privatizing liquor stores

Pennsylvanians May Soon Enjoy Home Delivery of Wine From Out-of-State

Have you every visited a winery and wanted to ship a case of your favorite bottles to your home only to remember that option is not possible if you are a PA resident and the winery is out-of-state?

In Harrisburg yesterday, the option for Pennsylvania residents to have wine shipped directly to their homes from out-of-state wineries just moved a step closer to reality.  Senators unanimously approved PA SB 790, 48-0 that would allow Pennsylvanians to buy as many as 24 bottles of domestic wine per month from US wineries. Purchases can be made over the Internet, telephone or by mail.  The boxes would have to be marked as containing alcohol and require an adult’s signature and proper identification before a shipment is delivered.

Senate Bill 790 now moves to the House.  However, it is possible that SB 790 will be tied in with PA HB 11, a bill to privatize liquor and wine sales that has been on the sidelines for several months.  Since Gov. Corbett took office, there has been discussion about privatizingPennsylvania’s liquor store system.   Apparently, there was difficulty reaching a consensus among legislators, and in the meantime, other options to improve the current system have been explored.

Pennsylvania House Bill 11 is a departure from the original intent, which was to sell off the state’s wine and liquor stores.  Pennsylvania Liquor Control Board (PLCB) is the largest purchaser of wine and spirits in the US.  No doubt, a primary factor in slow rolling selling the stores is that the 610 LCB stores hit a new retail year record in 2010-11 with sales topping $1.9 billion.  With the kind of revenue that LCB generates, what’s the saying, “if it ain’t broke, don’t fix it”.

HB 11 takes a broader approach and makes beer and wine more accessible to consumers.  The revised version includes a variety of issues including extending Sunday hours from 9 AM to 9 PM and allowing beer distributors to sell wine and 6-packs of beer.  Under HB 11, the LCB continues to maintain and operate the stores selling liquor and wine.  However, for $100 million each, wholesale wine licenses would become available, which suggests could lead to competitive pricing with the LCB.  The bill contains another favorable addition – those locations with distributor licenses, which allow selling of beer, could also sell wine.  (For me, that’s code meaning that Wegmans could sell bottles of wine in addition to beer).

Currently, Pennsylvania is one of only two states (the other is Utah) that owns and operates wholesale and retail sales of wine and spirits.  Senate Bill 790 and House Bill 11 solve many of the issues that I have with the current system and, it protects the yearly revenue generated by the LCB and provides job security for the LCB state workers.

Combining the components of SB 790 and HB 11, what’s not to like about this legislation – it should satisfy everyone.

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Much Awaits PA Legislators – Privatization of State Liquor System, School Vouchers, Redistricting and Marcellus Shale drilling policy

There is much awaiting lawmakers when they return to Harrisburg tomorrow. Several major areas require legislator’s attention before they depart for the winter holidays in three weeks – privatizing the state liquor system, school voucher program, proposed redistricting and natural gas drilling policy of Marcellus shale.

Since taking office last January, Gov. Corbett has been unwavering on certain agenda items, including the privatization of the state liquor system and pushing a school voucher program.  Much has been discussed on these topics over the past 11 months and Corbett is seeking resolution by the close of 2011.

Speaking of the state liquor system, did you see that the PA Liquor Control Board has changed the rule on shipping alcohol?  Shipping wine or liquor to PA residents was previously prohibited, but the LCB quietly changed the rule last week.  Just in time for the holidays, residents can order from LCB’s online Fine Wine & Good Spirits store for home delivery.

This is a service that wine fans in the rest of the country take for granted but now is available to Pennsylvanians. However, the UPS delivery is pricey, $14 for up to 3 bottles, then $1 for each additional bottle delivered.

Initially I was excited about the change, until I realized that the new shipping rule was only applicable if you were purchasing wine from the LCB — buying from out-of-state wineries is still off-limits!

We know that Corbett wants the state out of the liquor business.  A private firm reporting to Corbett has released a Public Finance Management Report that estimates a return of up to $1.6 billion for privatizing the state liquor system.  So why bother rolling out an alcohol delivery program on the eve of this vote?

Another important agenda item for Corbett since taking office is the school voucher program. Corbett has been transparent in his push for a voucher system, which would permit money to go to parochial and private schools.  One of the foundations of this country is the plan for children from all backgrounds to go to school together but if Corbett gets his way, a legislative vote may change public school education in Pennsylvania.

Although the state constitution prohibits using public money to send children to private schools, Corbett and other advocates of school vouchers, think they have a way around that legal matter.  Instead of giving the money directly to private schools, they will give the money to parents who in turn give money to schools.

Is the voucher plan a new twist on constitutional law – give the money to parents to give to the schools will magically transform the money so it’s no longer taxpayer money?

