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Armed with powerful lobbyists, union stonewalls liquor privatization in PA

By   /   June 1, 2015  /   News  /   No Comments

AP photo

FOR SALE: Pennsylvania remains one of only two states where the government operates a monopoly on liquor sales.

By Andrew Staub | PA Independent

If you want to buy booze in Pennsylvania, you’ll likely do it the way your great grandparents did.

Getting a spiced rum or a good Riesling here means a trip to one of about 600 so-called state stores. While there’ve been efforts to bring them into the mainstream of contemporary marketing, where design is concerned they’re inescapably Mid-Century Institutional — mostly generic shops with antiseptic white lighting, often identified outside by a simple sign proclaiming “Wine & Spirits.” The public employees who run them don drab aprons at the checkout.

Those who want a frothy craft beer will have no luck in the state stores. Instead, they’ll have to go to a warehouse-like beer distributor that can sell only cases and 12 packs. Six-packs? You buy those in so-called bottle shops or bars. Some grocery stores have been allowed to sell demon alcohol — as long as customers buy the booze in a special checkout line.

For five years, some Pennsylvania Republicans have worked to end the state’s monopoly on retail and wholesale wine and spirits sales and to allow one-stop shops for beer, wine and liquor. And for five years they’ve failed, running up against Wendell Young IV, president of the United Food And Commercial Workers Local 1776, which represents about 3,500 state-store employees.

Young and his organized labor allies are so successful in maintaining a nearly century-old system that they crushed privatization efforts even when the GOP controlled both chambers of the General Assembly and the governor’s office.

The reason? Young says he wins because he has truth on this side.

“Everything that Local 1776 has told people about the system has turned out to be true,” Young said.

Not true, say reformers.

“Their claims have not resonated,” said Nate Benefield, vice president of policy analysis for the Commonwealth Foundation, a free-market think tank. “What has resonated is their political clout and money.”

AP photo

YOUNG: Wendell Young, president of the United Food and Commerical Workers Union 1776.

‘A helluva team’

With lawmakers expected to discuss the future of liquor sales as part of the June budget scramble, that labor influence will likely be brought to bear yet again.

While a bevy of beer distributors and public health advocates have also objected to privatization, fearing increased competition and deleterious effects of more accessible alcohol, the union has been the elephant in the room.

Democratic lawmakers have stood behind the state store system — and by extension, the UFCW — in force. Not one lawmaker from the left has strayed to the side of privatization, Young said.

“We’ve had rock-solid Democrat support, no splintering at all,” Young said. “That’s a pretty huge element to this because, as you know, it only takes a few folks to go off the reservation, and then you could really have slippage on this.”

It helps that the UFCW has at its disposal a stable of powerhouse lobbyists, including the former chief executive officer of the Pennsylvania Liquor Control Board, a former state House speaker and a prestigious lobbying firm with deep ties to influential Republicans who control the General Assembly.

Among the phalanx of UFCW booze busters are:

  • Joe Conti: A former Republican state representative and state senator, Conti began lobbying for the UFCW in September 2013, about seven months after he resigned his $156,000-a-year post as chief executive officer of the PLCB. Conti, who calls the union lobbying group “a helluva team,” presided over the disastrous rollout of wine vending machines, an expensive decision to send employees to “charm school” and an ad campaign urging children to buy their mom’s vodka for Mother’s Day while at the PLCB. He also agreed to pay $2,388.51 in restitution to the state after failing to disclose gifts he accepted from a vendor doing business with the PLCB when he was the agency’s CEO.RELATED: Gifts galore in PLCB ethics scandal, but some say punishment lacking
  • UFCW Local 1776 from 2013 to 2014 also spent more than $195,000 to retain the services of Long, Nyquist & Associates, a lobbying firm with strong ties to state Senate Republicans. On the firm’s website, co-founder Mike Long, a former aide to the Senate president pro tempore, calls himself “the architect of the Republican dominance of the Pennsylvania State Senate.” According to his biography, co-founder Todd Nyquist previously served as the “chief of staff, political advisor and alter ego” to Senate President Pro Tempore Joe Scarnati, a Republican who favors privatization. Now Long and Nyquist are lobbying for a union opposed to a GOP privatization plan.

Young said he has no problems with Conti or DeWeese’s histories. The mere existence of state stores is evidence the pair have served the union well.

Long did not immediately return a message seeking comment about the firm’s lobbying efforts for UFCW, but Young said it helps to have people with strong relationships on his side.

“If Long and Nyquist are working on an issue that you happen to agree with, you wouldn’t complain about it,” Young said. “The only people who are going to complain are people not doing as good a job.”

Jobs at stake

Conti said the UFCW and Young have been particularly adept at dramatizing the human costs of privatization — for example, raising the specter that 3,500 employees could lose their jobs if the state stores closed.

“There’s a lot of jobs on the line here,” Conti said.

As of 2012, the average liquor store clerk made about $31,000 a year with an additional $21,000 in benefits. Young’s gross salary was $310,637 in 2014, according to filings with the U.S. Department of Labor.

