Revisiting some numbers that you won't see the PLCB publish

I first posted Numbers, Numbers, Numbers (some State Store numbers that are always missing in the PLCB's annual report) three years ago. It might be good to have a second look to see if there was any improvement at the PLCB.  The original findings are (in parentheses).

1) The average amount of non-tax revenue returned to the state per unit (single bottle or box) of wine or liquor - $1.25 (73 cents) Beware: this is based on the so-called "profit" turned in to the General Fund, which has little to do with actual profit. It's simply the amount asked for by the administration. We know that reserves were dipped into for 2018, so this number is skewed even more than it normally would be.

2) Not counting the actual cost of the item, what the PLCB spends to put one item on the shelf - $2.91 ($3.06)

3) What PA spends to put an item on the shelf, including the average cost of the item - $10.78 ($11.40)

4) What it costs with taxes included to put one average item on the shelf - $14.48 ($15.21)
Note: While it looks like items 2,3, and 4 are an improvement...this is due to the huge numbers around just 3 items: Fireball 50 ml (+750,000 unitls) and Tito's 50 ml (+175,000 units) and Tito's liter (+380,000 units). When you increase mini sales by over 900,000 units, it skews the average cost and tax per unit. 
  
5) Average real estate rental cost per store (2018) - $1663 a week ($1432)

6) Industry average profit margin 8.1%; PLCB 2018 profit margin 8.9% (6%) The majority of this increase is due to the auction of the "Zombie" liquor licenses, not because of actual retail sales.

7) PLCB effective markup, not counting any taxes - 46.7% (45.36%)
This is because of variable pricing. Now that almost all items fall under that, expect this to rise even more next year.

8) State and federal government workers' average benefits as percentage of salary - 36.4%.
PLCB benefits as percentage of salary - 85-104% (as stated by Board members during the Appropriations hearings in the Senate).

9) Percent of sales actually checked for proof of age - Unknown. 
The PLCB did not include any information about carding in this year's summary. It is still probably under 2% as it has been in years past.

10) Retail Wine Specialists as a percentage of PLCB workers: 2.2%  (1.7%) - Only a gain of 20 in three years. Retail Wine Specialist as a percentage of Total Wine store employees - ~20%


Sources

1. - $185M returned to General Fund plus $30.5M for BLCE plus $5.5M for Alcohol Awareness programs plus $2.5M for Drug & Alcohol programs divided by 178.9 million unit sales. We were told "Modernization" will increase profits by $180M. Is anyone surprised that we're not seeing anything close to that? (Keep in mind that the $185 million is a very flexible number, mostly representing what the Legislature requires from the PLCB, whether it's actually "profit" or not.)
2. - Operating expenses (not counting the cost of wine and spirits) of $520M, divided by units sold. The lower this number, the more efficient the organization is.
3. - Operating Expenses plus Cost Of Goods Sold (COGS) = $1.928B divided by units sold 178.9M.
4. - Gross sales ($2.59B) divided by total units sold. $3.47 in tax for every bottle or box sold is the average of sales and Johnstown Flood Tax; more expensive bottles can be much more.
5. - Rental expense for all operating leases $52.2M divided by 604 stores. Of course, this cost will increase as the PLCB tries to move into higher traffic areas.
6. - IBISWorld, May 2013, Operating Income divided by Sales Net of Taxes. With increased pension costs, workers comp, salary, and benefits increasing, this won't improve any time soon.
7. - COGS divided by gross profit. This fat markup of 46.7% still isn't going to be enough to cover increasing operating costs as the PLCB had to go into reserves again to pay the $185M requested by Gov. Wolf
8. - US Dept Of Labor - Bureau of Labor Statistics, 2016 PA Senate Appropriations hearing.
9. - No information about carding is mentioned in this year's documents. You have slightly better than 98% chance of not being carded (compared to a 0.0% chance at private stores like Wegmans), and since the State Stores are never checked by police for underage compliance...how effective are they?
10. - 4999 (2/15/2019) divided by 111 (www.pennwatch) There appear to be no Spirits Specialists in the PLCB.
11. - Over 5000 employees and 800+ Wine Specialists (Total Wine wiki ). The PLCB has ONE retail wine specialist for every 5.4 stores, Total has SIX at each store.

PLCB Numbers, PLCB lies: the truth about Bailment

A little over six years ago, the PLCB put in place a system called Bailment. Bailment is a common regimen in the business world...which is probably why the PLCB took 80 years to get there.

Bailment is a pretty simple idea; for instance, when you "give" your car to your mechanic with the implicit understanding that there's only a change of possession, not ownership. The mechanic holds your car until the work is done, and it's understood that the car never changes ownership; you don't have to stand there with your hand on the car to maintain your ownership of it.

In the case of the PLCB, bailment is a little more complicated, but not that much. The way it used to be, a wholesaler would deliver product to the PLCB warehouses, and they'd submit a bill immediately. Under bailment, the product is delivered to the warehouse, but the PLCB doesn't take ownership of it until it is subsequently taken from the warehouse for delivery to the stores. At that point, the wholesaler submits the bill, and PLCB will pay them. Well, not right then, that's not how business works, after all. Everyone works on "net 30," where you have 30 days to pay. The PLCB, of course, pays on "net 90." Because they're a monopoly, so there.

Bailment was touted as a big money-saver for the PLCB, a major 'get' the agency wanted legislative permission to use. It would reduce the PLCB's actual inventory costs, which would seem likely. But it would also allow the PLCB to skip the need for their annual $110,000,000 tax-free, interest-free loan from the General Fund at the start of every year, so they could buy product and have something to sell in the stores. Isn't that the way every business works? Borrow money from Mama to buy stock, and then pay her back...interest-free?

Well...the PLCB did stop taking the loan. Which you would think meant that they should have had some extra money to turn into the General Fund, you know, that big "contribution" that the Legislature tells them they're going to make. Yeah, that didn't happen. The amount after bailment was the same as the amount before bailment - $80,000,000.

We don't care -- it ain't OUR money, it's YOUR money.

The big talkers from the clerks' union say that there wouldn't be any increase just because the loan wasn't needed, because that money was used to buy the startup inventory. Let's look at that in round numbers to make it easier to follow.

Say I (as the PLCB) borrow...$100 million to buy inventory. In the course of the year, I make $500 million selling that booze to unhappy Pennsylvania citizens (unhappy because they have to buy from me!) before expenses. I then have to pay back the $100 million, which leaves me with $400 million to pay my other bills. But because of The Wonder Of Bailment!!!, I didn't spend as much just to have things sitting in my warehouse, so I didn't need that $100 million loan...which means I have the full $500 million before expenses. That money is now mine to spend on other things...like increasing the amount turned into the General Fund.

