How much did they steal from you this year?

It's that (belated) time of year, time for the PLCB to tell us what a wonderful job they are doing and what a swell place to work they have. Their Annual Report is out (you can download the PDF document here), and the truth is in there; we just have to root it out. 

We say it's "that time of year," but it's not, actually, because the annual report took a ludicrous four months to come out...again. Last time it took four months they said, "Ohh, there were special considerations with the new tax code." No new tax code this year, and they didn't bother with a new excuse. What's the point: it's all lies anyway.

Onward! Right on page 2 there's a mission statement (emphasis added):

The mission of the Pennsylvania Liquor Control Board is to responsibly sell wine and spirits as a retailer and wholesaler, regulate Pennsylvania’s alcohol industry, promote alcohol education and social responsibility and maximize financial returns for the benefit of all Pennsylvanians.

Funny how the part about maximizing revenue isn't in the liquor code. Just as well, since based on the available statistics they aren't doing a very good job on the stuff that is, like alcohol education or social responsibility; at least, not compared to states on our border. Their own report on these outcomes shows that students who consumed alcohol in the past year went up from 81.4% to 83%  After 85 years of the PLCB, 85 years of CONTROL FAILURE...maybe it is time to try a different system. Any normal business wouldn't survive 85 years of failure.

What have they done to us lately? After record sales (and record variably-priced screwing us) PLCB liabilities went down $2.03 million on over $1.1 billion dollars of debt. A payback rate of over 500 years, and getting worse. It was "only" 400 years previously. For some reason they don't report that number. Another interesting part of their financial reporting is that they say, on five pages in a row, that "The accompanying notes are an integral part of these statements." And then don't list what any of the accompanying notes are. They aren't going to verify what they are saying; just believe them, because they have such a great track record of telling the truth.

Another thing they don't tell us is that while variable pricing was supposed to be a partnership where the public was supposed to receive some benefit, we don't know what the benefit is in dollar terms. We can look at past financial statements and see that the PLCB is making almost double what it used to. That's almost all because of lower acquisition costs, but where is the share that the public was supposed to get?  We may have seen a 2% reduction in prices, and even that might be high. For every extra $100 they make, we are probably lucky to see a $2 reduction, spread across a number of products. Even then the PLCB still screws us, because of their rounding formula. Rounding is not considered part of "mark-up," so they can hide that from us, just like they hid what the mark-ups actually are now.

It all goes back to the total lack of leadership and experience of those at the top. They are never held responsible for the lack of progress under their leadership, so the status quo, or even a slip in the status quo, is the norm. On the business side it is even worse. I can understand hiring political hacks if you don't want things to improve in a structured order. But when you've got a failed congressman, a political chief of staff, and a furniture company exec it doesn't seem to be the path to a successful liquor business. In 85 years there hasn't been a Yuengling or Jacquin's executive, or someone from a wine wholesaler or spirits importer, who was qualified and wanted to do the job...really?

When you think about this, keep in mind this quote from the Joint session of the House Liquor Control Committee and the Senate Law & Justice Committee of 2017 (adjusted a bit for truth):

SENATOR MCILHINNEY (former Chairman Senate L&J Committee, since retired): "... the state citizens own this system, and they should be able to get some...benefit by having a good  deal when they go to the liquor store."

MR. HOLDEN (Chairman: Liquor Control Board) : "Absolutely Absolutely not."

There, I fixed it for you, Tim.

The Difference is What They Steal From You

I did a short post on this for the "Abolish the PLCB -- Rewrite the Code!" Facebook group. If you missed it there (and you really should join), this is the full version.

I'm about to go out shopping for my Labor Day get-together (planning ahead, as the PLCB minions always nag about). Phone in hand, I'm checking prices, just on the rare case that the PLCB put something I want on clearance. Because that's the only way they ever beat Total Wine's pricing. No surprises: no clearance deals, and nothing I wanted was on sale, or the difference might have been greater.

