PLCB - 85 Years to Get It Moving in the Right Direction and They Still Fail

Those of us who have put up with the restricted system of alcohol access in Pennsylvania would expect to see some results from the 85 years of the state's social experiment. The results are in, but no one's talking about them (except us), because the PLCB fails miserably. Using data from the National Institute on Alcohol Abuse and Alcoholism, Newsweek ranked the states by their alcohol use.

So far it ain't working.  Look at the states on our border:

1. New York - Lower consumption than Pennsylvania
2. New Jersey  - Lower consumption than Pennsylvania
3. Ohio - Lower consumption than Pennsylvania
4. West Virginia - Lower consumption than Pennsylvania
5. Maryland - Lower consumption than Pennsylvania

If you don't succeed, quit after failing 80+ times.

Only Delaware has a higher consumption rate than Pennsylvania! But that's not really fair, because these rates are based on sales, not actually tallying people's drinks, and we know that a significant portion of sales in Delaware are from Pennsylvania residents in search of better prices, selection, and service. Those superstores on the border with Pennsylvania aren't there at random.

Is this the PLCB's fault? It has to be: there is no alcohol that isn't under their control. They are responsible for how beer is sold, they just don't do it directly, exactly the same as the alcohol regulators in other states work. Even their report on underage binge drinking shows they aren't doing what they are supposed to be doing. Pennsylvania's rate is worse than the national average, and not getting any better.

The State Stores are never checked for underage sales - yea!

Maybe the DUI and DUI fatalities make up for it.  No, you don't want to go there. You'll just be disappointed again; more proof that the Pennsylvania system isn't working.

If they're not "controlling" drinking, what is the PLCB doing? Surprise! They are a jobs program ingrained deep into state government, protected by politicians dependent on union money and votes. It has nothing to do anymore with protecting the public, nothing to do with enforcement of the border (what, 3 arrests last year? Wow...), nothing to do with service, and certainly nothing to do with treating the public fairly.

No, the only thing the PLCB is interested in is squeezing the citizens for more money. Prices increase when better deals are brokered, in the name of "variable pricing," which was sold to us as a way to lower prices of popular brands. No! It's a way to make more money, but not for the State, it's to cover their ever-increasing operations costs!  What other business decreases their number of stores by 25%...yet has more employees?

They don't even know their own name! Are they Wine & Spirits Shoppes? Pennsylvania Wine & Spirits ? Fine Wine & Good Spirits? We paid $3 million for the Fine & Good, you'd think they would want to use that everywhere. Might as well have saved that money -- our money -- and stuck with what most people call them even without a sign - State Stores.

PLCB Sales

PLCB Liabilities

The people in charge have no experience in the business. Prices are raised arbitrarily -- everything is done arbitrarily! -- and customer service is unimportant, because they have no legal competition. They've had record sales almost every year, but they're deeper in debt than anytime in their history...and it doesn't matter, because in the end, the taxpayers are really the ones responsible for that debt.

We, the citizens, deserve better. We are not safer, we are not better served, and we are not satisfied.

PRIVATIZE NOW.

6 Reasons to Keep The State Stores - Does it still hold up?

Marc Stier, a Philadelphia-based full-time progressive political activist, published six reasons why we should keep the State Stores five years ago. I thought I'd take a look at those reasons and how well they hold up today.

1. Poor regulation

"First, in an ideal world we could count on government regulation of private liquor stores to control the sale of alcohol. That’s important, because alcohol abuse remains a major public health hazard. But in the real world, regulation fails when it is carried out by those who hate government. And academic studies show that states that control the sale and distribution of alcohol have lower levels of problem drinking, drunk driving, and the violence and death that go along with them."

In an ideal world we could count on the government to control the sale of alcohol, Stier says, then makes the self-evident observation that the world isn't ideal. It never has been, it never will be. And what does "regulation fails when it is carried out by those who hate government" even mean? The state's liquor regulations are carried out by PLCB employees and BLCE cops: are they known for hating government? Doubtful.

So we're left with our non-ideal world, where the PLCB simply isn't very good at all at control or regulation. Pennsylvania has higher levels of DUI, underage DUI, DUI fatalities, underage DUI fatalities, binge drinking, and underage binge drinking overall than the states on our borders; the non-control states. So while academic studies (set in the ideal world, apparently) may show that states that control the sale and distribution of alcohol have lower levels of problem drinking, the reality is Pennsylvania, where the alcohol problems are in the stubborn middle, despite control.

