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Liquor board hands $2.4M to municipalities — could it be more?

By   /   August 20, 2013  /   No Comments

By Melissa Daniels | PA Independent

BAR MONEY: PA municipalities will see more than $2.4 million in returns from the Pennsylvania Liquor Control Board for fees paid during the last six months.

HARRISBURG — In south-central Pennsylvania, near the state line, Shrewsbury Township gets $200. Across the state, the city of Pittsburgh will see more than $392,000, the most of any municipality in the past six months.

These are payments municipalities get from the Pennsylvania Liquor Control Board based on how many liquor licenses exist within their borders.

More than 1,400 municipalities in Pennsylvania will soon see such paychecks, totaling more than $2.4 million from the past six months, as announced by the PLCB Tuesday.

But this money could grow under liquor privatization, say advocates of selling off the PLCB. Since the license fees aren’t charged to the PLCB stores — only private-sector license holders such as bars or grocery stores — the fees are coming only from a portion of alcohol sellers.

Privatization plans like those proposed by House Republican Majority Leader Mike Turzai, R-Allegheny, would have created a structure licensing the retailers who would take the place of the PLCB’s Fine Wine and Spirits Stores — in addition to the already-licensed bars, restaurants and beer-selling grocery stores. A later plan sponsored by Sen. Chuck McIlhinney, R-Montgomery, included $8,000 permits for liquor and wine sales, or $4,000 for either type of product.

Whether such licenses would make up for the money the PLCB returns to the state every year became an issue in the debate. Liquor privatization stalled in the Senate in June, with few to no visible signs of progress over the summer.

Steve Miskin, spokesman for the House Republican caucus, said the liquor privatization debate is alive, and part of that includes discussing what happens to the license fees.

Miskin said license fees are turned over to the municipality for law enforcement purposes, but there’s no way to ensure that’s happening, as no local reporting requirement exists.

“A lot of those municipalities don’t have any law enforcement, they don’t have their own police forces,” he said. “There is a discussion, if the municipality does not have law enforcement, that that money goes to the state police for that purpose.”

The switch was outlined in Turzai’s privatization bill, which passed the House earlier this year. Miskin said a separate bill is up for discussion. Meanwhile, McIlhinney’s license proposal created new Safe Ride Home grants, property tax relief for seniors and funding for domestic violence and rape crisis programs.

STATE SYSTEM SUPPLY: No license fees for the PLCB, but the agency does collect license fees from private retailers.

The money these municipalities get from the licenses ranges based on the type of license and the population – each license fee could range from $125 to $700. Total payments in the past six rounds ranged from $125 to more than $400,000 — all based on how many outlets selling alcohol operate in that municipality were up for renewal.

Overall, privatization opponents hold up the PLCB as a significant source of income for the state. Earlier this summer, when the agency announced its annual returns to the general fund from tax revenue and transfers, Democrats and other PLCB supporters held up the figures as proof of a valuable, successful asset for the state.

Wendell Young IV, head of IFCW Local 1776, which represents employees of state stores, actively pushes to keep privatization attempts at bay. He said even if the state were to add licenses for off-premises consumption — retail stores created by privatization — the state is playing a negative sum game.

License fees wouldn’t necessarily be enough to stand on their own and support a regulatory version of PLCB if the system were sold off.

“Remember every scheme that was proposed, that didn’t add up to more total revenue for the state, Young said. “The state might get a license fee, but the state’s losing the markup built into the product.”

Stacey Kriedeman, spokeswoman for the PLCB, said the agency retains $100 per license fee to offset administration costs, and the remainder is returned to the municipality of the license holder. All types of license fees, of which there are dozens, are returned, although beer distributors and performing arts facilities fees are retained by the state.

A license holder renews his license every two years and pays a validation in off years. The state then disburses the payments twice a year. Pennsylvania municipalities earned a total of $4.6 million off licensing fees from Aug. 1, 2012 to July 31.

The fee structure hasn’t been updated since 1990, per the General Assembly. 

Other states with more private-based systems may earn more off licenses fees, though their agencies may operate differently than the PLCB in terms of property and transfer back to the state.

In Virginia, license and permit fees totaled a little more than $12 million in fiscal 2012 and fiscal 2011. Virginia has about 50 types of licenses. Its liquor stores are operated by the state, while wine and beer are available elsewhere. Virginia does operate a state-owned wholesale division.

Contact Melissa Daniels at melissa@paindependent.com

Correction: This story was updated at 10:10 a.m. Wednesday to reflect Virginia’s wholesale operation. An earlier draft incorrectly stated the wholesale operation wasn’t part of the system.

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