But that didn't happen, nor is that money accounted for in store remodels, in fact, there are fewer stores now than there were then. It's not accounted for in increased education, increased money to enforcement, or buying new LCBee costumes. So where did it go? 

Well...about the same time, the PLCB was putting in a new Oracle computer system. Unfortunately, just like the system they installed before, they didn't do a very good job (the Auditor General said so; both times). The cost overrun was about $40,000,000 (although it was spread out over a few years). Inventory expenses went up over $20,000,000 the first year, even though Bailment was supposed to reduce inventory costs and keep them low. Store, warehouse, and transportation costs went up $25,000,000. Stores' operations and supervision expenses went up $25,000.000  Overall, for the first two years of bailment, PLCB Operating expenses went up over $82,000,000! While both years had "record sales" (so knock-down easy to do in a monopoly that we wonder why they keep saying it), the PLCB had record expenses to go with them and pretty soon...the $100 million was gone.

So...all that money bailment was going to save through reduction in inventory costs? Last year, inventory was about 2.5% shy of pre-Bailment levels. One gets the feeling that the PLCB uses the Servpro motto - "Like it never happened."

After seeing what a bang-up job the PLCB did with our money here, maybe we'll check into how well variable pricing is screwing the citizens, and why we aren't seeing that extra $185 million that wonderful plan was supposed to bring in. We have a sneaking suspicion that the words "rising operations costs" are involved...

"Given our need inside this building..."

Pennsylvania Liquor Control Board member Mike Negra may have inadvertently told the truth (he'll probably be fined for that). Quoted in a story about the PLCB's recently announced price hikes that ran in several state newspapers, Negra let it slip that the PLCB's main mission is the survival of the PLCB, its jobs, stores, and cushy bureaucratic positions. How else are you supposed to interpret this quote?

"Given our need inside this building and throughout our agency due to rising costs of employee benefits and so forth, a lot of that is out of our hands, we felt it was something we needed to do," said board member Mike Negra. "That's what is behind it."

Any PLCB bureaucrat

You see that, right? "Given our need inside this building..." None of the usual window dressing and self-sacrificing bullshit about how the PLCB does so much for the state. Nothing about the General Fund, nothing about the state's financial crisis, nothing about the State Police, nothing about actual alcoholism prevention (what about the children???), and certainly nothing about you, you poor shlub. No, the prices are going up because the bureaucracy needs to fund their ever-increasing operating costs. 

We told you, over and over, that "flexible pricing" would mean "higher pricing." We take no joy in being right, we just wish someone would have listened.

Now can you finally call your rep and tell them it's time to privatize this mess? All of it?

Are Your Prices Variable Enough?

Just how much is the PLCB screwing us with "variable pricing"?

A good question, and one that the PLCB doesn't really want to answer. There is no sunshine at PLCB HQ; their mission is to hide as much as possible, keeping as much information away from the citizens as they can. And why? It's not like they have any competition to worry about, no business secrets to keep: no one else is in their business, they've made sure of that. They do it for one reason: to keep the owners — that's you, and I, and the Legislature — ignorant of what they're really doing; of how they're desperately shuffling prices and margins around to try to look "profitable."

Would the wine kiosks have passed if the citizens, if the press, knew about them, knew that the PLCB had been advised against implementing them...by their own people? Would Joe "Da CEO" Conti been brought back after having been found to have committed ethics violations if the citizens knew, and could do something about it?*(Correction: please see below.)  Maybe anti-competitive branding and placement wouldn't have taken place with citizen involvement. But that all did happen, mainly because the PLCB kept it all hidden away and secret, to the point of having records destroyed, to the point of appearing to have had secretive off-book meetings to make decisions that are supposed to be discussed in public.

Now they don't want you to know how much of a shaft you are getting on variable pricing, the one thing they wanted more than anything else from "modernization." Remember, the PLCB said that they couldn't negotiate prices for 82 years, even though there was nothing in the Almighty Liquor Code that prevented it, and then they said that they did negotiate on some things, but not most. ACT 39 changed that, and supposedly allowed the PLCB to do something they could have been doing all along...only now the game is rigged to benefit the PLCB and not the consumer. That sounds fair.

In the PLCB meeting minutes, you used to be able to see what new products were going to show up, and the cost for those products. Not anymore. The PLCB doesn't want you to know what they are paying and what they are going to charge,  because it will raise questions about why the consumer isn't seeing benefit from "variable pricing." They don't want you to know that they are making an extra $1.16 for every bottle of Jack Daniel's sold while you see no change** on the shelf.

Now, a real retailer wouldn't tell you this either. But the PLCB isn't a real business; they have a police-enforced monopoly to ensure their market share! A real business doesn't tell you this stuff, but their competition keeps them honest, and you can be sure that they're passing along savings to you; if they don't the competition will.

But the State Store System has no reason to benefit the consumer by lowering prices in order to increase market share or maintain their customer base. They don't have to worry about that, and there's nothing in the Almighty Liquor Code that says they do. Remember the founding principle of the PLCB, as stated by Governor Gifford Pinchot himself: “to discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible.”

So what does the PLCB tell us about the effects of variable pricing? The Chairman said that they will not raise prices across the board, but with having to dip into reserves to pay more into the general fund, and trying to prevent privatization by making it look like they contribute more than a piddling amount to the state (not including the taxes, which would still be collected in a private system!), and having to pay off $260 million in pension debt...what do you think they are going to do? Keep their sinking ship afloat in any way they can, or benefit the consumer?

Last year the PLCB charged an average of 45.36% above cost for every product sold.  For the first eight months of this year it has risen to 45.46%, and I guarantee that will continue to climb as time goes on. If you remember, the Democrat's modernization plans said that the PLCB will make an extra $75-100 million because of this alone. That would mean they'll have to raise the charge above cost to over 60% — such a deal!

The choice comes down to this. Do we want to continue to have limited selection, limited convenience, Harrisburg bureaucrats selecting the booze for the entire state, and anti-consumer pricing? Or do we want the freedom of choice that the private market brings?

Privatize - all of it. Retail and wholesale. Why wait one variably-priced month longer?



*Correction: Conti was ruled to have violated the state's ethics code about a year after he was brought back as an 'emergency consultant' and paid about $67,000 more of your booze dollars. Our error, which we own up to...unlike Joe The Ethics Violator, who is currently on the faculty of the Fels Institute of Government, and a lobbyist with Triad Strategies. Great places for a known ethics violator.