I usually go to New Jersey, but the Total Wine in Towson, Maryland was closer, and even with the so-called "Free State" (what bitter irony) charging a 9% sales tax on alcohol it worked out to about the same total cost as New Jersey, but with less driving time. This is a big store at 30,000 sq.ft. A true Superstore unlike anything in Pennsylvania. They also sell beer — like any real liquor store would — and as a bonus (for me, at least), they sell cigars, too. If Total Wine has a variable pricing scheme, it at least appears to favor the consumer with lower prices, and not just the owners. Competition will do that.

Here's the Pennsylvania version of variable pricing at work. Jack Daniel's is the largest selling American whiskey nationwide, and in both Pennsylvania and Maryland. If you compare the prices on big brands like that, keep this in mind: every dollar difference is what the PLCB is stealing from you with variable pricing. You know that Total Wine isn't losing money. They're set to overtake the PLCB in total sales shortly, so they must be doing something right, even though they have to deal with competition and not the easy ride of a police enforced monopoly.

Dare to compare:

Kendall Jackson Chardonnay Vintner's Reserve California PLCB $15.99, Total $9.97 - $6.02

Maker's Mark Straight Bourbon Whisky 1.75L PLCB $59.99, Total $44.99 - $15.00

Kim Crawford Sauvignon Blanc Marlborough PLCB $11.89, Total $10.97 - $0.92

Apothic Red PLCB $12.99, Total $7.97 - $5.02!

Tito's Handmade Vodka 80 Proof 1.75L PLCB $34.99, Total $28.99 - $6.00

Jack Daniel's Old No 7 Black Label 1.75L PLCB $46.99, Total $39.99 - $7.00

These are common choices, big sellers. Nothing out of the ordinary or esoteric to skew the results. It does show how badly we are being treated, how badly the PLCB is managed, how badly variable pricing is being abused...and how much the PLCB lied to get it. We told you this would happen. And here it is, in black and white.

End the charade. Privatize.

The PLCB has over $1.6 Billion in liabilities.....and wants to stay that way.

When your business has low debt, good cash flow, a decent profit margin, and service better than the competitors, you can expect somebody might want to buy it, so they can get the benefit of all those good things. And if you're in debt up to our eyes, have crappy management, legendarily bad customer service, your business doesn't look too good to the outside world, no matter how much demand there is for your product.

Yeah, we're talking about the PLCB. After 20+ years of "record profits," somehow they are more in debt now, than at any time in their history. Over $1.6 Billion in liabilities and a total position of $1.1 Billion in liabilities exceeding assets.

Why would any business want to be in that position? They wouldn't, unless they wanted to look like a bad investment to the outside world. If the PLCB was a real money making venture run by at least semi-competent people, then the private sector would have more interest because they know that:

1. They can run a consumer industry far better than any bureaucrat.  
2. They are inherently more efficient. 
3. They wouldn't be saddled with over a billion dollars in debt right off the bat.

YEAH! My business model sucks!

But the PLCB doesn't really care how much or what kind of debt they have. There is no mandate that says they need to be current, no benefit for being efficient, no propaganda value in saying "Look, we decreased our debt!" instead of "We gave 30 million more to the General Fund!" Although this year the amount they "gave" to the General Fund actually decreased $30 million, but you aren't hearing them say anything about that.

Why aren't they worried about their debt? The PLCB has a backup plan and it is called the taxpayers. They can't default - we cover it. Have to pay out more than you take in? No problem, we got it. Can't raise those variable prices fast enough to keep up with rising admin costs? Just give less to the General Fund, the taxpayers will make up the difference!

Remember when the PLCB tried to leech itself onto the state debt with a bond against future earnings? (Don't worry: we do.) Make yourself as unattractive as possible by hanging a 20 year debt obligation to your nose, and the people in favor of privatization (i.e., the majority of the adult population) have one less tool to work with.

Giant leech.  Like the PLCB but more useful.

I'd ask you to stay alert for any hint of debt reduction from the PLCB. With all this money coming in from ACT 39 and variable pricing, it shouldn't be long before you'll hear it every day. That's right, and I have a bridge for sale too...

Privatize.

The world as we know it is ending.