Andrew Staub/PA Independent

NO BEER HERE: Pennsylvanians have to buy their wine and spirits from state-run stores, like this one in Shrewsbury, just over the Maryland line. So-called state stores don’t sell beer, meaning it’s impossible to buy wine, liquor and beer in one spot.

While a privatization bill passed by the House earlier this year would phase out the state stores, those employees would not be totally forsaken. They would receive extra points on the civil service exam, preferential treatment for jobs that don’t require the civil service exam and grants for education.

Republicans also say privatization will lead to more businesses and more hiring opportunities, especially for former state-store employees, as retail outlets soar from 600 to as many as 1,800.

In a brief conversation Thursday morning, DeWeese simply said he had never heard from any constituent clamoring for privatization during his time in office.

TV ad: Privatization will kill kids

As the push for privatization gained momentum in the last legislative session, the UFCW took to TV to issue a dire warning: Eliminating state stores would kill kids.

Part of nearly $1.3 million in radio and television-related spending over two years, a union-sponsored TV ad featured two women at a park discussing privatization. One woman stated “the same kind of law in North Carolina is killing one child every week.”

That’s a chilling statement, but it was actually a reference to a statistic that underage drinking accidents killed one child a week there. Yet the two women fretted over the prospect of alcohol ending up in gas stations and grocery stores in Pennsylvania.

“It’s about greed, pure and simple,” one woman says. “Well, it only takes a little bit of greed to kill a child,” the other woman says, hoisting a small girl onto her lap.

The Commonwealth Foundation has tried to discount the public-safety claims the union has made, pointing to a February 2015 PLCB report that found more eighth- 10th- and 12th-graders in Pennsylvania had tried a sip of alcohol in their lifetime or had a drink in the past 30 days than the national average.

The union, though, cites Centers for Disease Control statistics that show Pennsylvania in 2007 had the country’s lowest rate for deaths related to alcohol-induced causes. The state also had the lowest death rate of alcohol-induced causes from 1999-2007.

PLCB gives $526 million to state Treasury

One of Young’s central arguments to keep the state stores focuses on cold, hard cash.

According to figures from the PLCB, the state-store system poured almost $526 million into the state Treasury in fiscal year 2013-14. That was the highest one-year total since 1998-99, when figures were no longer compiled on a five-year basis.

“What we now know is that the system does make money,” Young said.

Of that $526 million, about $321 million came from the state’s 18-percent liquor tax, while about another $125 million stemmed from the state’s 6-percent sales tax. All told, nearly 85 percent of the PLCB’s contribution came from taxes — revenue that privatization supporters note would still come in even if private retailers sold wine and liquor.

No guarantees for privatization

Then there’s simply the procedural challenge for liquor privatization.

Photo courtesy of Ballotpedia

TURZAI TRYING: House Speaker Mike Turzai, R-Allegheny, has been pushing for privatization for years to no avail.

It’s a pet project of House Speaker Mike Turzai, an Allegheny County Republican who has guided it through the House twice now. Yet the state Senate, though also controlled by the GOP, has never been as adamant about the issue.

That might change this session, now that state Sen. Scott Wagner, R-York, has announced plans to introduce his own privatization legislation.

RELATED: In privatization debate, lawmaker wants to avoid mixing liquor with beer

Conti is counting on the higher profile of other Republican initiatives — the move to reform public-employee pensions and cut property taxes — to take center stage. Unlike those issues, Conti believes liquor privatization isn’t quite the dramatic issue it was in past budget battles.

The union has another strong ally in Democratic Gov. Tom Wolf. While he says he’ll modernize the system, he opposes privatization. Even if a privatization bill makes it to Wolf’s desk, his veto pen would loom large. Conti sees no scenario in which Wolf would sign the House’s privatization legislation.

RELATED: Wolf looks to liquor stores to pay down pension debt

Political realities aside, just unraveling a government bureaucracy and changing the already private beer industry is a complicated issue, said Gene Barr, president of the Pennsylvania Chamber of Business and Industry.

“It’s not a surprise that it’s difficult to unwind that system,” Barr said.

The union’s influence — evident in campaign finance records that show UFCW’s 1776’s political action committee has spent more than $950,000 since 2010, when privation efforts began to ramp up — only makes it harder.

Young often roams the halls of the Capitol railing against privatization. His met with Wagner before the York County Republican announced his intent to introduce a bill getting rid of the state stores.

EARLIER: Union leaders under fire for unregistered lobbying

They disagreed, but the meeting was cordial, said Wagner, who added that he finds Young likable. The senator said he’d be a “fool” not to respect his opponent.

“We’re adversaries, and we’re respectful adversaries. And that’s what it is,” Wagner said.

For now, the union and its cohorts have blocked privatization attempts, leaving Pennsylvanians with a confusing system that forces them to buy beer in one place and wine and liquor in another – but almost always from a government employee.

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Andrew formerly served as staff reporter for Watchdog.org.