Taylor bill protects beer distributors

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.” ••

You can reach at jloftus@bsmphilly.com.

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