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PA Liquor Board could pour $150M into state coffers

By   /   February 16, 2012  /   1 Comment

Bill used to push down privatization efforts
By Stacy Brown | PA Independent
HARRISBURG — The Pennsylvania Liquor Control Board said it has 150 million reasons why privatization talks should stop.

Joe Conti, CEO of the Pennsylvania Liquor Control Board, or PLCB, referred to an estimated $150 million in profits that would go into the state’s coffers annually under a bill sponsored by state Sen. Jim Ferlo, D-Pittsburgh.
“We want to be able to increase our revenue and return it to the General Assembly,” Conti told the state Senate Appropriations Committee during a hearing Thursday.
The board's proposal is outlined in Senate Bill 1287, which is in the Senate Law and Justice Committee.
"Given the commonwealth's current fiscal challenges, this proposal should be given careful consideration," Conti said.
The bill estimates that PLCB would generate $70 million a year in new state revenue on top of the $80 million it will give the state this year, money that could be used to stall some of Gov. Tom Corbett's proposed budget cuts, Conti said.
Additionally, PLCB made a cash transfer of $105 million to the state's general fund last year, and transferred more than $391 million in tax revenue last year.
PLCB will transfer $80 million this year, but the general fund could see an almost 100 percent increase under the board's proposal.
The bill also would allow PLCB to operate like a modern, wholesale and retail business and deliver a greater return for all Pennsylvania taxpayers, he said. PLCB recently launched app for iPhone users. A similar app for Android users is launching soon, he said.

Highlights of the proposal with anticipated annual revenue include:

  • Providing the board the authority to adjust its markup on specific products: $25 million;
  • Allowing the board to charge manufactures a fee to store inventory at a warehouse operated by someone under state contract: $12 million;
  • Assessing a $700 administrative fee for all license renewal and validation applications: $14 million;
  • Increasing fines on those who are found to have violated the state Liquor Code: $2 million;
  • Allowing lottery tickets to be sold at state wine and spirit stores: $8 million;
  • Expanding Sunday hours from noon to 5 p.m. to noon to 9 p.m. and allow up to 50 additional stores to open on Sundays: $10 million.
For some, expanding Sunday hours and opening more wine and spirit stores is almost blasphemous.
"Sunday is a sacred day made by God," said the Rev. Earl Watkins of Grace Baptist Church in Scranton. "It's a day of rest, a day God has declared holy and a day that one should not have the option of partaking in joy juice."
The PLCB’s proposal is the latest example of why state involvement in alcohol is a conflict of interest, said Michael Geer, president of the Pennsylvania Family Institute, a socially conservative organization.
"On the one hand, the PLCB is supposed to enforce laws related to alcohol and, on the other hand, they are looking to find more ways to sell it to more people. Add the lottery and that's encouraging people to drink and gamble. They shouldn't do it," Geer said.
Proponents of the board's proposal said tough economic times are a cause for such action.
"This is just plain old common sense and now is the time for lawmakers to support modernizing this valuable public asset," said Wendell Young, president of the United Food and Commercial Workers Local 1776, which represents 24,000 workers including clerks in state wine and spirit stores.
"It makes a lot more sense to generate $75 million more each year in revenue than it does to cut higher education, basic education and the safety net for vulnerable Pennsylvanians," Young added.
Young said PLCB already provides the commonwealth with more than $500 million a year in revenue — after paying all expenses for the agency's operation — and employs more than 5,000 Pennsylvanians.
While state House lawmakers have wrestled with legislation to privatize Pennsylvania’s state-owned liquor stores, but the effort appears to have slowed since last year.
Unlike in 2011, Corbett made no mention of the privatization effort in his budget address last week, though he has a commission working on privatizing some elements of state government, including, possibly, the liquor store system.
And previous attempts by the PLCB to modernize have not always been successful.  The board admitted that it lost $1.5 million between 2009 and 2011 on the ill-fated wine vending machines before pulling the plug on the program last August.
Thursday, state senators said they are focused on making the existing system more competitive.
“We’ve taken a wait-and-see approach. If they pass something out of the House, we’ll address it," said Senate Appropriations Committee Chairman Jake Corman, R-Centre, of the privatization plan. “Since it’s been a year and it hasn’t gotten through the House, people are just going on the assumption that it’s not going to happen until it does.”
Ferlo said privatization is mostly pushed by the media, particularly newspapers who want the advertising dollars that could come from a private industry.
"When the state is getting this much money in the general fund, it would make no sense to privatize it and take that money away," Ferlo said. "Privatization is media driven for ad dollars."
Privatization, however, is still on the table, said Senate Law and Justice Committee Chairman John Pippy, R-Allegheny.
"We have a parallel responsibility to make sure the system works better, said Pippy, whose panel has legislative oversight of PLCB.