It only took 83 years, with five years of us pointing it out, but the PLCB has finally — at least for this month — listed Jack Daniel's correctly across their inventory. There is still one small mistake, but considering how bad it was for DECADES, this is pretty amazing.

Of course, the "adaptive" inventory lookup that the Chairman spoke about well over two years ago still doesn't work.  Don't put in "Jack Daniels" or "Jack Danials" or "Jack Danial's" and expect to find anything...but that's something for them to work on for the next 83 years, I guess. Nope, as of October 2018, the only questionable listing is for item 2419 (the "Jack Daniel's Tennessee Whiskey Family of Brands Combo," a pack of five different airline bottles) which is listed under the category of "Whiskies." Like a catch-all category, except it's one that the PLCB doesn't have. You can't search it on their "Product Catalog," but it does come up on the splashy 'finewineandgoodspirits.com' page. Consistency, guys...

That doesn't mean they're off the hook. There are so many more inventory mistakes to be found, we'll be busy for years to come.

Here's something that made me delve into the PLCB inventory again. I was in New Jersey and bought a bottle of 1792 Full Proof (125 proof) Bourbon. I'm not a big fan of 1792 in general, but a high proof non-chill filtered bourbon isn't that common, even more so at under $50; so I took a chance. Well worth it...if you can find it. So, back to the the online PLCB Product Catalog.

That's never as easy as it sounds. Even the PLCB doesn't think too much of their system, because right in the instructions for using the keyword search, they say, "If too precise, the product may not be returned as expected." In other words, don't put in exactly what you want, put in something close...unless it's Jack Daniel's, because then you have to be exact with the spelling of Daniel's. Which is something the PLCB apparently couldn't do for eight decades. It's tough being a consumer in Pennsylvania.

So I put "1792" into the keyword search box, select "spirits" and hit Enter...no 1792 Full Proof shows up.

OK, I'm used to the PLCB not having most things I buy. But this is pretty mainstream stuff, so I was surprised that it wasn't listed. Well, maybe it just didn't make it through the "good ol' boy" selection process, since it was fairly new. After a month I check again - still nothing. The search page says it is updated daily so if it hits the system, it should show up right?

Wait a minute...I head over to the FWAGS website to see what is there. Sure enough, the Full Proof is an "Online Exclusive." Now, the Online store is technically a store, and everything in it used to be shown in the Product Catalog because, well, you know, it lists "everything." So I randomly search for some things listed as "Online Exclusives" — McKenzie Rye Whiskey, Peerless Kentucky Straight Rye Whiskey, Highland Park Full Volume, and a few others. None of them show up any more. That is helpful in a uniquely PLCB kinda way. Great way to sell product - don't let the consumer find it.  Must be that "control" they always talk about.

I know we don't do much wine here, but...if this is what they're screwing up with a few hundred whiskeys, can you imagine how they're screwing up thousands of wines? The mind boggles.

Hey, PA legislature — are you sure we can't do better?  Privatize.

Oregon: the 2nd highest liquor taxes in America! Or are they?

Today we are going to look at Oregon, home of the Oregon Liquor Control Commission (OLCC), and generally considered to have the second-highest liquor taxes in the country behind Washington State. They are a control state for liquor sales, but wine sales are private business. This chart by The Tax Foundation shows the tax levels for 2016; Oregon appears to have a tax rate of 3.1 times that of Pennsylvania.

Wow. If we have high prices, the prices in Oregon must be astronomical, right? Let's compare some of the top selling liquors in the two states today, now that we have the additional wonder of variable pricing. Keep in mind, the PLCB's very own report on variable pricing says nothing about using price negotiation to benefit the citizens, only about how much more money they can take from us in "Revenue."

We're going to compare the prices for the top selling spirits in the PA State Stores from 2017 (Fiscal 2018 ended 3 months ago, but the new report still isn't out) to those same bottles from Oregon, using both state's website prices. We'll give you the OLCC price, and the PLCB's shelf price (and out the door price). We'll explain that shortly.

First on the list is Tito's Handmade Vodka. Oregon # 8488B is selling at $23.95. The PLCB has it as # 9359 and it is on sale this month for $17.99. ($19.07) Yay us!