** Since the PLCB hides all of their purchase information now, the $1.16 is just my best guess, but it is an educated guess...and it is most likely more.

Reality check: how is "modernization" working out?

The end of February marked eight months gone of the fiscal year, and just under seven months of Act 39's "modernization" of the state's police-enforced monopoly on wine and liquor sales, changes that Governor Wolf trumpeted as "historic."

So things are booming for the State Stores now, right? Well...not exactly.

Remember how bailment was going to cut inventory costs and save the citizens all sorts of money? It may have but it didn't last. Inventory cost went up over 10% so far this year and has now gone up over 46% since bailment was implemented in 2012. It will certainly pass pre-bailment amounts next year with a modest 3% increase. For the same period of time, the inflation rate went up 6.2%. (2012 Inventory $175,902,668; 2017 Inventory (so far) $257,285,382; Pre-bailment inventory $265,816,891)

Still, with all that inventory they must be making more money right? Sorry! Total Operating Income is down almost 5% year to date, while total assets squeaked out a gain of 4.2%. Meanwhile, Total Liabilities jumped almost 16%, from $803.7 million to 930.5 million. (And you know who has to cover that; you and me, the taxpayers.) Total debt is up almost $50 million more than at this time last year; $264,454,330 or about $26 million in additional debt than at the end of last fiscal year. To be fair, the PLCB statement has numerous notations about 'See Note X, Table Y', but they don't provide what those notes are. Are they valid reasons, or just lame excuses? The public doesn't know, and the PLCB clearly doesn't think we need to; it's kind of like their selection, if they don't have it, we don't need it.

The Never-Ending PLCB Story!

The PLCB is selling more product while making less money. In desperation, they're dipping into reserves to make a big payment to try and fend off  privatization, blowing smoke as thick as possible so you don't notice that they're going even further in the hole with liabilities approaching a Billion dollars...all the while remaining as incompetent as ever.

The benefits of modernization? I'm not seeing any evidence of that extra $137 million the Governor said they would make, and I'm willing to bet I won't, with only four months left in the fiscal year.

How many reasons do you need to get rid of this broken system and replace it with one that works for the consumer?

Why does PA think the PLCB has more value than the Military?

Back in August of 2014 I wrote about the supposed value of the PLCB workforce compared to the rest of the labor market. I said, "One can get an idea of how society values a profession by the compensation given." It's a fundamental truth of how the free market works...except in Pennsylvania, where the Legislature has denied reality for decades and inflated the value of PLCB workers to an extreme.

What do I mean? Try this. According to testimony at the State Senate Appropriations Committee meeting of 2 March 2017, the average value of benefits for a full time PLCB employee is 93.6% of salary; so for example, the value of benefits for a clerk making $30,000 a year would be 93.6% of their salary ($28,800), so their total compensation would be $58,800.

Now, for the actual average of a Liquor Store Clerk 2, that's a total of $64,060 in salary and benefits. Here's the rub. Compare that to a US Army Sergeant (E5) with six years in service, who these days may even have a couple combat tours under their belt: $55,233. (If you want to check my math...see below.*)

Really? Why are liquor store clerks worth about $9,000 a year more than combat infantrymen to the state of Pennsylvania? Is their job more stressful?  Do they work longer hours? Do they perform a greater service to the citizens?

I don't know who made this shirt but I want one**.

Of course, you can make this comparison with other jobs, and if you saw compensation like that the prices would probably be higher at that store or firm...but the State isn't forcing you to buy products from that person in that place under penalty of law. You have choices in the free market: you don't have to buy that product, and you don't HAVE to shop in that store. You don't HAVE to support a monopoly. But you do...if you're buying wine in Pennsylvania. (Yes, yes, with the exception of Pennsylvania-made wines bought direct, right.)

So the next time you have to go to the State Store, or have to settle for something because the bureaucrats in Harrisburg decided not to sell the item you wanted in their monopoly system, and they don't allow you to go anywhere else, stop for a moment. Ask yourself if maybe the state should be funding Veteran's care with the same zeal they fund state store clerks.

Privatization fixes that.


*pennwatch.pa.gov lists everybody and their salary who works for the state including those in the PLCB. Search under Liquor Control Board for Agency Name, then select Liquor Store Clerk 2 under the Positions drop-down menu in the results. There are 22 pages of data: add up the individual salaries, divide by the number of them to get an average, and then multiply that result by 1.963 to get the total of the average salary and benefits. For those working for Uncle Sam it is a bit easier.  They do it for you on this site (I used the PLCB HQ in Harrisburg zip code). I've just gone ahead and done the math on the PLCB compensation for you, but you can check my work.

** Buy the T-Shirt here!

This will only hurt a little bit, we're just flexible pricing.

On January 1st, the PLCB raised the price of 341 bottles of Booker's Bourbon from $59 to $99.99, a 66% increase. Bottles that they already had in stock on the shelves across the state. Bottles that they had already bought and paid for at a lower price. This was in anticipation of the published March or April price increase by Jim Beam on NEW product.

However, Beam didn't increase the price to $99.99 due to consumer pressure and outrage, They decided that an increase to $69.99 would be enough at the moment, and changed their minds before the actual price increase took effect. So how come the PLCB price went to $99.99 anyway? (Update: the PLCB has belatedly lowered the price to $69.99...but you are still paying more for bottles they bought at a lower price.)

The PLCB excuse was that they raised the price for Booker’s to $99.99 on January 1 “at the request of the vendor,” according to PLCB spokesman Shawn Kelly. I'd like to see that in writing. Remember: Beam gets no benefit from an immediate price increase, so what the PLCB is saying is that Beam told them, 'Hey, fine. Screw your citizens by raising the price across the board, limiting sales and competitive pricing of our product so you can make more money in your little monopoly.'

There are two factors at work here, a desperate desire to maximize 'profit,' and lack of any consumer protection and overwatch. The PLCB used to brag about how they controlled price increases, saying that industry instituted more increases then they had, but now increases are seen as a way to make more money for the state by gouging the consumer.

How does that work? Say Bottle "A" sold on the shelf for $25 before "Flexible Pricing;" the PLCB paid about $14.50 for it before all the taxes, fees, markups and rounding they add. Now, with "flexible pricing," the bureaucrats decide to negotiate to try and save themselves some of that money. (Negotiating is something they could have been doing all along when it would have benefited the consumer, but they chose not to. But now it benefits the PLCB, so full speed ahead, boys!)

