Corbett Announces Liquor Privatization Plan; $1 Billion in Proceeds to Fund Education

“Our plan gives consumers what they want by increasing choice and convenience, and helps to secure our future by adding $1 billion in funding toward the education of our children, without raising any taxes,” the governor said Wednesday.

Gov. Tom Corbett, joined by Rep. Mike Turzai, R-Allegheny County, last week announced his plan to privatize the liquor system in Pennsylvania and committed $1 billion in proceeds from the process to education funding.

Corbett said the $1 billion will be used to create the Passport for Learning Block Grant, which will provide flexibility to schools, allowing our public schools, instead of Harrisburg, to decide what their students need.

The grant will focus on four priority areas: school safety, enhanced early education programs, individualized learning and science, technology, engineering and mathematics courses and programs.

“Our proposal is part of my commitment to changing Harrisburg, streamlining
government and moving Pennsylvania forward,” Corbett said. “Our plan gives
consumers what they want by increasing choice and convenience, and helps to
secure our future by adding $1 billion in funding toward the education of our
children, without raising any taxes.”

The $1 billion in revenue will come from the three to four year process of selling the LCB: $575 million from the wholesale license process, $224 million from the wine and spirits retail auction process, $107 million from the wine/beer license
application process and $112.5 million in the enhanced beer distributor application process.

“Pennsylvania and Utah are the only two states in the country who have fully state-controlled liquor systems,” Corbett said. “Our plan sells both the wholesale and retail arms of the state-run liquor business.”

He continued: “I want Pennsylvanians to enjoy the same convenience that virtually every other American today has today. My plan gets the state completely out of the liquor business. The state will no longer be a marketer of alcohol; instead, it will now focus on its role as a regulator. It also creates an unprecedented opportunity for economic expansion for private sector employers while remaining revenue neutral for the state.”

Currently, there about 600 state stores in Pennsylvania, the governor’s plan allows for 1,200 wine and spirits stores.

During the previous decade, the state stores’ expenses have grown faster than their revenues, Corbett added.

He said his plan will offer Pennsylvania consumers greatly increased convenience and choice, because they will be able to buy the products they desire in a simpler, more accessible and more rational way. For example, consumers will be able to buy beer and wine where they shop for groceries, buy six-packs of beer at a distributor instead of being forced to buy an entire case, and buy a six-pack of beer at a convenience store.

Currently, Pennsylvania has far fewer alcohol retail establishments per resident than the average state. This proposal would allow the number of establishments to be naturally driven by the market, as it is in other states.

Corbett said his plan balances the increased amount of retailers with additional enforcement measures.

The governor’s plan calls for significantly enhanced fines for selling to minors and visibly intoxicated patrons, with penalty ranges increasing from $1,000 to $5,000 to $5,000 to $10,000. The additional money from license surcharges and increased fines will be designated for enforcement efforts of the Pennsylvania State Police, Bureau of Liquor Control Enforcement, who will see a 22 percent funding increase under this plan. Corbett also proposes a 75 percent funding increase for alcohol treatment and prevention efforts.

New alcohol retailers, such as wine and spirits stores, grocery stores, pharmacies and convenience stores must all use an ID scanner device before they can sell alcohol.

Corbett also explained that his proposal is fiscally neutral. Every dollar not returned to the state due to the divestiture of the LCB is returned to the state through restructured fees. He also noted that history in other states shows that many of the private sector jobs created will have comparable compensation.

Corbett also noted that his plan includes measures for affected LCB employees,
including tax credits for businesses that employ separated workers, educational
credits, civil service credits, individual employment plans and a multi-agency
committee to help displaced employees find re-employment.

What do you think? Good idea? Bad idea? Leave your opinion in the comments section below.