Personally, I am opposed to Corbett sidestepping the constitution and continue to be opposed to taxpayer dollars funding nonpublic education.  Funneling taxpayer dollars through parents to private schools  ultimately weakens the public education system.  If there are problems with specific school districts, then I believe that the state has a responsibility to ‘fix’ the school district.  And giving some parents money to leave their failing school districts is not the answer nor does it fix the school’s problems for those students that remain.  Moving the best students out of a failing school further weakens failing schools.

Besides legislative discussion on liquor privatization and school vouchers, lawmakers have to approve the state and congressional redistricting maps by the end of the year.  This week closed the 30-day public comment period on the proposed redistricting and now the matter is in the hands of the legislators.

Redistricting is a powerful tool for elected officials to protect their own and undermine opponents and I have previously stated that sweeping nonpartisan redistricting reform is unlikely. However, I failed to mention that former State Rep Paul Drucker (D-157) introduced legislation (H.B. 2005) to reform Pennsylvania’s redistricting process in 2009.  In describing his redistricting reform House Bill 2005 in a November 2009 press release, Drucker stated,

My legislation would establish a nine-person committee made up of the top eight legislative leaders in the House and Senate, or their designees, plus a chairman appointed by the Pennsylvania Supreme Court. 

Under the bill, the chairman would have to be a registered voter in Pennsylvania for at least two years, could not hold a federal, state or local office, and not have held a position within a political party in the previous 10 years. The commission would meet in public and be held to specific rules designed to avoid districts drawn for political reasons. Any plan created by the commission would need to be approved by six of the nine members before moving to the full legislature for final approval.

Drucker’s redistricting reform bill would have increased the commission size from five to nine; established a PA Supreme Court appointed chair and created transparency of the redistricting process with public meetings!  Unfortunately, Drucker’s redistricting reform bill did not get out of the House State Government Committee.  If you are interested, here is link to House Bill 2005.

Another major issue for Harrisburg legislators to discuss in the next 3 weeks is the state policy on natural gas drilling in the Marcellus shale.  The state House and state Senate have passed Marcellus shale bills that include per-well impact fee and a series of new environmental regulations but differences between the bills needs to be worked out.

Differences between the two proposals will need to be reconciled over the next few weeks if lawmakers are going to get a bill to the governor’s desk before they leave in mid-December.

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Privatize Pennsylvania’s Liquor Stores? Why not . . . Could provide $2 Billion Revenue for 2011

Should Pennsylvania sell the state liquor control system to help balance the state’s budget?

For years, there has been discussion about the privatization of Pennsylvania’s state liquor stores.  Having moved here from California, it was an adjustment for me to Pennsylvania’s liquor stores; it seemed a rather ineffective, antiquated way of doing business.  The state’s monopoly on liquor stores removes the convenience, efficiency and competition that would be created in a private marketplace – I was mystified why the system remained ‘status quo’.

Apparently, there is now renewed interest in the privatizing concept of the state’s 621 liquor stores by Governor-elect Corbett.  It is believed that by leasing the state liquor stores, there would be $2 billion up-front revenue gain in 2011.  A projection of 850 businesses would be created by the privatizing the state-run stores and that number does not include the new jobs that would be created by the expansion of the wine and liquor industry in Pennsylvania.

House Bill 2350 was introduced last spring by State Rep. Mike Turzai (R – Allegheny) which calls for the auctioning of 750 retail licenses and 100 wholesale licenses “to the highest responsible bidder with a reserve based upon the fair market value” to replace the current state-run system of liquor stores.  This bill is set to expire on Nov. 30 but it is possible a similar plan will be introduced next year.

At first thought, one could wonder what happens to the state employee jobs in the liquor stores but those jobs should not go away.  The liquor stores will continue to exist and they will continue to need employees – the difference is that the state will not have the employees on the payroll but rather the jobs shift to the private sector.  It is also possible that there could be an increase in private jobs with the change, depending on the demand.

I have long thought that the state’s monopoly on liquor sales needs to change.  Look at UPS and FedEx vs the Federal post office.  Private companies have a profit motive to deliver products at a price the consumer desires and with the convenience that the consumer demands.  Look at the way the postal costs have continually risen over the last decade.  Why should sales of liquor in Pennsylvania be any different? 

The liquor store debate is a problem of two dimensions. First, let’s consider ridding the state of this government controlled monopoly, its associated abuses and watch prices reflect true free market conditions. Second, the state could cash in on the value of this government monopoly by selling it. Pennsylvania’s government always needs money and the proceeds of the sale could be thrown at the most needy — in the instant case, the state budget.

What do you think — should Pennsylvania sell the state liquor control system to help the state’s budget issues?

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