In this April 2013 photo liquor bottles sit on shelves in a market in Baltimore. If privatization is approved in the legislature, Pennsylvania will end its dubious distinction of being one of only two states in the U.S. to retain total control over the retail sale of liquor and wine. (AP Photo/Patrick Semansky)
If 48 other states around America have found a way to relinquish total control over the sales of wine and liquor why is there such a ruckus in Pennsylvania on the issue of privatizing liquor sales, wondered Shalimar Blakely, executive director of the Philadelphia African-American Chamber of Commerce.
Ending state control of the sale of liquor and wine in Pennsylvania — inclusive of closing the 600 ‘state stores’ is a major item on the legislative agenda of Governor Tom Corbett, a Republican, who feels the time is long since past to “put our liquor system into private hands.”
In March the Republican controlled State Legislature passed a liquor privatization measure that is now in the State Senate for consideration.
If privatization is approved in the legislature and signed by Corbett, who is awaiting such a measure, Pennsylvania will end its dubious distinction of being one of only two states in the U.S. to retain total control over the retail sales of liquor and wine. Pennsylvania and 17 other states retain some form of control over liquor and wine sales. State government in West Virginia, for example, is the wholesale distributor of distilled spirits but not wine and malt beverages.
“I plan to do further research into why privatization is working in 48 other states and how it can work in Pennsylvania,” Blakely said, adding she plans to poll the Chamber’s membership on the issue.
When members of the Pa. Legislative Black Caucus discussed privatization of liquor sales during a meeting earlier this year, “no member voiced support” for the controversial issue, PLBC Executive Director Brandon Flood said. All PLBC House members present for that March vote in the House approving privatization voted against it, Flood said.
PLBC members have two principal concerns with privatization, Flood said: (1) increased accessibility of liquor through increases in retail sales outlets in areas that don’t need more liquor availability; and, (2) the impact on jobs now held by state workers employed by the Pennsylvania Liquor Control Board, the state agency in charge of wholesale and retail liquor sales and liquor law regulation.
While a finalized privatization plan is not in place as yet, proposals call for replacing the 600 state stores with at least 1,200 new private liquor sale stores statewide plus allowing the sale of liquor and wines in existing supermarkets, convenience stores, pharmacies like Rite-Aid, big-box stores and beer distributors that purchase proper licenses.
Proposals also call for eliminating 3,200 of the PLCB jobs in retail (state stores) and wholesale operations. One study on privatization conducted for Pa’s Office of the Budget stated “separation costs” related to just unemployment compensation and paid leave involving the furloughed PLCB workers “will be significant.”
That study released in October 2011 estimated $68.2-million in just unemployment compensation payments between 2014 and 2017 for the 2,302 PLCB workers anticipated to seek unemployment compensation due to difficulties with obtaining other employment.
“Governor Corbett promised [PLBC] workers first crack at jobs in government and private stores,” PLCB Director Flood said. “However, this governor has established a track record of reneging on pledges.”
That state Budget Office privatization study noted that state government hiring freezes and other budgetary restrictions are “key challenges to placing a significant” number of furloughed PLCB employees in other state government slots. Compounding those challenges is the fact that opportunities for possible state government job slots for PLCB workers are better in the Philadelphia/Pittsburgh/Harrisburg areas with significantly less options available in rural counties, that study stated.
Gov. Corbett and his supporters of privatization inside and outside of state government argue that increasing the number of outlets selling liquor will translate into increases in employment opportunities for furloughed PLCB workers and other job seekers.
That rosy picture of more jobs is dimmed by findings in that state study detailing how the salaries now earned by PLCB state store workers will not be matched in privately owned stores. For example, a PLCB cashier earns $31,200 yearly, while private sector cashiers working in New Jersey earn $20,070 and $21,070 in Maryland.
“Private sector retailers, on average, are not likely to provide comparable salary and benefits to those that the PLCB employees receive,” stated that “Liquor Privatization Analysis.”
The issue of liquor privatization ignites supporters and opponents.
The Pa. Manufacturers Associations favors privatization while Mothers Against Drunk Driving opposes it. The Commonwealth Foundation supports privatization citing such PLCB ‘boondoggles’ as creating its own private label wine using wines bottled in California not Pennsylvania. The head of Pa.’s Fraternal Order of Police opposes privatization, telling state legislators in testimony that privatization will spawned higher crime rates and drain police resources, a contention disputed by the head of the Pa. State Police.
PLCB revenue to state coffers, averaging hundreds of millions annually, funds the Pa. State Police $20-million yearly cost for enforcement of the state’s liquor laws that include monitoring compliance in 20,000 establishments currently with liquor licenses like bars and restaurants. Under privatization state government would have to find enforcement revenue elsewhere, like from privatization licensing and renewal fees.
Privatization supporters said costs for alcoholic beverages will decrease, selections will increase and the Pa. residents going to out-of-state to buy will lessen. Yet, such claims are disputed. When the state of Washington privatized a few years ago prices increased 10-20 percent and selection decreased in many stores. While Pa. residents crossing-borders to purchase liquor may decrease in NJ or Ohio, Delaware still has an advantage with no state sales tax.
Bilal Qayyum, president of the anti-violence Father’s Day Rally Committee, said his key concern with privatization is controlling the volume of liquor in communities already reeling with problems of joblessness and poverty.
“The current system is not perfect but now there is more control over sales. We remember what happened with those Stop-&-Go’s selling beer to teens,” Qayyum said. “Look at casinos. Those businesses were supposed to be windfalls to cities and that hasn’t happened.”
Qayyum, a former economic development official for Philadelphia city government, raised a little discussed issue: economic/ownership opportunities for minorities under privatization.
“If privatization goes through, what are the opportunities for minorities?” Qayyum said. “Are we going to be locked out of this also?”
While powerful entities and prominent individuals wrangled over privatization, the general public places that issue in low priority status according to a recent poll by the respected Franklin & Marshall College Poll.
The poll, released May 8, found Pennsylvania residents placed privatizing liquor next to the bottom of 11 priorities, far behind improving the state’s economy, creating new jobs and improving public schools. Further, that poll found public support for privatization slipping since the beginning of 2013.
Gov. Corbett announced that he wants to direct revenue from the sale of wholesale and retail liquor operations to increased funding for public schools statewide. But major cuts to K-12 education made by Corbett during the past two years has placed many public school systems in a financial tailspin, like in Philadelphia which will close 23 schools and perhaps enact deep cuts in educational services to reduce a massive budget deficit.
State Senator Vincent Hughes, Democratic Chair of the Senate’s Appropriations Committee, supports increased government funding of public education but notes the Corbett’s liquor privatization funding is a one-time deal not sustained, states Hughes’ spokesman Ben Waxman.
“With privatization the state loses control of ensuring full collection of all sales and other taxes involving liquor store sales. This is not a problem with state stores,” Waxman said.
“I have not seen a credible study stating that privatization will lead to higher revenue and taxes for the state.”
Reprinted from the Philadelphia Tribune
Vincent Hughes Shalimar Blakely Tom Corbett Bilal Qayyum