Back to the example. The PLCB knows that another state's monopoly system only pays around $12.30 for the same bottle. They've known for decades that other states pay less, and decided not to do anything about it. There was a conscious decision that having a lower price yet selling more product to increase overall sales was not something the PLCB wanted to do. Too much work selling that extra amount of product for that sales increase, apparently. Yet, keeping the same price, selling the same amount, and gouging the consumer by not passing any savings along when producers offered deals was decided to be perfectly acceptable.

The PLCB now manages to get $1.50 shaved off of the wholesale price. To make sure that the same amount of taxes are collected, they increase the markup from what used to be a standard 30% to nearly 47% to reach the same point to apply the 18% Johnstown Flood Tax. The consumer sees NONE of the price reduction from the agency's "buying power." The state doesn't collect any more taxes, but the PLCB gets to say they are making more money, and they cover their ballooning operating expenses for another few years. Remember: the amount the state gets by having the PLCB in the middle is less than they would get if taxes were raised by the same amount. The cost to the consumer is the same. In other words, we get to pay more to keep the PLCB jobs program afloat.

Here's another example of the "benefit" of flexible pricing: sale items. The PLCB itself doesn't put anything on sale, other than closeouts (of items they can't be bothered to sell), and out of season items ,like the Christmas gift packs that are on sale now. Everything else that you see a sale tag on is a reduction from the producer. Formerly, the PLCB had to pass on those reductions to the consumer; that was the law (and a good law to keep a monopoly in check). What they can do now is "recapture" some of that savings that was supposed to go to you, the consumer, through the magic of "flexible pricing."

Here's how that works. Suppose a distillery offers a $5.00 off special to the PLCB. Used to be that the PLCB approved the sale, printed up sale tags, and the citizens got to pay closer to what some other places charge. But under the new "modernization" law, "flexible pricing" allows the PLCB to decide that they don't want the citizens to have $5.00 off, that $3.00 off is good enough ("Good enough" should be their agency-wide motto), so they take the full $5.00 discount from the producer, print up sale tags for $3.00 off, and they keep the other $2.00 - such a deal! Doesn't that make you feel good about "modernization"? Don't you wonder what rat hole your two bucks is going down?

PLCB apologists will point out that private business can and does do the same thing. Sure, they can, but there is one thing that keeps that in check: competition from other businesses. If you decide to keep that extra $2.00, but your competition down the street (remember, private liquor sales means a "alcohol on every street corner") doesn't, and guess who will have more sales? But pass on some of that wholesale price reduction to your customers, and who will have more repeat business?

This is the heart of it. The total lack of competition in Pennsylvania is why we pay more, why we have less convenience, why we have less selection, and why we don't have the same protection from price gouging the free market provides. Don't like what the State Store System has, at the price they charge? Screw you, you have no choice. But if you're in a free state, and you don't like what Bob's Liquor has at the price they charge? You can just go somewhere else where the selection or prices are better.

This lack of choice will always make the citizens serve the needs of the PLCB  instead of them serving the needs of the citizens.

Where the PLCB Money Goes: Then and Now - A Second Look

Let's have a look at what the PLCB has done with its money -- our money -- since the new millennium has started. I did this story almost 3 years ago so let's see what may have changed The numbers from 3 years ago will be in parenthesis. 

Fewer stores, more employees: In July 2000 there were 692 stores with 2,869 full time workers and 1,072 part-time workers In June 2016 there are 601 (604) stores, and as of May 15th, the last reported figure for FY 2015 there were 3,067 (3,080) full time workers and 1,606 (1,417) part-time workers. Stores decreased by 15.1% (it was 14.6% the first time I wrote this) and employees increased by 18.9% (13.5%). Just looking at it from 3 years ago there are 3 less stores but 176 more employees. 

Higher gross, lower margin: In 2000 the PLCB had record sales of $1,083,330,579 and record operating income of $89,868,893 or 8.30% of sales. In 2016 the PLCB had record sales of $2,430,209,796 ($2,171,946,398) and non-record operating income of $131,770,874 ($151,877,723) or 5.42% (6.99%) of sales a decrease of 53.14% (18.6%) in operating income for every dollar spent in sales compared to 2000. (Hardly surprising, given the increase in overhead represented by the previous point.) Looking at these numbers is there any doubt "flexible pricing" is going to cost you more?

Cost overruns: In 2000 the Auditor General found the PLCB incurred $408,000 in additional costs due to problems in Its implementation of a new computerized Warehouse Management System. In 2010 the Auditor General reported the PLCB incurred excess costs of $500,000 due to problems with the new inventory system (on top of being over budget). The inventory system was contracted for $25.8 million and as of June 2010 has cost $66.6 million, or 158% over budget. Of course, we are still paying the legal expenses for the wine kiosks too.  Who knows when that will end or how much it will total.

More for ads, less for education: In 2000 the PLCB contributed 0.76% of their expenses to drug and alcohol education.  In 2013, the biggest year they ever had up to that point, they donated only 0.66%, up from the 0.53% in 2012 (also a "record year"). This year it went up but only because they had to pay the $800,000 they shorted Drug and Alcohol programs last year. It is still below 2013 levels  The PLCB hasn't released how much they spend on advertising until this year where they said the spent "about $6,700,000" or over double what they spent on education.

More booze, less enforcement: In 2000, the PLCB gave 7.39% of their expenses to enforcement of the liquor code.  In 2015, the PLCB only did 5.51% (6.19%), a shortage that works out to over $9 million less for enforcement compared to 2000. So even though the number of licensed establishments increased and the population increased, there was less liquor code enforcement. State stores still aren't checked at all for compliance.

More embarrassment, less arresting? In 1992 the Auditor General reported that: "Policing bootlegging and illegal importation of liquor without payment of Pennsylvania taxes should be the primary mission of the liquor law enforcement personnel."  In 2013 there were 2 reported cases of “bootleggers” caught. It could be that the more support for privatization there is, the less border enforcement takes place...since that would highlight the huge problem of people who purchase out of state. It might have something to do with the $9 million the BLCE doesn’t get since they were no longer funded at year 2000 levels too. While I'm sure a few token bootlegging arrests were made in 2015 I haven't been able to find out how many.

The real PLCB new funding source.

Same lack of relevant experience: In 2000 no member of the Board has had any experience with running an enterprise anywhere near the size of the PLCB.  That hasn’t changed at all in any year since and they still only work 21-22 days a year. It hasn't changed with the current board, or ANY board either.