2. Union organization

"Second, in an ideal world, the workforce in privately owned liquor stores would be able to form a union simply by securing the support of a majority of workers.
But in the real world, laws created and implemented by Republicans have made union organization in the private sector almost impossible. So I stand with currently unionized employees of the state stores."

Hung by that real world again. Stier didn't know that laws (and regulatory interpretation) would change to allow supermarkets to buy restaurant licenses and start selling beer and wine. And what happened? The majority of licenses purchased were by grocery stores which are already heavily unionized, most by the same union that the State Store workers already belong to. Guess union organization in the private sector isn't impossible after all.

3. Tax revenues

"Third, in an ideal world, businesses, including those that sell alcohol, would be taxed at reasonable rates, wouldn’t get to keep 1 percent of the sales tax to cover costs of collection they no longer have, and would pay all the taxes they owe.
In the real world, because we don’t have to worry about those problems, the wine and spirits stores generate more revenues for education, health care and other public needs than private stores would."

As we've always said, in the real world, the world we actually live in, tax collection problems are not a liquor store problem, they are a department of revenue problem. And having an average number of liquor stores for a state our size (about 2,400, compared to the 600 the PLCB manages to keep open...most days) will generate more tax revenue just due to the extra convenience. And don't forget the hundreds of millions of dollars that won't be going out of state to buy things that the bureaucrats in Harrisburg have decided we don't need or want. (BTW, if Stier thinks that in an ideal world alcohol would be taxed at reasonable rates...does he think the real world rates aren't reasonable? Because that's something we'd agree on.)

4. Wage disparity

"Fourth, in an ideal world, our governor and general assembly would be working to increase wages for working people and the middle class. But in the real world, the Republicans are attacking public sector workers and privatizing public services mainly to drive wages in the private sector down. So I stand against a proposal that is likely to make income even more unequal in our state."

In the real world, there would be LESS wage disparity. There wouldn't be the artificially large difference between a stock clerk in a grocery store and a stock clerk in a state-run monopoly liquor store (who are both represented by the same union...how's that work?). Also, I don't in any way consider the PLCB a service. It limits selection, never leads in new products, severely limits locations, and generally prevents entrepreneurs from providing the services consumers want. The PLCB stops job creation and is a drag on the economy, being well over a billion dollars in debt.

5. Discrimination protections

"Fifth, in an ideal world, the state would protect worker from discrimination by private businesses, including new private liquor stores. But in the real world, LGBTQ workers are only protected from discrimination by organized labor."

Simply not true..."in the real world." Again, Stier's pessimism (and drama) has undercut his positions, as the real world moved on and changed for the better. Workplace protections are provided by state law or regulation. Union agreements do not over-rule written law.

6. Corporate influence

"Sixth, in an ideal world, elections and public policy would be determined by the number of people on each side,  not by campaign contributions given by each side."

We strongly agree! Because by this measure, the PLCB should have been gone ages ago, since for decades the majority of people polled wanted private liquor stores. And we all know who gave more money to politicians -- those against privatization, even though it was against what the people wanted.


So what does this all mean?  In 2018 -- in the real world -- there are no reasons to keep the antiquated, anti-consumer jobs program called the PLCB.

Privatize.

The Gift That Keeps On Taking

Giving and getting booze as a gift in Pennsylvania is no easy feat.

Given the police-enforced monopoly that is Pennsylvania's wine and spirits marketplace, you might expect that there are laws to fence off all possible ways around those restrictions; for instance, no "gifts" of booze (that are then surreptitiously reciprocated with cash). But if you thought there was a one bottle or a case exception for honest gifts, you would be wrong. You still have to give the state its cut, even on a gift.

And you know who is responsible to pay the fees, taxes, and unknown markup on that bottle? Not the person giving, but the person receiving. A good friend of the blog recently quizzed the PLCB about all the steps necessary to give some hard to find, not available in PA no way no how, honest to goodness collectible booze to a PA resident. Here's what they learned.

As a rule it is generally unlawful for anyone, other than the PLCB or the holder of an importer’s license or a direct wine shipper license (or a sacramental wine license), to "import" any liquor (including wine) into Pennsylvania. 47 P.S. §§ 4-491(8), (11).

