The Daily Item, Sunbury, PA

March 22, 2013

State House approves private liquor plan

Daily Item Harrisburg Bureau

— HARRISBURG — After an eight-hour debate worthy of a controversy 80 years in the making, the state House on Thursday voted 105-90 to dismantle Pennsylvania’s monopoly on liquor sales.

“Today is truly a historic day,” Gov. Tom Corbett said. “Never before has a liquor privatization bill passed through either chamber of the Legislature, and I am extremely proud of the hard work and commitment the House and their leadership have shown to the people of Pennsylvania today.”

State Reps. Fred Keller, R-85, of Kreamer; Kurt Masser, R-107, of Elysburg; and Lynda Schlegel-Culver, R-108, Sunbury, were among those voting in favor of the bill.

The legislation moves to the Senate, where Republicans have only a 27-23 advantage.

Republicans estimate the legislation would provide more than $1.1 billion in up-front license fees.

Increased taxes paid by the private businesses would mitigate a $50 million decrease in ongoing revenue — between the $80 million in profit the Liquor Control Board had funneled into state coffers and the $30 million expected to be generated by reoccurring fees.

Amendments added this week to give preferential treatment to existing beer distributors was a much more palatable approach than the plan laid out by Corbett in his budget address, Republican lawmakers said.

Another key difference between the governor’s plan and the measure approved by the House: The House bill does not specify that the upfront revenue be devoted to education. Instead, the legislation would put the money into an account until the Legislature determines what to do with the money.

The legislation would create 1,200 wine and liquor licenses — one for each beer distributor in the state. Beer distributors would have first opportunity to acquire those licenses and then a year without competition from other stores. Licenses not claimed by beer distributors would then be sold to any other private business. In addition, the legislation would create another 820 grocery store wine licenses.

But beer distributors would be the only location where consumers could buy all three — wine, liquor and beer.

Whenever the number of wine and liquor licenses doubles the number of state stores in a county, state stores will close. When the number of state stores across Pennsylvania drops below 100, the entire system will be shuttered.

State Rep. Bradley Roae, R-Crawford County, said that under the original plan proposed by Corbett, beer distributors would have had to pay $150,000 to become one-stop shops for liquor, wine and beer.

The new plan creates a fee-scale based on the location of the beer distributor, so that sellers in rural areas will pay a smaller fee and have four years to pay off the cost of the license. For a beer distributor in Crawford County, for instance, the cost of the enhanced license would be $52,000 — $15,000 for the cost of a wine license and $37,000 for the cost of the liquor license.

“A lot of people, they would have been crushed,” if the state had required a $150,000 license fee for beer distributors, Roae said.

Keller said that the legislation achieves an important ideological goal while also providing those businesses already invested in the state’s liquor system with a fair opportunity to establish themselves before competition arrives.

“If you have people concerned about their ability to compete, I don’t think they are giving themselves enough credit,” Keller said.

Keller said he does not drink alcohol, so he, personally doesn’t care about the issue as a consumer.

But liquor and wine are legal products that adults ought to be able to buy and there is no defensible reason the state, instead of private business, would need to sell them, Keller said.

“The government should not be running a monopoly,” Keller said, adding that in some cases, there may be residents who, due to moral objections, would rather not be associated with the sale of alcohol. As long as the state operates the liquor system, all taxpayers have a stake in liquor sales, he said.

“I don’t want to be in that business,” Keller said.

Democrats questioned the fiscal impact of the move and argued that the social costs of privatization have been ignored.