"Multiple weaknesses" in procurement: In 2000, the Auditor General reported that: “Weaknesses exist in the administration of the Pennsylvania Liquor Control Board's warehouse management system consultant contracts.”  In the 2010 Audit the Auditor General reported that: “…multiple weaknesses in the PLCB award process, including lack of documentation. As a result we could not verify the PLCB adhered to proper procurement standards or exercised proper due diligence in awarding the contract.” (Remember that one of the PLCB “modernization” plans is to have less oversight in procurement although thankfully that part of "modernization" wasn't part of ACT 39.)

The PLCB has not changed in the sixteen years since 2000...Act 39 will only cause a larger bureaucracy with less customer service and more problems, that spends less on its very reason for existence: control. The problems are systemic, pervasive, and totally ingrained in the PLCB's processes and workforce. They won’t be fixed until the entire system is replaced with privately-run wholesale and retail operations -- as it is in the majority of other states and countries -- and they are able to fully concentrate on regulation, compliance, and enforcement, and not sales.

Privatization is Modernization – accept nothing less.

PLCB financials 2016. How'd I do?

In a surprise move showing more competence than....well...then they ever have before, the PLCB released its unaudited financials only 60 days after the end of the fiscal year. Sure beats the 122 days it took last year. I don't know if this is a trend or perhaps an outlier. (It's probably got something to do with no privatization bills currently under consideration in the Legislature. -- Lew)

As always they sent out a press release saying how great it was that a police-enforced monopoly that doesn't allow any competition, with a rising population and increasing prices, had record sales. I always like it when they claim how much they "return" to communities. Communities that would get the fees on their terms and their schedule if the PLCB wasn't mandated to act as the middle man.

And of course the big self-congratulations: "Hey, we collected taxes and turned it in!" Just like thousands of businesses do every year, only they DON'T send out press releases saying LOOK AT ME LOOK AT ME!!

Speaking of press releases, this one said to go to www.lcb.state.us to see the unaudited numbers.  You had to look hard because the link did't take you there! It wasn't found under the financials tab or in annual reports, but in the board meeting minutes. To their credit, they did move it to an easier place to find it when I mentioned it to them. Now if I could only get them to spell Jack Daniel's right...

So what did this really tell us, minus the hype? The big thing I got out of it was that total liabilities went up over $105 million in one jump and for all the crowing about record sales, the $238.7 million they were in the hole last year only went down by about $550,000. That's right: $550 thousand. Chicken feed. And inventory went up 9.4% again, even though the marvelous bailment was supposed to reduce it! It has gone up $70 million in four years, and if it jumps that much again next year, it will be higher than it was before bailment.

Well, how did I do on the predictions?  Let's see.

1. The normal amount of squawking about "record sales and profits" when that isn't going to happen. Collecting taxes is not making a profit even in PLCB Bizarro business world. Of course with a police enforced monopoly, rising prices, and more citizens,  why wouldn't there be record sales? A private system would generate even more sales.
This was really a gimme because we all know they were going to do that. Nailed it!

2. "Record amounts of taxes collected" will be big in PLCB world, but again, with a police-enforced monopoly, rising prices, and more citizens why wouldn't there be?
Again, who are they trying to impress?

3. I predict that "Net Operating Income" will decrease for the third year in a row, even with "record sales."
OK, I'm eating crow on this one.  Surprisingly it went up about 19%.

4. Prediction: "Store, Warehouse, and Transportation Costs" have gone up for the last few years, albeit only 3% last year but I think it will be 5% this year.
 Well....it didn't go up 5%, it went up 8.9%!

5. "Administrative, Alcohol Education, and Support Costs went up over 29% last year and 9% the year before. They will go up again by 8-10% this year.
Of course, the PLCB didn't group these together this year, so I can't compare apples to apples. But Alcohol Education did go up, so even if the others stayed the same, the total went up. I wonder if the education budget is higher then the advertising budget this year? They don't list that, so one never knows. Education is what they should be doing anyway, so after cutting it so much last year, it is good to see it up again.
 
6. The PLCB finished out last year almost $240,000,000 in the hole. I don't think that is going to change too much so I'll say a slight increase in that number for this fiscal year.
The total change was a whopping $550K. Just what are they doing with these "record sales" anyway?

7. Not really a prediction but an observation. PLCB "profit" return to the General Fund will be less than it was in FY2008 - which has been true for every year since then. Just where does all that record sales money go?
Nailed this one too. 8 years of "record sales" and they still haven't matched 2008.

There you have it for another two months, until the "official" numbers come out and I probe a bit more in depth. What this is really telling you is that take away the taxes, the entire PLCB contribution is 3/10ths of 1% of the budget. What it doesn't tell you is that they are a drag on the economy; always have been, always will be.

Fix that. Privatize.

Something to look forward to.

I don't know if you have ever watched a train wreck actually take place in front of you in real time, but it is something that you can't stop looking at. That's what it's like watching the anticipated PLCB profit projections coming from McIlhinney's Mistake, the "epic change" of a liquor bill. The big number is $149 million in increased revenue overall, but with zero dollars, none, nothing coming from the casinos that number is already down to $137 million. Of that, $25 million is going to come from Sunday sales and a whopping $75 million from "flexible pricing."

Now to get that $100 million that would mean, based on FY 2015's profit margin (1) of 5.988%, an increase in sales of about $1.67 BILLION (2). Not gonna happen.  Even if we use the exceptional FY 2014 profit margin (3) of  8.28% it would still be over $1.2 BILLION in increased sales. That ain't gonna happen either. Even if we count the increase in sales from all those places that will be allowed to sell wine it ain't gonna happen. So if the PLCB doesn't decrease expenses -- and when have they ever -- they have to increase sales. A lot.

What this means is that we may have been sold a bill of goods that is not based on any reality. Remember that no increases in staff or payroll are taken into account, at least, not that I've seen. Modernization proponents didn't say if they are or not in their proposals at the time.

PLCB Flexible Pricing model

Now dollar sales do not necessarily HAVE to go hand in hand with an increase in product sales. It follows the same trend, but isn't 1 to 1. With "flexible pricing" the PLCB can charge more for popular items and less for unpopular items in order to move stock. They could, all of a sudden, decide to play hardball and negotiate prices with vendors, which they have chosen not to do so far; see here, here and here. Only now they are going to keep the difference instead of passing it on as they had to do by law before (except they didn't do it, which kept prices higher, which cost you more, and increased sales totals for them).