No problem, you think, I'm not bringing it in, someone else did and gave it to me. Ah, but it is also generally unlawful for anyone, other than a manufacturer, the PLCB, the holder of a sacramental wine license, or the holder of an importer license, to possess or transport any liquor or alcohol within the Commonwealth that was not lawfully acquired from the PLCB, a PLCB-licensed limited winery, a PLCB-licensed distillery, a PLCB-licensed limited distillery, a PLCB-licensed direct wine shipper, or a PLCB-licensed retailer holding a wine expanded permit. 47 P.S. §§ 4-415, 4-488, 4-491(2), 5-505.2, 5-505.4.

OK, so how do you LEGALLY get that bottle into the state so you can give it to somebody? Short answer: you can't. In a moment of supreme bureaucratic idiocy it was decided that the recipient has to do all the work. Why?  All I can come up with is that the PLCB can't screw an out of state person like they can screw a PA resident.


So if you go ahead and just illegally give that bottle to somebody in PA? Here's what they have to do, if they want to legally keep it and not just flush it down the toilet and deny all knowledge when the BLCE comes busting in.

BLCE!! HAND OVER THE GRAPPA! NOW!!

First, they have to know exactly what you are giving them...ahead of time (which kinda ruins any surprise if that was your intent). Then they have to fill out an application for importation and an application for the payment of tax on the liquor to be filed with the PLCB’s Bureau of Product Selection by the intended gift recipient (i.e., the person importing the liquor). (40 Pa. Code§ 9.51.) No word on how long it takes to get that information (because nobody in their right mind has ever done it).

Once it has been decided by the Bureau of Product Selection what fees and markup and service charge (remember that this is a SERVICE to allow you to bypass the incompetents in Harrisburg) to apply, you then have to contact the Department Of  Revenue, because the state taxes on the liquor would be levied by the Department of Revenue, and they have to determine the amount of taxes that would be owed on the gift, if any. If they're confused by this, tell them the PLCB sent you.

(By this time, you may be wondering: if Revenue is collecting the taxes, and the BLCE is doing the enforcement...if we got rid of the State Stores, what would we need the PLCB for? Good question.)

If you want to try and figure out approximately what the fees are yourself, before committing to this mindstorm of bureaucracy - be prepared to wait. It took two weeks to drag the info out of the Bureau of Product selection. They finally sent a reference to 40 Pa. Code § 9.52. Why did that take fourteen days? Probably because nobody in organizational memory had ever been asked the question before. You know...because an ordinary citizen would just give their friend the bottle of booze and be done with it. 

Once that is done, hopefully before you are too old to enjoy your gift, you have to go back to the PLCB’s Bureau of Product Selection and turn in your application for importation and an application for the payment of tax on the liquor (which Revenue gave you). Now even though you have paid the tax, the fees, the markup, and the service charge, the Board can still say no because they have monopoly power and there is no legal recourse for you to appeal to if they are feeling a little bitchy that day.

Think you are done? Of course not! Your friend can't just drive across the border with with his gift. Horrors! The world will come to an end. No, the State has to maintain CONTROL by having you hire a Transporter for Hire Class A or Class C licensee to bring it to your residence. Yeah, really. And by the time this is all over, you'll want to remember to tell your friend to please never bring you another gift.

By the way, if you decide you don't like the gift and want to sell it -- because it is, after all, your legal property -- then just turn it in to any State Store and they will take care of it for you. "But what about the money?" you ask? Don't worry, it won't cost you a penny! Really. You don't get any proceeds from the sale...but your conscience will be clear knowing you didn't break the law. I'm not sure what happens if you sell a bottle when you are out of state but I'd bet the PLCB has some way to screw you if you do that too.

More Pennsylvanians than this buy or drink bootleg booze every day

Suppose this just was too much and the giver decides to say screw it, it is too much trouble for my buddy to go through, I'll just bring him some beer. Guess what? There are NO EXCEPTIONS for beer at all. No jump through the hoops while you kiss our ass paperwork hurdles, no forms to fill out, no taxes to pay. It is illegal, period, to bring beer into the state.

Don't believe me? Here is what the PLCB has to say about it: "The importation of malt or brewed beverages is governed by different sections of the Liquor Code, 47 P.S. §§ 4-431, 4-492(8), and no exception currently exists that would allow for the importation of gift malt or brewed beverages outside the otherwise authorized channels of distribution."