2. Captain Morgan Spiced Rum: Item # 0475BB in Oregon, selling for $16.95. Here it is Item #8865 at $17.99 ($19.07).

3. Jack Daniel's No. 7: OLCC Item #0146B, which sells for $21.95 (on sale this month); or you can pay $25.99 ($27.55) for Item #4291 in the State Stores. Such a deal!

4. Fireball Cinnamon: Oregon item #0939B for $15.95 in plastic, or $17.95 in glass. The PLCB equivalent, #4302, is on sale for $17.99 ($19.07). Even on sale they can't match the Oregon price. How much do you reckon they had to variably mark it up for that to happen?

5. Jameson Irish Whiskey: Item # 0391B for $29.95 in Oregon; or pay $29.99 ($31.79) for item #7303 in Pennsylvania.

6. Bacardi Superior Rum: Oregon #6179B is currently selling for $12.95. But it's on sale at the PLCB! Yeah! Item #7970 is on sale for $13.99 ($14.83). Wait...what?

7. Grey Goose Vodka: Oregon's #0636B at $35.95 compares to the PLCB's # 8963, selling for $32.99 ($34.97). Hey, we won one!

8. Crown Royal: Oregon's #0311B is going for $27.95 there; but #5186 is selling for $28.99 ($30.73) here. Screwed again.

That's the tale of the tape. Now we'll explain it.

Why did I include the out the door price for Pennsylvania, but not Oregon?  Because there are no extra or hidden taxes in honest Oregon. The price you see on the shelf is the price you pay: no hidden variable markup, storage fees, extra 1% 'just because' fees, and no sales tax dumped on top of the already taxed liquor. Kinda makes you wonder about the "negotiation" on those JD prices in Pennsylvania, doesn't it?

Remember that these are the largest selling 750s in Pennsylvania*. If there was any buying power leverage that could be used, it would be on these items. So what did that buying power get us? Jack went up a dollar, as did Fireball, Bacardi Superior and Crown Royal.

Looks like Oregon has pretty competitive prices even though their tax rate is THREE times as much. How is that possible? Hidden taxes, with the main one being product markup, the bloated PLCB "profit" that's being used mainly to pay for bloated PLCB operating costs. It used to be fixed at 30%, but now it is whatever they need it to be -- that's "variable" pricing! -- to pay off their burgeoning overhead, incompetent decision making, and of course to maybe pay some of the pension debt they owe. Need more money? Just vary the pricing! UPWARD!

You see, in Oregon they just have taxes, and it's transparently easy to find exactly what they are. From that they pay for the OLCC's costs. Here in Pennsylvania, we have the super-secret Variable Markup that no citizen is allowed to know, used to pay for the PLCB and whatever idiocy they come up with: wine kiosks, house brands, courtesy training, bad contracts, renaming stores for the 4th or 5th time...you get the idea.

Oregon's listed tax rate may be OVER 3 times that of Pennsylvania, but our secret taxes make them almost equal on many, many items. This is what we get with an "independent" agency with almost no oversight, no experienced business people in charge, and 80 years of cronyism and incompetence at every level. Is this the system that is best for the citizens? Are you sure we can't do better by having real business people run real businesses in competition with each other for the consumers' dollar? You know...just like you buy everything else?

Privatize - now more than ever.


* (Oregon does not carry the same bottom shelf vodka that the PLCB does, so that was left off the comparison.)

Orwell's 1984 and PLCB-world — the similarities are striking

Although George Orwell was likely unaware of the PLCB's Stalinist ways when he wrote 1984, his classic tale of a dystopian future (writtenalmost 16 years after the PLCB was forced onto an unwilling Pennsylvania), parts of it are strikingly close to what the PLCB has become.

Let's take the three sacred principles of Orwell's totalitarian government, the ways they control the population of Airstrip One, and see what parallel ideas the PLCB — a monopolistic government agency — runs on.

First: Newspeak. The official language of all party members, the prime method to eliminate all thoughtcrime. Any thoughts that are unorthodox or outside the official government platform are only describable as "thoughtcrime" in Newspeak; they are crimes by their definition.

