A Northeast Philadelphia Republican legislator has his own idea of how the state can stop selling booze and still protect the private businesses that already have pieces of that business.
State Rep. John Taylor, whose 177th district includes Northwood, said Pennsylvania’s 1,200 beer distributors have a lot invested in their operations and should get the first opportunity to sell a full range of alcoholic beverages — adding wine and liquor sales — if the state dissolves the Liquor Control Board. Other licenses would be sold after that.
“I’m for expanding into a private market, but we have to be cautious how we do that,” said Taylor, chairman of the House Liquor Control Committee.
Pennsylvania’s liquor laws require wine and spirits to be sold only at state-run stores. By default, those same laws led to the creation of a private industry that sells only beer and related products. Wiping away existing laws to create an entirely new alcohol sales system would destroy the beer businesses that already exist, he said.
The legislature is considering a measure, backed by Gov. Tom Corbett, that would ditch the LCB — which has controlled Pennsylvania alcohol liquor sales since the end of Prohibition — and allow private businesses to sell beer, wine and spirits. Allegheny County Republican Rep. Mike Turzai introduced the bill last week and expects it to come up for a vote in the House by month’s end.
Corbett’s plan calls for the entire wholesale and retail liquor system to go into private hands by auctioning off 1,200 licenses for retail sales of wine and spirits. Groceries, convenience stores, large retailers and beer distributors could apply to sell just wine and beer, but also would be permitted to bid on the 1,200 wine and spirits licenses. The proposal also would allow Pennsylvanians to ship wine to their homes.
The governor said the estimated $1 billion that the state would gain over four years from the sale of the state’s assets would be directed to public education.
Taylor thinks Turzai’s measure will not have as much chance of passage as it would with the amendment he is preparing. Taylor said his proposal is not as wide open as the governor’s.
The LCB is a big business.
In 2010-2011, state stores poured approximately $1.9 billion into the state’s economy, and more than $496 million of that went into the Pennsylvania Treasury, according to the LCB’s Web site. The LCB employs more than 5,000 clerks and managers, has about 600 stores and also sells online.
Beer distributorships, under Taylor’s amendment, would have very valuable licenses, he said. Some owners would sell their licenses, he predicted, but others would expand their businesses.
In a phone interview March 6, Taylor said his proposal not only would prevent beer distributors, 121 of which are in Philly, from being swept away, but also would lift some restrictions on beer sales.
For example, beer distributors currently may not sell six packs; they may sell only cases. Bars and restaurants, on the other hand, may not sell cases. Taylor said his amendment will erase both of those “package” rules.
Taylor proposes keeping state stores open when private licensees begin operating. He believes it would be bad business to privatize the liquor business too abruptly.
Wendell Young, president of United Food and Commercial Workers International Union Local 1776, thinks the whole idea is bad business.
“The governor is giving away a valuable public asset,” he said.
He said destroying the state’s liquor system would cost his local 3,500 jobs while ending a profitable venture that costs taypayers nothing. Not only state jobs would be lost, Young said in a March 12 phone interview. Most of the 12,000 jobs in beer distributorships will disappear, he said, as the small businesses give way to larger chain retailers with deep pockets.
“This is a battle that’s 40 years old,” he said.
There’s no proof privatization would really give Pennsylvania liquor buyers better prices and more convenience. If that were true, he said, Harrisburg would be buried in paper filled with the evidence.
Two recent opinion surveys show Pennsylvanians favor privatization. A poll released Feb. 12 by the pro-free-market conservative Commonwealth Foundation showed three out of five Pennsylvanians favor ending state control of liquor sales. Fifty-three percent of Pennsylvanians surveyed by Franklin & Marshall College’s Center for Opinion Research favor the sale of state stores,
One Democrat who isn’t behind Corbett’s move to privatize the liquor industry is state Rep. Ed Neilson (169th dist.). It would eliminate thousands of good-paying jobs, he said, and is not good for small businesses.
Instead of dismantling the LCB, he said, “We need modernization, better operating hours, more locations.” ••