If they do get lower prices, they can make more money because they will be spending less for product. Well, maybe. In the game of liquor chicken, who will blink first: the major suppliers or the retailer? Think of it this way, who gets the blame when something isn't on the shelf, no matter whose fault it is? The retailer. Who can least afford to aggravate the consumer: the PLCB, or Jim Beam? The PLCB is not dealing from a position of strength: the people want the product, they don't want the PLCB. Having new colors and plants in the store does not make up for having empty shelf space, especially when there is no benefit to the consumer because you want to keep that extra dollar.

Will all  this result in a large increase in sales and a large amount of money saved? Do cows fly? Bailment (not paying for products until they leave the warehouse) was supposed to save $100 million a year too, and that didn't happen. Now I realize that next year, when the financial numbers finally come out, it won't be for a whole year of this new fiasco and I'll have to adjust the totals based on historical values for July and the first two weeks of August, or just look at the second half of the year and extrapolate from there. No matter how you slice up the PLCB pig, you aren't going to find any bacon, only fat.

This is what happens when the PLCB increases sales over 50% in one year

Normal is what we want and there is no rest until we get it.

Privatize.

(1) The PLCB doesn't really make any profit, it just has left over Use Tax money it didn't waste on something. That said, FY 2015 Operating Income of  $111,520,313 divided by Sales Net of Taxes $1,862,269,904 gives you "profit margin" Note that Operating Income is before any required deductions.

(2) $100,000,000 divided by "profit margin" gives you the additional amount required to achieve the desired increase.

(3) Operating Income of $147,959,116, divided by Sales Net of Taxes: $1,786,501,686

New Positions, Old Positions

The PLCB says, over and over, they want to run like a business. I did a comparison of how they attempt to go about that in my "Run Like A Business - Really?" post at the beginning of this year.

One of the things businesses do, one of the most important things, is hiring personnel to do the work and run the operations. The PLCB way is not so much to hire qualified people in 99% of those occasions, as it is to prefer the policy of promoting from within. In general, though, those people know nothing about how real retail is run, because all they know is the Socialist Monopoly PLCB retail model, which has little to do being "run like a business." Governor Wolf continues the tradition of hiring hacks, people with no liquor retail experience, with his latest addition to the board.

Who runs the "business"? The Board seems to have abdicated that responsibility, reserving to itself the job of rubber-stamping license applications (and reading letters from the Governor), testifying to the Legislature about how wonderful things are (despite how they look), and hiring people to actually run the "business." People like Joe "Da CEO" Conti and John Metzger and whoever Metzger's replacement will be when he retires at the end of September.. Nice work, boys.

Now we have the new made-up position of COO (Chief Operation Officer), which you usually find in businesses with more than one thing going on. Maybe he is in charge of the liquor testing lounge too. Just another $120+K slot that didn't exist before this year, filled by another born and bred PLCB insider, the former Director of Retail Operations Charles Mooney.

Besides getting paid every two weeks, just what has Mooney done? Not much so far, that we can see. But that's not surprising, considering that he was the guy who took years to replace Renovo's store, a year to move the Mountaintop store 50 feet (give or take), and pulled the State Stores out of downtown Lewisburg and Lock Haven against the wishes of the community, the local Representative, and their state Senator. You can read some other consumer friendly (I'm kidding) things he's had his hands in here. I don't expect much to change in the new position. Charlie's replacement is another brainwashed 30 year PLCB vet, Carl Jolly, so you know there won't be any innovation happening, just like during Charlie's tenure. Same old, same old, that's the way we've always done it here at the good old State Store System.

I'm not sure how this is going to work. In a real business, all the "Chief" officers are higher up the food chain than Directors. But at the PLCB we now have a COO and have had CIO (Chief Information Officer), both ostensibly under the Executive Director, at least according to the PLCB's own wire diagram in their Fiscal Year In Review (page 9 if you are following along). Just like every business you've never seen.

It is a typical PLCB answer to a PLCB problem. Throw money (or in this case, Mooney) at it and see if that fixes it. Adding more bureaucrats to an already top-heavy, incompetent organization is not the fix that is needed. Neither is keeping and promoting the old guard who only know the PLCB way. PLCB lifers have no real business experience, because the PLCB isn't a real business.

But if the PLCB is intent on creating high-paying positions that they don't have anybody qualified to fill, I'll offer these suggestions so they can fully mimic what a real business does.

CXO - Chief experience officer - A chief experience officer is the officer responsible for the overall user experience (UX) of an organization. This executive is ultimately responsible for the strategy and user interface design to connect the consumer to the organization's products and services, and may further oversee marketing communications, community relations, internal relations and HR relations. This would then supply someone convenient to blame for the millions of customers who have and continue to have poor experiences with the PLCB. Very handy for the Board to deflect criticism; this should be someone especially expendable.

CFO - Chief Financial Officer - This person manages the corporation’s financial risk.  They deal with data analysis, financial planning and record keeping. Being $240 million in the hole might require somebody to blame, so who better than the CFO?

CHRO - Chief Human Resources Officer - With all the new hires, the PLCB will need to be open longer hours and Sundays, and deliver products. That's gonna take a CHRO to combat the likely 40% turnover rate for new employees (and to blame for it).

CMO - Chief Marketing Officer - Somebody has to be in charge of the new, exciting coupons (and take the blame for their inevitable failure to meet revenue expectations).

CRO - Chief Revenue Officer - You really need this guy to explain to the unions and other PLCB supporters (and maybe even the Democrats in the Legislature) that "revenue" is not "profit". 

CSO - Chief Strategy Officer - Somebody has to be the point of focus to fight every pro-consumer initiative, every threat to the status quo, and any changes that weren't approved by Gifford Pinchot himself. (This position is unique in that it doesn't accept blame, it creates it. Very useful.)

How a real dysfunctional business works. Maybe the PLCB's not that far off...

Of course, all of these people need to report to a CEO, which they haven't had since Conti smeared crap all over title like an incontinent monkey, so you can add that salary to the total. You should be able to waste at least a few million on these folks and their staff  in addition to your new COO position. To make sure you expend the maximum amount, remember to only hire people with no experience in real life retail or liquor — just like was done over the past 80 years.

The only way the liquor and wine business in this state will ever "run like a business"...is if it is a business. Even better: lots of businesses.

Privatize. Accept nothing less.

Another year, another set of predictions

Last year was a pretty good year for PLCB prognostication. I hit most of my predictions. Just shows that if you have no faith in the State Store System, they won't let you down. So what, if anything, has changed this year? 