All organizations have their own language, their jargon, of acronyms, contractions, and task-specific verbiage that outsiders have a difficult time understanding. PLCB employees talk about facings (how many rows across a product has on the shelf) sku's (stock control units; products with individual barcodes), self-audit (the act of looking over your own shoulder to see if you're doing what you say you're doing), border bleed (smart shopping, American-style), chronic alcohol abusers (that's us, the customers), and our favorite, variable pricing (which means higher pricing). These terms force the conversation into the PLCB's favor, and make all customers criminals.

Second: Doublethink. The act of simultaneously holding two opposite, mutually exclusive ideas or opinions, and believing in both absolutely. Doublethink requires using logic against logic or suspending disbelief in the contradiction.

PLCB Doublethink abounds. We're told the PLCB "controls" alcohol sales, because the private sector can't. But the PLCB also issues license to thousands of privately-owned beer distributors, restaurants, and now grocery stores and convenience stores that also sell alcohol. They must be out of control... The doublethink at the heart of the PLCB though, is the one that increased consumption of alcohol is bad...when the private sector is selling it. It is beneficial when the State Stores are selling it, because the State benefits. You can't get more doublethink than that!

Third: The Mutability of the Past. The deliberate changing (manipulation) of the past through the use of ‘Newspeak,’ by destruction and alteration of past history elements. The aim of this manipulation by Big Brother is to change the social consciousness of the system.

The PLCB and the unions that support it like to use this to prove they are a benefit to the citizen. "We contributed X million dollars in local taxes" is a favorite ploy in changing what happened. They didn't contribute anything. The State Stores merely collected taxes and by law had to return them to the municipality. With private stores, the municipality would collect those taxes on their own terms at a time convenient for them if the state wasn't in the middle.

But there are more parallels beyond the three principles. Drop into PLCBspeak and see how they work.

Crimestop: to rid oneself of unwanted thoughts that interfere with the ideology of the PLCB, a necessary mental discipline for indoctrinated members of the PLCB. Good employees are in a state of constant enthusiasm about the goals set by the State. This is achieved by not grasping analogies, failing to perceive logical errors, misunderstanding the simplest arguments if they are inimical to the PLCB: call it protective stupidity. The main example of this in the PLCB is variable pricing: how to suck more money from the citizens while giving them nothing in return. Sound business practices show that lowering prices to increase sales has more total benefit, but not in PLCBvania! Everything for the State (Stores) — nothing for the citizens! Productive stupidity!

Big Brother: The bureaucrats in Harrisburg make all the buying decisions for every single store, no exceptions. We tell you what you can buy. We tell you where you can buy it. We tell you when you can buy. There is no other choice. Dystopian regime or the PLCB or both!

Thoughtcrime: Any ideas, wishes or thoughts that contradict the idea that the PLCB knows what is best for you. They are the pinnacle of access to alcohol, even when the facts show otherwise. To think otherwise is a crime. You laugh at this, but as an American citizen, in direct defiance of the spirit of the U.S. Constitution (because of the terribly written 21st Amendment), Pennsylvania tells you that you can't go buy booze across the Delaware River in New Jersey. Laugh that off. 

Room 101: In the novel, Room 101 was where you were tortured with your worst fears.  Here in Pennsylvania, Room 101 is the entire state under variable pricing. All our worst fears about the PLCB come true (we warned you about this over and over, damn it!).

2 + 2 = 5: The mathematically false statement that control over physical reality is unimportant; so long as one controls one's own perceptions to what the PLCB says ("We make millions in revenue for the State!"), then any act is possible, in accordance with the principles of doublethink. A prime example: the commonly held belief in the Legislature (and among the citizens) that the PLCB is profitable, while it is over  $1 BILLION in debt, with total liabilities approaching $2 BILLION.

Memory hole: A small chute in the wall used to carry documents to a large incinerator, in order to censor information and or remnants of the past. What's the connection to the PLCB? They tried to dump who was responsible for the wine kiosks and House Brands. They buried the truth about the Point Breeze warehouse firings in 2010 (and rehired all the union employees). And we go on like nothing happened. No one gets arrested, no one gets fired. Okay, ONE guy gets arrested, despite obvious corruption. Do you remember who? 

