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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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?
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.
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.
P.S. The number of stores will double. The unemployed will find jobs.
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.
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
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.
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!
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.