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Robert February 04, 2013 at 02:25 PM
Yeah right....he is giving us what we want....what a joke he is. I have purchased spirits in other states in grocery stores and privately owned establishments and it is much more expensive than it is here. The only concern of the governor(usuing that term loosely) is taking away more union jobs where the employees have benefits and actually make enough money to feed thier families and give these stores to his rich friends so they can get even fatter than they are now. Let's take a guess at what the wages might be in these new stores if we let this happen. Could it possibly be jore minimum wage positions available for the workforce.....probably only until they eliminate the minimum wage laws...which next to abortion is thier main goal. Sell the Pa Lottery to a foriegn concern.....eliminate the turnpike jobs.....sell the Turnpike and the JOB CREATORS can create even more low wage no beneifit jobs and eliminate even more good union jobs. How about this governor using our money to sue the NCAA for the penaltys they bestowed on penn state. If it was me i would have closed it down. What business could it possibly be of corbits anyway......trying to hide the fact that he knew about all the allegations against that nitwit coach who was deemed guilty in a court of law. Seems the repukicans always have thier noses where they don't belong. Congrats to the voters that put him in office. The polls tell us he is the worst governor ever. I didn't need a poll to tell me that.
T&B T February 04, 2013 at 08:15 PM
It's high time they do this!
Free Market Supporter February 04, 2013 at 08:51 PM
Blah, blah, blah ... union lackeys - please shut up!!!
Robert February 04, 2013 at 10:13 PM
Then people wonder why thier communities have gone so far downhill.
Robert February 04, 2013 at 10:16 PM
I can explain it to you free market but i can't understand it for you. How do they say it......ignorance is bliss.
Ed M February 05, 2013 at 04:07 PM
So far Robert, you explanation has been extremely union biased. I, too, have purchased alcoholic beverages from independent stores and while some are more expensive there are quite a few who are cheaper. Beer and wine sales are occurring now in grocery stores in PA. I don't see this as a bad thing especially when every state surrounding PA does the same. Why should PA business go out of state?
Robert February 05, 2013 at 04:50 PM
Again Ed M I cant understand it for you. How bout the employees in the 600 plus Spirit stores who make a living wage and some benefits? What do they do? What do you suppose the wages will be in the new system? Why would you care ed? it must be so hard for you to see that the republicans are eliminating any jobs they can that could possibly contribute to a middle class. That way we would form a HUGE cheap labor pool dor them and thier already record profits will grow even more. Those of us that can't find a job with them can go fight thier wars that they rely on so much for them. We can send all the blacks and hispanics to lose thier limbs or die so they can continue to make money manufacturing war essentials such as ships and airplanes and tanks and guns and ammunition. They don't want to go too long without wars and you can't blame them ed.....the profits are enormous. Lemme guess ed.......you don't see this as a bad thing.
Ed M February 05, 2013 at 06:34 PM
Again union biased. The employees of these 600 plus Spirit stores are state employees. I'm sure many would be able to secure jobs in other state departments. I'm sure others would be able to find employment in the private sector. I'm sure some are ready for retirement. It's not hard for me to see the current state store system is old, antiquated and broken, much like PAT. It is apparent, Robert, you can't see the benefit of this. Maybe it's not so much can't as won't.
Robert February 05, 2013 at 07:08 PM
I don't think i will EVER see a benefit of a minimum wage job other than a nine year old trying to make a little spending cash....but thanks to your kind it looks like that is about all that will be left.....unless the voters wise up and make the repukican party extinct in the next election......which I have a feeling they will. If all the women and blacks and hispanics and white people with even a semblance of brain power stick together we can get rid of the fat old white men who want to bring our country back to the 1800s. After losing a landslide election a few months ago it seems they got even STUPIDER ..........should make it easy for the dems to take control of EVERYTHING.....and I can EASILY see the benefit of that. Not so much can as DO.
Lucy February 05, 2013 at 08:02 PM
I for one am tired of hearing the union thugs crying foul at every turn. Talk about disillusioned. This would be a very welcome change to the antiquated system and bring PA out of the dark ages.
Robert February 05, 2013 at 08:22 PM
Well Sue.....you go work there for minimum wage and no benefits when they privatize....or maybe your son or grandson can try to raise a family on it. I don't appreciate the reference of "thug". Did I call you an idiot? I used to wonder how dormont went downhill so quickly......I no longer have to wonder.
Concerned Citizen February 05, 2013 at 08:26 PM
Living wage is an unattainable myth. The time for privatization was years ago. So...what, keep the liquor stores state-run so 600 people can keep a living wage? Ridiculous. What's even more absurd is you have no other argument but that one. The consumer would benefit greatly from a change to a private system. The whole idea of "Living Wage" is a product of the entitlement society that we have become, and will never be feasible. A pie-in-the-sky dream that is not only not possible, but is counter to the economic principles of this and all other free economies. And Rober, your rhetoric at first seemed like you were a mouthpiece for unions, then I read your other posts. You're just clueless. By the way, as far as those 600 employees go, I have been laid off before when a company was bought out and when business wasn't booming...why should they be any different than anyone else? Yeah, let's keep an antiquated system that is not in the best interests of the consumer so that 600 people can be gainfully employed. What nonsense.
