By Wendell Young IV

As the Legislature readies for a "blitzkrieg on liquor sales", as one media outlet put it, lawmakers need to study very carefully the case that Gov. Tom Corbett, House Majority Leader Mike Turzai, R-Allegheny, and the privateers have made for breaking apart the Pennsylvania Liquor Control Board.

Because they haven't made one.

They have the rhetoric and their wild claims about the wonders of privatization. But facts? Not so much. Gov. Corbett ignores his own consultants, and dozens of groups opposed to privatization, including Mothers Against Drunk Driving and Students Against Drunk Driving, to name just two.

They claim that the state will make a mint by selling off licenses; that prices will plummet while convenience and selection will blossom if Walmart, for instance, stocks a wine aisle in between sporting goods and house wares.

It isn’t true.

Consider just five questions that lawmakers must address before putting 5,000 PLCB employees and hundreds of small businesses out of work:

Why are we even having this debate? House Leader Mike Turzai promised a $2 billion to $6 billion windfall for the liquor licenses. Then Gov. Corbett promised $1 billion.The House legislation  calls for $800 million. Taxpayers don’t know what the price tag of the Senate bill because the author, Sen. Chuck McIlhinney, has yet to provide any details.

But we do know that the LCB will provide a record $700 million in total transfers to the treasury this year, including more than $100 million in profit. We also know that Corbett’s hand-picked consultants at Public Financial Management (PFM) found that privatization will cost the state $1.4 billion in transition costs. Privatization in one fell swoop or one piece at a time will cost taxpayers hundreds of millions of dollar. That’s just a fact.

Where are the jobs? They keep promising jobs. Lt. Gov. Jim Cawley played the jobs card earlier this month before the Senate Law & Justice Committee. But PFM says that more than 2,300 LCB employees will land on unemployment and, because existing businesses will grab the bulk of any new licenses, very few new jobs will be created.

According to PFM, ‘...minimal workforce will be hired…’ by existing retailers while the big chains ‘have sufficient existing employees to manage the registers will tend to reallocate store space.” The same goes for small retailers, drug and convenience stores. Since the LCB ‘currently contracts out the majority of wholesale operations, the number of net jobs created are likely to be minimal.’

There is no nice way to put this: the privateers are just lying to Pennsylvanians when they say they’re going to create jobs.

What about price and convenience? Privatization does not mean lower prices or better selection. After Iowa privatized, “Price increases were gradual and totaled 7.4 percent above what they would have been if the State had retained its stores,” says PFM. 

One year since privatization in Washington State, consumers are still experiencing much higher prices in private retailers then what they saw in state liquor stores. The average PA store stocks 3,000 to 5,000 items; the smallest stores stock at least 1,000 items. Costco, the leading proponent of privatization in Washington State, stocks only 140 wines and 32 spirits on its shelves. Prices will spike and selection will suffer in rural areas especially, according to PFM.

What do Pennsylvanians want? A majority of Pennsylvania voters now oppose privatization, according to the latest independent poll by Franklin & Marshall, which found 57 percent of the state's registered voters believe the state-owned liquor stores should continue as they are (31 percent) or be modernized (26 percent). The same poll found that privatization of liquor ranked 10th out of 11 of the list of issues Pennsylvanians care about, well below transportation funding, a critical issue for all Pennsylvanians.

Pennsylvanians want more convenience and so do the 5,000 men and women who work at the PLCB. It’s time to modernize liquor sales to give the consumers what they want.

Why are we even having this debate at all? The big chains win but 5,000 Pennsylvania working families lose. Consumers lose. Every taxpayer loses. This week, however, we learned of another potential winner: Gov. Corbett’s reelection campaign, which this week sent out an e-mail blast soliciting cash for the liquor fight. They’re asking for donations starting at $10.

That’s not quite $2 billion to $6 billion but, for the governor, it’s something.


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