So I urge you to put on that mask, and join the tens of thousands of Pennsylvanians who say, 'Up Yours, PLCB!' every day, and bring that cheaper beer, nicer wine, and better liquor in over the border in as much quantity as youu need as often as you want. Be an outlaw, be a Hero for Freedom of Choice. Perhaps I'll see you on the border.

Privatize.

Smuggler's Blues from Michael Dewey on Vimeo.

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.

Could Border Bleed Actually be $500 million?

Everybody thinks that border bleed — Pennsylvanians going "out of control" to buy booze in other states, spurning the State Store System...which is illegal — only happens on the southeastern border of the state*, when in reality it occurs across all of Pennsylvania's borders and for a number of reasons.

Why do Pennsylvanians break the law just to buy booze? Why, for everything from spur of the moment decisions to deliberate shopping for lower prices, more convenience, different products not carried by the state stores, or just plain better service that a non-monopoly store can only provide. A private store depends on pleasing their customers; a monopoly store knows you have nowhere else you can legally go.

Back in 2004 a study prepared for the Pennsylvania Food Merchants Association (long-time foes of the state liquor monopoly for perfectly self-interested reasons: they'd like to sell wine and spirits themselves, like stores in other states) determined that 29.4 percent of the Commonwealth's consumption of wine comes from cross-border sales, as well as 20.8 percent of distilled spirits. Has much changed since then?

Let's extrapolate, shall we? In 2004, there were about 640 state stores. Now we have 605, so convenience certainly didn't increase. 29.4% of wine sales would have been $248,460,768.80 in 2014 (Can't use current numbers, because over 11 weeks after the end of the fiscal year the PLCB still hasn't released them). 20.8% of spirits would result in $243,569,926.08, for a grand total of  $492,030,694.88.  Not quite $500 million, but then I'm using numbers from two years ago. I'll bet it would be over the threshold if the PLCB ever decides to let us know how they did last year.

In 2010, a study that was made by the Wine and Spirits Wholesalers of America, they found that 23.6% of wine sales were done out of state or just over $200 million for wine alone. Using the current ratio of wine to spirit spending that would mean $276 million spent for spirits or a total of $476 million in total border bleed (within 3.25% of the extrapolated 2004 numbers). Close enough for PLCB work, as they say.

The PLCB Neiman report of 2011 had it over $230 million and that was for just 8 of 67 counties and didn't sample any Maryland sales at all. As I pointed out in my report in February, that number is certainly well above $300 million now. Do the other 59 counties spend $150 million out of state? I can't prove it using just the Neiman report, but the other studies indicate they probably do.

Has anything changed since 2010-11? Is the economy more like 2004, or even better now?  Have gas prices come down somewhat? Do people travel more? Of course, the answer to all those questions is yes. The Neiman report showed that even during the recession people that shopped both PA and out of state stores spent more money out of state than in state in those counties and at almost all levels, but especially higher levels, than they spent at state stores. And they did it for the same reasons they always did:

Travel out of state for a broader selection and better price (Neiman report pg 28)

Go out of state to get better prices and stock up on personal supply (Neiman report pg 36)

Recapturing some of that $500 million potential through privatization means more jobs, more taxes collected, more businesses, more selection, more choice, and more benefit for the citizens by not having government interfere with retail. Painting your PA liquor jail cell and extending visiting hours (or selling the jail to some outside firm, Gov. Wolf's latest dim idea) might be better than what you have now but it isn't the same as being a customer in a free market.

Don't "modernize" it or lease it, and don't leave it as it is: NORMALIZE IT. 


*This is probably because Philadelphia-area citizens are so blatant about it; we just don't care at all.

Still waiting on the PLCB and their computers

Here is is 2 months and almost 2 weeks after the close of the fiscal year and still nothing from the wizards in Harrisburg about how well they did or didn't do. Maybe covering their butts from Federal charges is taking up their time....who knows?

But you know what really hurts? Other control states already have their numbers in. Let's look at New Hampshire and see how they did. With a population of only 1,327,000 they somehow sold $652,000,000 in wine and spirits (or just over $484 for every man, woman, and child in the state) and at prices that are usually lower than our State Stores. Pennsylvania has a population of  12.8 million and sold $2,240,563,426 worth of wine and spirits. or $175 per person (2014 numbers because, you know, we're still waiting...).