Concerned Citizen February 05, 2013 at 08:27 PM
I meant employees of 600 stores, not 600 employees. It doesn't change my point.
Joseph February 05, 2013 at 09:16 PM
Finally! I don't have to special order! Hopefully, this also means wine can be delivered to PA. P.S. The number of stores will double. The unemployed will find jobs.
M. R. Birkos February 05, 2013 at 09:50 PM
Here are the last four states that privatized elements of their liquor sales. Iowa went private with retail operations of wine in 1985, and liquor in 1987. West Virginia privatized liquor retail operations in 1991. Both states earned less than $20 million each. Operational costs were greatly reduced, but the expected windfalls never materialized. In 1986, $71.6 million net profit was sent to Iowa coffers. In 1987 - $43.6 million. Cash flow did not return to pre-privatization levels until 2004. They chose to retain wholesale operations, because they would have lost $60-70 million/year. http://www.pennlive.com/editorials/index.ssf/2010/12/dont_toast_yet_to_pa_liquor_st_1.html: http://voices.washingtonpost.com/virginiapolitics/2010/09/as_we_reported_this_weekend.html: In 2004, Maine picked up a quick $125 million for a 10 year lease of their wholesale operations, but since, has lost over $100 million in profits due to revenue sharing with the wholesale distributor. http://www.mainebiz.biz/article/20110725/CURRENTEDITION/307259998: In 2012, we know that Washington only earned $150 million for wholesale rights, $30.8 million for their existing stores, and a new liquor/wine/beer license only costs $166.00, not $15,000/year.. Last month, the governor’s windfall estimate was $1.6 billion. Today it is $1.0 billion. But ironically, the billion dollar number and the real market comparables are both deal killers.
Joseph February 05, 2013 at 09:58 PM
Just looked at some figures... the PLCB only makes about $50 million profit from $2 billion in annual sales. Probably doesn't include employee benefits and pension outlays either. Sales tax generates $400 million, which will still be collected after privatization (likely to increase with additional stores and diversified inventory). Interesting tidbits: - There's a hidden 18% tax on alcohol sales that was put in place to help with the Johnstown flood in 1936. It's still collected, but goes to the general fund. (http://www.johnstownfloodtax.com/). - The beer tax rate is pretty low compared to nearby states. The tax on wine and spirits is insanely high; 28% vs. 8% in NY, NJ, DE and 4% in MD
Joseph February 05, 2013 at 10:22 PM
Interesting. But, from what I understand, profit includes difference between sales operating costs, licenses, fees, investment income, etc. So obviously, if the state no longer sells alcohol, profits will decrease. Also, the PLCB fudges their 'profit' numbers. For example, in the first article it says, "... we get a healthy $105 million a year profit." but that's not the OPERATING PROFIT. The operating profit was closer to $68 million in 2010, and the TOTAL net assets in 2010 was $8 million -- http://www.auditorgen.state.pa.us/Reports/Federal/fedLCBAudit063011.pdf (page 15) -- Take note of how they transferred more money they generated to the general fund. They weren't in the black that year, and haven't been for the past 3 years. For a more accurate assessment, OPERATING PROFIT and/or total revenue from alcohol sales (including taxes) should be compared.
Robert February 06, 2013 at 12:22 AM
One more time joe..,....please five me an answer....what do you think all those jobs gained by privatization will pay? Our economy can never grow with low paying jobs. Most people who will be employed there will also need food stamps to survive....add on healthcare to the tax payers bill.....oh but maybe you can have your wine delivered now joey. corbins wealthy friends will have the franchises and they will become even more wealthy.....and no one else will benefit from it in any way Thier accountant will make sure they pay little if any in the way of taxes.....but those minimum wage workers will make up for it I am sure. Just another classic example of voting against your best interests. What else could be expected......after all its dormont and many more townships just like it.....voting against all those union thugs and putting all those fat old white men who will tell them when to have an abortion in addition to taking all thier jobs away and selling the trights to them to foriegn concerns....ala the Pa. State Lotterty. I suppose you have to have a brain to wake up and smell the coffee.
T&B T February 06, 2013 at 01:15 AM
Ignore Robert; he tries to get people's goads up by taking silly positions on the issues.
Robert February 06, 2013 at 01:49 AM
If you think my positions are silly.......you don't even have a clue tidbit. Everything I have said about this is the absolute truth.......and in time you will see it all come to pass. Not one person has an answer as to what the benefits are in adding all these minimum wage jobs. I mean ANY benefit besides the owners who will benefit beyond your teenie weenie comprehension. You will tell me right tidbit?
Ed M February 06, 2013 at 03:06 AM
Yeah it's the truth Robert because you read it on the internet! And as you stated, Robert, the PLCB fudges its profit numbers. Typical government operation. The 18% Johnstown Flood Tax now goes to the general fund! Wonder what they are doing with that? This should be eliminated! There is so much pointing to eliminating the antiquated state store system. Oh yeah, Robert, nine year olds are not legally allowed to work. And more cheap shots at Dormont! Erin, he will never stop! It must be dealt with!
Erin Faulk February 06, 2013 at 12:56 PM
Hi guys, I'm going to ask one time before I start deleting comments. Please talk about the issue at hand without making personal insults, without the purposeful misspellings of each others' names, and without purposely calling each other by the wrong names. Keep the conversation centered around the topic of the article. Thanks.


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