1. The normal amount of squawking about "record sales and profits" when that isn't going to happen. Collecting taxes is not making a profit even in PLCB Bizarro business world. Of course with a police enforced monopoly, rising prices, and more citizens why wouldn't there be record sales?  A private system would generate even more sales.

2. "Record amounts of taxes collected" will be big in PLCB world, but again, with a police enforced monopoly, rising prices and more citizens why wouldn't there be?

3. I predict that "Net Operating Income" will decrease for the third year in a row, even with "record sales"

4. Prediction: "Store, Warehouse, and Transportation Costs" have gone up for the last few years albeit only 3% last year but I think it will be 5% this year.

5. "Administrative, Alcohol Education, and Support Costs went up over 29% last year and 9% the year before. They will go up again by 8-10% this year.

6. The PLCB finished out last year almost $240,000,000 in the hole. I don't think that is going to change too much so I'll say a slight increase in that number for this fiscal year.

7. Not really a prediction but an observation.  PLCB "profit" return to the General Fund will be less than it was in FY2008 - which has been true for every year since then. Just where does all that record sales money go?

So there you have it. Will we have to wait for 122 days for a computerized accounting system to spit out unverified numbers like last year? Or will the PLCB figure out what button to push before then?  Will I be eating crow or steak?  I'm getting sorta used to steak.

How deep is the hole this year?

Today is day 7 of the countdown.

More PLCB convenience

On  April 16th, 2011 the PLCB increased convenience, affecting the 4,200 residents of Renovo and the immediate surrounding area, by closing the State Store in town. They decided it was much more convenient — for the PLCB, apparently — to have the residents drive a minimum of 55 miles round trip to the State Store in Loch Haven: the only State Store in all 900 square miles of Clinton County, the only State Store for all 40,000+ residents of that county. 

Of course, the PLCB has said they are "actively looking" for a replacement spot in Renovo. I'm pretty sure that after five years some lard-assed PLCB real estate drone could have walked to every building in Renovo and the surrounding area. So I have to question on how "actively" they are "looking," or if they are just "actively" running their mouth trying to obfuscate the fact they aren't really doing anything. Last year I suggested the empty store at 112 St. Clair Street and Third St. in Renovo, which has parking and a loading dock, but no one "actively" did anything, and now it isn't available.

So how fair is this? Let's look at it the PLCB Way. The Almighty Liquor Code favors quotas: so many bar and restaurant licenses for so many residents, so many beer distributors and importing distributors per so many citizens...that sort of thing. Once it was one "R" license (a 'bar license,' roughly) for every 1,000 citizens, now it is 1 for every 3000. Apparently we don't need as many restaurants with beer and wine anymore; when did that change? What about State Stores? 45 years ago, there was one store for every 15,608 citizens. As of today, there is one store for every 21,225 citizens. Population went up, number of stores went down a lot, almost 25% down. That makes it more convenient for the PLCB and their ever-increasing operating costs, but what about you?

Based on that current ratio, Clinton County should have two State Stores, but they don't, and after five years they still don't (and of course, they're still screwing around with where they're going to have that one store!). I have to give the citizens credit for being so patient. Looking at the U.S. average, Clinton County should have seven liquor/wine stores, and they probably would under privatization, despite what the PLCB and its lockstep lackeys in the Legislature keep saying about a vast booze desert in upstate if privatization takes place.

It's a simple proposition. Renovo has two area grocery stores, one area beer distributor, and three area drug stores. Do you think any of those would have liquor and wine if allowed? You bet they would, because they know how to run a business already. Would the selection be better than the State Store? I guarantee it, in writing, and I'll eat my computer if I'm wrong! I'm not worried, it's an easy bet. Any selection is better than what the PLCB is providing now in Renovo: zilch, squat, zero, nada, nothing.

As long as we have the police-enforced monopoly State Store System, there will be less service in rural areas, because only the with the featherbedding incompetence of an institutionally corrupt and directionless agency like the PLCB can a state-backed complete monopoly not break even with the only liquor store in town. Privatization will at least allow somebody to provide what the PLCB won't, or can't. Privatization will bring small stores, large stores, specialty stores, and CONVENIENT stores. Will they carry everything? Of course not, but they will carry more than a closed store or a store that currently doesn't exist. A win for Clinton County! 

You have to wonder why Clinton County's representative in the House, Michael "Mike" K. Hanna, consistently votes against privatization. Is it because of the tiny handful of votes represented by the employees of the State Store in Lock Haven and their families? (Er...in Lock Haven for now, that is.) Or is it because he doesn't think his constituents can handle more than one liquor store? Or is it because he likes inconveniencing the thousands of tourists, hunters, and fishers that visit Clinton County every year, the hundreds of people who are working in the gas fields in Clinton, and the students (of legal age) and faculty at Lock Haven University? Because he does vote consistently against privatization (of course he does, he's the Democratic whip). If you live in Clinton County, why don't you ask him why he keeps voting against your convenience?

The PLCB vs. Real Business

Retail exists for the benefit of the consumer. The PLCB exists for the benefit of the people working at the PLCB. The consumer doesn't even enter into it, as admitted by the PLCB when they said they don't try to get the best pricing, they just pay whatever the producers ask. Now they say they want to "negotiate" as part of "modernization"; they aim to keep the difference between what they now pay and the lower price to maintain their bloated structure, not to lower prices for you and me. As if!

We deserve better. The State Store System had 82 years to prove their case, and the court of the public has said they failed. Just ask the people of Clinton County how well they are doing their job.

END IT, DON'T MEND IT. 

How PLCB buying power incompetence has cost you and me Billions

In my last post, PLCB "Buying Power" A Myth, (which you really should read first), I told you how for the past eighty-plus years the PLCB's incompetence in not negotiating or even trying to negotiate the best prices for Pennsylvania liquor prisoners should damn them for all eternity to the lowest circle of Hell, the one Dante reserved for people who betray those whom they should serve.

As always, we are going to provide some numbers to show what they've cost you. I'm going to use the largest selling whiskey in the state as an example, the standard 750 ml Jack Daniel's Old Number 7. (I thought I would use that because when the PLCB reads this (and they do), it might reinforce how to spell Jack Daniel's correctly, since they seem to have a problem with that.)

We are going to compare Pennsylvania prices with the state that has the 2nd highest liquor taxes in the country — Oregon, also a control state with uniform prices — and see who at least attempts to take care of their customers: the PLCB or the OLCC.