The expected response from our fine Liquor Corruption Board workers is that New Hampshire residents are all "chronic alcohol users,"  because that's what they always say when confronted with anything that shows the state stores up, be it better selection, more sales, better staff...whatever. Let me put forth a different theory. People go to New Hampshire to buy liquor; and they leave Pennsylvania to buy liquor. New Hampshire makes shopping worth the trip by having better prices, better stores, and a larger selection than nearby competition. The majority of that competition is in Massachusetts, right on the border and the largest state in New England; they also have substantially higher booze taxes than New Hampshire...which has none.

What does PA have? Certainly New York has more people, and higher sales taxes with liquor taxes being pretty close, but we don't see that influx to make any real change in the Corruption Board bottom line. Ohio and West Virginia are control states too, so not much difference there. Most of Maryland is a free state with higher sales tax, lower liquor excise tax and higher beer tax than PA but still draws people across the border because competition drives prices down.

Delaware, as we all know, has no sales tax so that makes them less expensive right off the bat. But they also have stores with far greater selection than anything in PA to draw people in too.

New Jersey has a higher sales tax but a lower liquor tax. Mostly people go because of the selection and prices, again due to competition. The large stores across the river -- Joe Canal's, Total Wine, Moore Brothers, Roger Wilco, etc. -- are not there because of people living in New Jersey. They are there because of the people from PA who find better price selection and service even if they have to pay a toll to get there.

$300 million leaves the state every year and it isn't going down.

Border bleed is real and large and Governor Wolf's proposal to raise the sales tax here is not going to help reduce it, Putting in baskets and changing the name of the state stores is not going to help reduce it, "modernizing" is not going to reduce it, thinking about raising the markup when private stores think about cutting costs is not going to reduce it, and having one store for every 21,000 residents is not going to reduce border bleed either.

Privatization will.

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

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

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

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

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

Bucks	$135,700,317.31
Berks	$52,109,662.18
Chester	$120,388,495.05
Delaware	$77,696,292.72
Lehigh	$70,209,394.60
Montgomery	$200,801,436.82
Northamton	$41,606,625.89
Philadelphia	$228,424,798.19
Total	$926,937,022.76

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

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

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

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

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

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

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

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

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

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

Privatization is REAL moderniization

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

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

Eh? Buying better booze in Delaware, you say? We're on it!

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

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

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

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

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

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

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

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

Washington State is not equal to PA

For some time we've been told (mostly by UFCW last-ditchers) that Washington State's liquor income is close to Pennsylvania’s liquor income, and that when the Evergreen State privatized their liquor monopoly, they only got a small amount -- $181 million -- for their retail and wholesale systems together.

Well...kind of.

Take a look at this, from the Washington State Department of Revenue. This shows how much liquor tax was collected in 2013. It is more than PA collects, but since their tax rate is 5 times ours, that stands to reason. But the rate of taxation really doesn’t have anything to do with the worth of the system to a purchaser, except to drive it down. Worth is determined by demand and availability; so with about half our population, high taxes which decrease total sales, an already private wine market, and the 8th highest beer taxation (even after it was reduced - see below), Washington’s system was inherently worth less than Pennsylvania’s in total and per unit.

 Pennsylvania is a much bigger market with more outlets even after closing 20% of them over the last 40 years (while Washington increased their number of stores over the same time period) and controls both wine and liquor. As such, it is worth more since the volumes are higher and greater economies of scale are present, along with a high demand and somewhat reasonable taxation on liquor, albeit higher taxation on wine. As a wholesaler, Pennsylvania's monopoly rights are worth more than just the 4 times the indicated value (double the liquor and all the wine). Of course, nobody knows exactly what anything will sell for until it does in an auction situation, and that could change up or down daily. That said, a bigger fish like the Commonwealth is worth more than two smaller fish...and certainly more than one small fish, like Washington.

Some points to consider.
Washington – Population 6.9 million
Pennsylvania – Population 12.8 million

Washington $35.22 per gallon alcohol tax.
Pennsylvania $7.22 per gallon alcohol tax.

Washington Liquor taxes collected (2013) – ~$266 million in liquor taxes (after the 27% increase in fees)
Pennsylvania Liquor taxes collected (2013) – ~$183 million as the liquor share of the Johnstown Flood Tax.

Washington – 40 million units sold (liquor only).
Pennsylvania – 140 million units sold (liquor and wine).

