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?