From the PLCB we know that (non-negotiated) cost +30% markup (required by law) + handling fee  (arbitrary) + 18% Johnstown Flood Tax (levied on the price) + rounding up (always up!) to nearest .49 or .99 (just because) = Retail Price. In this case, our bottle of JD has an initial cost of  $14.46. so putting that into our formula we come up with $14.46 + 30% ($4.34) + Handling fee ($1.20) + Flood Tax ($3.60) + Roundup ($.39) = Retail Price of $23.99.

Oregon doesn't give us their unit price so we have to work backwards from the retail price to figure out approximately what their cost price is. Oregon works on cost + 79.8% markup + $1.40 Handling fee + $.50 per bottle surcharge + roundup (to nearest .05). Oregon's shelf price for a 750 ml bottle of Jack Daniel's Number 7 is $24.95 or about $1 more than PA. Taking that $24.95 and working the formula backwards we subtract the roundup (which we'll call zero, because the price is already at $X.95, and we don't really know, except that it's not much). Next we subtract the surcharge of $.50, which gives us $24.45. Then we take out the handling fee of $1.40 to leave us with $23.05.  Taking out the 79.8% markup ($23.05/1.798) ends up with a cost price of $12.82 at most (it's unsure because of the unknown roundup, but it's less than a dime difference). Remember: PA is paying $14.46.

Hey, but Oregonians still pay more on the shelf, so Ha-ha! Only...how much is the PLCB's "non-negotiable" system of costing and pricing costing you, when you compare it to the unit price the OLCC is getting? Easy enough to find out. Put Oregon's cost into the PA formula. $12.82 +30% = $16.67; adding $1.20 gives you $17.87; drown it in the 18% Flood Tax, and that brings it to $21.08, then add the roundup…and you end up with $21.49, a $2.50 savings ON EACH BOTTLE, if only the PLCB did their job. PLCB incompetence in business cost PA consumers over $6.1 Million extra on Jack Daniel's alone last year.

You're getting screwed out of $2.50 every time you buy a bottle of Jack — remember, that's only one example — because the PLCB can't be bothered (or doesn't know how) to use their "massive volume leverage" to get the same price little Oregon does. Multiply that by how many millions of bottles they've sold since 1934, and that is how much they have cost the consumers of the state. An amount you have been paying extra for all these years because of PLCB ineptitude, laziness, and their "we don't give a shit, we're a monopoly" attitude. Far more than any so-called "profits" they have ever turned in.

Remember: this isn't a tax that's being levied on you that's going to benefit the Commonwealth, it's not a fee you're paying to the PLCB to pay for alcohol enforcement, it's not "profit" that gets sent to the general fund whether it's real or just hidden pension funds...it's money the PLCB doesn't know how to get from distillers, vintners, and importers. It's gone to line their pockets, exactly the people who the PLCB apologists rant and rave that privatization will somehow steal all your money to pay. Too late: they've already got it, had it for decades, thanks to the PLCB.

Is this the system you want to keep or do you want them to "modernize"? Because "modernization" and "flexible pricing" will just cost you more by statute instead of by PLCB incompetence; the only difference will be that the PLCB will waste the money on Increased Operating Costs to fuel the Boondoggle Machine. I say we privatize and let business people run businesses and end the PLCB screwing of the public.

PLCB "buying power" a myth

This is the single most important piece of information I've written about.

The House appropriations committee had the PLCB in for their annual hearing on February 25th, and besides the normal tap-dancing that they do ("Well, sir, it's my personal feeling that we'll meet those goals, yes"), the Chairman of the PLCB let it slip out that the PLCB doesn't really have any buying power.

Ooops! In a response to a question put forth by the Appropriations Committee about where they might be able to find more income, LCB Chair Tim Holden said that because of the current 30% markup structure, the board can't negotiate for the best price. According to Mr. Holden, the manufacturer sets the price they want to sell their product for, and the the PLCB backs down from that through the 30% markup, 18% Johnstown Flood Tax, bottle fees, and whatever other charges they have that they've hidden from you, to come up with a buy price that they will pay. Unlike a real business that tries to get the best possible price and then adds on what it needs to make a profit and cover expenses.

This quote is taken from the Appropriations meeting; you can see it here, at about 2:43 in. Holden says, "People somehow believe that we have the ability to negotiate with the vendors. We have to do it proportionately so we have to have a markup that's consistent. And we believe that the money that can be made by negotiating a better price on different products is where the greatest amount of [increased] money can be achieved."

A little later, Board member Mike Negra backs him up, even more clearly: "The manufacturer sets the MSRP, the manufacturer's suggested retail price, and through the system it's backed down to determine what we pay for that product. Not necessarily your typical retail relationship between us and the manufacturer. We can't really leverage our ability of purchasing, our 'buying power' is not really leveraged in that manner. There are significant dollars, we believe -- it'll take a lot of time, it'll take a real learning experience for our vendors and for our buyers to change that." Remember: Negra is the first Board member in a while to have any actual retail experience!

Now I can understand why the lazy way is taken. It is less work for the PLCB if they don't negotiate every price. But I have yet to find any justification in the Liquor Code for the attitude that they can't negotiate for the lowest price, which is what the board members are saying here. That reasoning seems to go against the what the Code says the Board should be doing already. The Code says the price has to be "proportional," not that it has to be proportional from the MSRP or that it can't be negotiated.

Section  2-207 (b) of The Liquor Code under General powers of board says: "Prices shall be proportional with prices paid by the board to its suppliers and shall reflect any advantage obtained through volume purchases by the board." Isn't that the definition of 'buying power'? If they aren't negotiating prices, which the Chairman says they are not, just how are they leveraging their volume purchases beyond what the vendor says they will give? As Negra admits, they aren't.

I'm going to say this in really big letters so you can't miss it.

There is no volume discount on standard stocked items, because the goal is to sell them at MSRP.

If you are the 2nd or 3rd largest retail buyer of ANYTHING and don't try to get a better price, then the entire organization needs to be replaced, eliminated, done away with for sheer incompetence.

The board not only doesn't want to save you money, they want to take away what money they could save you by negotiating lower prices by using the nebulous "flexible pricing" they want as part of "modernization." Believe this: "flexible pricing" means negotiating a lower price and still charging you the higher "MSRP" they charge now, and keeping the difference. At the PLCB, they don't care about the consumer. All they care about is covering their ever-increasing expenses so they can keep the boondoggle machine running at full speed.

Do we really need this? Privatize and let real businesses try to save you money by being in competition with other businesses, because they're motivated to keep you as a returning customer...rather than knowing that you have to come to them because that's the law.

Honestly? Sometimes you have to wonder how stupid we all are for putting up with kind of crap for eighty years.