Washington – Reduced beer tax from $23.58 a barrel to $8.08 a barrel (2013) to help in-state brewers.
Pennsylvania – Did nothing to help brewers (probably because our beer tax rate is already one of the lowest, at $2.48 a barrel).

Washington Border Bleed – The total increase for the year was about 10 days worth of PA border bleed.
Pennsylvania Border Bleed – The largest liquor border bleed in the country.

Washington – Legislature respected will of the people to privatize liquor sales.
Pennsylvania – Legislature consistently rejects will of the people to fully privatize (so far).

While we are not Washington, we can do what they did; and with the hindsight they have enabled, do a much better job of it. More jobs, more revenue, more convenience, more selection, less government and freedom of choice can and should be ours.

Privatization IS Modernization. Accept nothing less.

Privatization facts & figures

All the arguments against privatization — job losses, revenue losses, public safety endangered, less selection and higher prices, less convenience, and worse service — are addressed and refuted below, with facts and common sense. Arm yourselves with knowledge, and pass it on to your legislators.

Jobs - Everyplace in North America that has privatized some or all of their liquor distribution system has seen an increase in employment. Jobs in the industry tripled in Washington State and Alberta, Canada, the last two places that fully privatized. They doubled in Iowa, which kept wholesale sales but privatized all retail. Are the jobs exactly the same as what they replace? Probably not; are all jobs the same at every store where you shop now? Why would alcohol sales be any different?

Revenue and Border Bleed - Sales have gone up in privatized systems, every single one; how much is dependent on taxation more than anything else. Case in point is Washington State, which already had the highest liquor taxes in the country before they privatized and added new fees. Sales have still gone up in state, and the fee-driven increase in border bleed has increased sales out of state. If they hadn’t raised taxes, in-state sales would have increased even more. Washington State’s border bleed is nowhere near the border bleed rate in PA. The border bleed increase for an entire year in Washington is about a weeks worth of the border bleed PA sees.  While privatization will not eliminate border bleed in PA, it will, just from a convenience standpoint, decrease it. A privatized PA will still not be able to equal pricing of states with lower taxes, but it will make it easier to buy locally. People pay more for convenience all the time, even when less expensive alternatives exist reasonably close. Case in point is buying almost any food or dairy item in a convenience store — “a damn Sheetz,” as Senator Ferlo would snarl — instead of a grocery store. The key is to not raise taxes.

Revenue 2 – Iowa actually decreased their taxation and still reported making more than they would have if they kept their state stores.

Revenue 3 - It isn’t only direct liquor taxation that has to be taken into account. For PA, there will be business taxes that the current system doesn’t pay. There will be more income taxes from owners and workers, since there will be more of each. There will be new jobs created that do not exist under our current system, delivery to bars and restaurants being one example, and increases in current jobs to accommodate new business. Again, just one new warehouse in Washington State employed 1,100 workers, which was more than the entire state store workforce of 937. In the long term, money will be saved by not having taxpayers responsible for future retirement and medical shortfalls. The current amount the taxpayers owe for PLCB pensions is $550 million and is expected to go up to $600 million by the end of this year.

Safety – Under the current system PA has more DUIs, DUI fatalities, underage DUI, binge drinking and underage binge drinking than 4 of the 5 privately run states on our border, and is just average compared to the rest of the country. Washington State has seen an 8% reduction in DUI crashes and DUI fatalities since privatization. While some may claim that is because there was less policing, policing has no effect on the decrease in DUI fatalities. Alberta, Canada has decreased their DUI fatality rate to one of the lowest on the continent (37% lower than PA) since they privatized, even though they have over 1,300 retail liquor outlets now for a population of under 4 million. Is there a connection? No way to say without further study, but it’s plain to see that privatization didn’t make the situation worse.

Safety 2 – Limiting underage access has always been a point for those opposed to privatization. While the true rate of underage purchases in PA State Stores is not known, since they are never independently checked (or policed in undercover sting operations, as privately-owned liquor stores in other states are) it would follow that it should be about the same as other localities which have similar requirements. Washington State was at approximately 93-94% compliance before privatization and is at about 92% now. Another thing we can learn from Washington State’s experience is how to limit direct unobstructed egress to cut down on shoplifting.

