some prizes.

One of his biggest arguments is that the sale of the system -- which is really the sale of retail and wholesale licenses; the stores and two of the three warehouses are leased -- won't really raise $2 billion as Turzai claims. Over and over, he repeats (and so do his UFCW drones) that those licenses will cost $2.3 million if Turzai's going to get $2 billion, and that's going to shut out mom and pop stores, and big box stores will get a monopoly on liquor and wine sales in PA. 

Okay...first, I don't really care about the money. It's about getting rid of a ridiculous state retail monopoly that doesn't work. It's about service -- Joe "CEO" Conti was recently quoted in the New York Times as pleased that State Store employees “aren’t incentivized to sell”, and by God, he's right -- it's about selection, it's about this is ridiculous in 2011.

Turzai agrees. “The fact is, government is not private business. It simply cannot compete with private industry by pretending it is something that it is not. When it comes to the PLCB selling wine and spirits, we all need to ask: ‘Should Pennsylvania really be in the business of selling alcoholic beverages?’ How can the government agency charged with educating the public and regulating the industry, be in charge of maximizing sales of wine and spirits in the Commonwealth?”

But look. Say those licenses go for $400,000 each; not unreasonable, and a once-in-a-lifetime opportunity to get part of a former monopoly. The 620 stores we have now are not enough; you can see that by looking at other states (that have no better or worse a record with alcohol problems than Pennsylvania). So let's say a nice round thousand stores. That's still half as many -- proportionally -- as they have in New York, and the alcohol problem stats there are about the same as in PA. So, a thousand stores at $400,000 each is $400 million, plus 100 wholesale licenses is another $100 million. $500 million. It's not $2 billion. 

But instead of making them pieces of property -- like we did with tavern licenses, which is stupid -- make them non-transferable. The license is issued, and you have to pay a reasonably substantial fee every year to maintain it -- $10,000? $20,000? -- and if you sell the business...the new owner pays the state for the license. Not you. The state charges for the new license whatever the going rate was in the initial auction, plus inflation.

Don't want big box stores owning all the liquor licenses? Simple: Massachusetts says no one/no business can own more than a small number of liquor store licenses (can't remember if it's one or three off the top of my head); do that here. Why not, the 21st Amendment says we can! That keeps mom and pop in the running.

Here's one that Wendell and his minions trot out all the time, flash it by you fast so you don't think: 

"If the privateers do their homework, they'll see that selling the Wine and Spirits stores can't replace the nearly $500 million a year they generate for Pennsylvania taxpayers. And they'll see that selling the state stores would be a onetime money grab at the expense of an asset that generates reliable, growing revenues."

The Wine and Spirits stores don't generate nearly $500 million a year. They collect about $400 million in taxes; they 'generate' about $100 million in profits. The taxes -- not in exactly that form, but still about the same amount -- will be collected by private stores, and the loss we're currently experiencing in "border bleed" will likely go away, resulting in higher tax collections in-state. I mean, if Canal's opens a store in Fairless Hills, I'm not going to Jersey any more (which, by the way, means I won't be buying gas in Jersey, or lunch, or groceries while I'm at Canal's...)!

The point he brings up that's honest is about the union jobs that will be lost: over 4,000. That's what he's really concerned about, and he should be: that's what he's well-paid to do (about twice as much as Joe "CEO" Conti gets, BTW). I get that, but...those jobs should never have existed. The state should never have been in retail. A bad decision 75 years ago, and we should keep paying for it forever? 

No. Cut the payroll, cut the never-ending pension benefits (how many of you have a guaranteed-benefits pension? Know any retail clerks that do?), cut that all out. Give them help finding work (and Turzai's bill does that), and if they're any good at what they do, they should be able to easily find work in a new private system -- good-paying work, with their years of experience -- or even open a store themselves. But running this big a jobs program for unnecessary work makes no sense in 2011.

Wendell smears the motives of everyone in favor of privatization: we're all in it for money. As a citizen, I take that as a deep personal insult. I want nothing more than to be treated like an adult, to have the simple freedom of being able to buy something in a store 15 miles away and bring it home without fear of arrest, to be able to shop in my home state in a way I can currently only do in another. I want to support local business, not a government fossil.

Today is inauguration day. Privatization starts today.