1984 never came to pass...except in that weird Apple Macintosh commercial. We certainly don't need it here in Pennsylvania. 

A free citizen does not need the PLCB.

At the PLCB, ALL money is TAX money

Well, the good 'ol PLCB got their annual report out, and proudly lists the following as "Contributions to state and local governments" totaling $749.6 million for last fiscal year:

• $371.5 million in liquor tax
• $146 million in state sales tax
• $185.1 million in cash transfers

Of course, the first number is the Johnstown Flood Tax, which was raised twice since the flood in question, the second time about 30 years after the flood. Still, at least they call it a tax. Same with sales tax. That's what passes for honesty in Harrisburg.

It is the last one that the whole PLCB rides on, the reason they still exist: $185 million in "cash transfers," or what they like to call "profit." They don't want to call it tax revenue, but that is exactly what it is, a tax. Webster's defines a tax as: A charge usually of money imposed by authority on persons or property for public purposes. Don't like that one?  This is even more specific: A compulsory contribution to state revenue, levied by the government.

When a government entity -- the PLCB -- is levying a compulsory charge -- which is anything above break-even on their monopoly retail operations -- to increase revenue - it is a tax.

They do that so the codified taxes -- the Johnstown and the sales taxes -- pretty much remain the same. And as we've pointed out many times, they have a police-enforced monopoly and their own pet judiciary system that allows them to do pretty much whatever they want anyway.

No matter what they say, this is not a service to the citizens, nor is it a business. Successful businesses do not have record sales and still go further in debt. The PLCB is well over $1 BILLION in the red...and it isn't going down, it is going up. Businesses do not lie to their shareholders (and they keep saying...that's us!) about plans that have no hope in reaching the levels they promise.

Remember all the money bailment was supposed to save: $100 million. And opening more Sunday stores: $22 million! Opening.remodeled/new stores faster: $25 million. Variable pricing: $75 million. That all totals up to an "extra" $222 million, ON TOP of what they were turning in previously. Wow, dolla dolla bills, y'all!

Have any of these things happened?  Maybe bailment? Probably not since after the first time the PLCB didn't have to take out a $110 million loan that money was never seen again.  No increase in capital spending, no increase in pension contributions, no increase in "profit," and no explanation where it might have gone. Uhhhh...gee, guys, what happened to all that extra money?

The only thing that has consistently gone up is how much red ink the PLCB uses. For real businesses, record sales does not equal record debt for too many years in a row, but the PLCB keeps on with lies to the public about how much of a benefit they are. That's right, lies because if you read the underage drinking report, look at alcohol related DUI and fatalities both underage and legal age. Look at consumption which according to the National Institute of Health spirts consumption - the thing the PLCB is directly responsible for - went up 56% in the past 20 years. We're barely in the middle nationwide. Look at binge drinking and we are 43rd best out of 51; dropping eight places in the past four years. Worse than all the surrounding states, worse than all the free states on our borders, worse than most of the entire United States. "Control" isn't really effective. All it is.... is annoying and expensive.

The PLCB does not control anything, they still exist only to provide a jobs program for the people that work at the PLCB. They aren't even good at what they do. At the last reporting -- well over a year ago, since the PLCB not only doesn't have to report these numbers, they make it a point not to -- 81% of the items they "negotiated" lower costs on had ZERO benefit for the consumer. As a betting man, I'll take every dime you have saying that percentage has gone up and they are screwing the citizens even more.

What they supposedly contribute is meaningless when compared to what they owe, the limited selection and poor service compared to other billion dollar stores, the universally bad reputation they have had over 80 years and the outright proven malfeasance of the leadership are just some of the ways you can see what we have to put up with in Pennsylvania compared to free states.

Maybe this has really been the plan since privatization efforts started in earnest. Run things so poorly, manage so ineptly, lead so incompetently and be so financially inadequate that it will cost far more for the state to bail them out to be able to rid ourselves of this outdated jobs program than to keep them. 

Naw...they ain't that smart...are they?