Selection - Under the PLCB, urban areas essentially subsidize rural areas for alcohol selection, something that would seem to go against their stated mission of limiting access. This is the retail equivalent of PENNDOT making sure there is a Jaguar dealer in every county, because without government intervention they wouldn’t be there. Where the population can support them there will be larger stores, and in areas that can’t support those, there will be smaller stores. This is the retail model found almost everywhere. It is not the government’s job to make sure you can buy a wide selection of booze, especially when they say it’s detrimental (but they still want to sell you more of it). It is their job to make sure that a business climate exists which will allow retailers to try to sell whatever they want within the regulations and restrictions. To date I have not heard a reasonable explanation as to why the state should subsidize alcohol like they do milk.

Selection 2 - That in-store selection will increase is not in question. One only need to look across the country to stores like Bev-Mo, Total Wine, Roger Wilco, Binny’s, HighTime, B-21 and hundreds of others to see what the private sector can provide. They provide it based on consumer demand, not by what a bureaucrat or committee with unknown or non-existent credentials selects for them in a small capital city, far from major markets. What is in question is what variety will be available in rural areas. The answer is the same as it is for any other product. If the demand is there, the market will provide it, just as it does in rural grocery stores and hardware stores. If what you want is not available locally, chances are you will be able to order it, the same as now, only you probably won’t have to buy a case at a time as it is with a good portion of the current system. The entire state of big, small, specialty, urban, and rural stores will be open to you. Not that every store will ship but it will certainly be more than now, because real businesses strive for customer service since their existence depends on it and not state police enforced monopoly power.

Prices – There are no absolutes in pricing. So much would depend on the system that is selected. Do we continue with the three tier system or do we eliminate one tier and allow more direct buying? Are taxes collected at the wholesale or retail level? Will the taxes increase or remain the same? Depending on what combination is used, you can say that prices should go down or prices should go up. The one thing you can say with certainty is that in a competitive market prices are lower than they would be given the same circumstances in a non-competitive market. As the third largest retail buyer on the continent one would expect the State Stores to have some of the best pricing available in the country. However, this is not always the case and the differences are more than taxes alone can account for.

Convenience – Since closing 20% of their stores in the past 40 years and having the lowest amount of stores per capita in the country (even lower than Utah!) there is no doubt the current system is inconvenient. Quite simply, anything that doesn’t open hundreds, if not a couple thousand more locations will not provide convenience seen in other states, and is a Band-Aid at best. It is obvious the PLCB cannot begin to compete in this area because they can’t afford it based on their business model of having everything the same store everywhere. Don’t let them buffalo you: the PLCB chooses the number of stores to open, not the legislature; the number of stores is not enforced by the Almighty Liquor Code (with the exception of the number of stores allowed to be open on Sunday). So while the population has increased over the last four decades, the number of State Stores has decreased from over 750 to about 605 today. Just to reach the national average, Pennsylvania should have about four times that number. “Modernization” does not begin to answer that issue, with one proposal saying they want to put 400 sq. ft. “stores” inside other stores, which they are already allowed to do now, and have been for at least 30 years. What exactly does that do for the consumer that the same size private store (which they claim wouldn’t provide the selection) would, besides remove that business opportunity from the citizenry?

Service – Unlike other retail stores, if you don’t like the service you can’t go anywhere else. You are stuck with the same training, the same attitudes, the same level of passion. In the world of private stores, if you don’t like the service you can go somewhere else and reward them with your business. The stores with bad service will eventually fail, and if somebody else sees the opportunity another will open. In the private sector you will find stores with a sales staff of well-trained professionals along with stores whose sales staff can barely tie their shoes. You have the choice of what level you require. Same size fits all is not a tenet of retail, although it seems to be gospel for the PLCB. There are private stores who have sommeliers on staff. The whole of the PLCB, 600 retail stores and an entire state’s wholesale wine trade, doesn’t. To be fair, the PLCB does have a sommelier as a part-time consultant. One. Part time. For the entire state. The third largest retail wine buyer on the continent does not have a full-time top tier wine person. I can’t be the only one to think there is something wrong with the system that not only allows this, but doesn’t care.

Privatization does create winners and losers. The winners are the citizens who now have access to a free market; the losers are those who can’t adapt to the free market system. While no system is perfect, looking at the rest of the country it is easy to see which one is preferred by consumers and businesses whenever there is a choice.

TELL YOUR LEGISLATORS YOU WANT THAT CHOICE!