Every so often one of the Governors in Pennsylvania come up with the grand solution to the balance the budget and propose selling off the state-run liquor stores. Former Governor Tom Ridge fought for years trying accomplish this mission and failed each time. Current Pennsylvania Governor Corbett announced on Wednesday, January 30th his plan to sell off the state-owned wine and spirits stores and use the revenue to fund education. After successfully privatizing the PA lottery, Corbett's next step is to get the state out of the business of selling wine and booze. Motivated by a lump sum payment that the sale of the stores would generate, Corbett proposed to use the funds from the sale of 600 state stores and 1,200 wine and liquor licenses to provide an education block grant that school districts could apply for to fund projects that focus on safety in schools, early childhood development programs, learning support systems and additional classes in math, science, engineering, and technology.
Since December 1933, the sales of all liquor, wine and the licenses to sell these products have been regulated by the Pennsylvania Liquor Control Board (PLCB). On December 5, 1933, the 21st Amendment to the U.S. Constitution was ratified and alcohol prohibition was repealed. One day later on December 6, 1933, the Pennsylvania General Assembly approved the sale of more than 600 liquor licenses which gave bars and restaurants the permission to sell alcohol at their establishments. This very same month over 1,000 clerks were hired by the Commonwealth to work at the state stores. After 14 years of prohibition laws making the use and sale of alcohol a federal and state crime, on January 2, 1934, the PLCB opened up five warehouses and 63 state stores which sold wine and liquor. The "Liquor Code" was signed by the PA General Assembly into state law on April 12, 1951 combining the sale of liquor and beer into one statute. The first premium liquor store was opened in Allentown on August 23, 1990 giving consumers the ability to purchase over 4,000 products in the superstore. In an effort to encourage consumers to keep buying their booze locally and to keep sales in state, on June 3, 2003 the PLCB opened up wine and spirit outlet shops in Gettysburg, Hermitage and Franklin Mills. That same year brought the inception of one-stop wine and spirit stores shops with the first one opening up in Montgomery County, PA. Over the past 20 years, the PLCB has taken the sale of wine and liquor to a new level providing consumers with chairman-selected wines and wine tasting events right at the stores that are located in convenient places throughout the state offering both choice and quality.
Over the years much criticism from privatization supporters has been directed towards what many refer to as Pennsylvania's antiquated system of selling liquor which has been by and large through the the PLCB. Operated and run by the state, proponents of liquor store privatization believe that the Commonwealth should not be in the business of selling wine and spirits rather putting the responsibility of the actual sales and distribution to private business owners. There are many reasons why privatization proponents want the state out of the liquor business: convenience, morality, big revenue, price competition and improved selection. The belief is that if businesses were managing the sale of alcohol, they would open earlier and stay open later instead of regulated hours kept by the state employees who manage the wine and spirit shops under the current system. Proponents also think that if business owners manage the sale of liquor that competition will move prices up and down to the consumer's benefit. In other words, people will buy where they can get a bargain or a deal. There is also the thought that privatization will bring out larger product selection as compared to what exists now. Naturally, there is the big windfall of money an estimated $2 billion in revenue that the state could look to receive if the stores were sold to the private sector not to mention the fact that people in this state just seem to resent that the state is in the business of selling booze.
On the other side of the argument are those people who think that the way we do it here in Pennsylvania is just fine going by the don't fix what isn't broke mantra. Privatization opponents believe that there are too many good reasons to keep the PLCB running and managing the wine and spirit stores and not to privatize most notably because of public safety, selection, prices, profits, loss of jobs. One only need cross the PA border into New Jersey, Maryland, New York or Ohio and go into a local convenience store or gas station to pick up some beer or liquor for the ride and see that the prices are not that much different from what is sold here. While it might be convenient to pick up beer or wine at a place like Sheetz or the local Wal-Mart, the selection is small mostly name-brand products which means that better prices and convenience might still be at a store that just sells alcohol. Another concern is who is behind the counter at the register ringing up the sales. In PA, the liquor store clerks receive additional training in alcohol education compared to the business world where a sale is a sale. Privatization also means the loss of jobs as about 3,000 liquor store clerks, managers and other employees would be laid off. The strongest argument against privatization is the loss of annual revenue. While the sale of the liquor stores and their licenses would bring in around $2 billion over a four-year period, the state would lose the $494 million annual profit that alcohol brings into PA. That just does not make sense. Why sell off a business that brings in almost $500 million each year to make a quick sale that the state would already make in the same four-year period.
In taking a good hard look at Corbett's proposal and his reasons for wanting to privatize liquor in PA, it is all smoke and mirrors being thrown up to cover up the real reasons to privatize and it is not for the reasons stated. It is cold hard politics at work with Corbett motivated by the lure of big business such as Wal-Mart in his back pocket backing him come the next election year. Corbett says that the $2 billion in sales revenue would be used to help out PA's education system; however, in the same breath the Governor wants to cut education expenses. Should PA get out of the business of selling alcohol, there is no guarantee that the Corbett would actually shift the funds into a block grant for education and the schools when in the same breath he wants to cut expenses. While the Governor does have public opinion in his favor as many Pennsylvanians are in favor of privatization, the unions are his biggest opposition and they also wield a certain amount of political power and control. After all, if the liquor stores were sold and run by private businesses, there would be a few thousand state employees who would either have to be absorbed into the LCB and/or other state agencies in comparable positions, be furloughed while the state figures out what to do with them or be shifted onto unemployment which does not seem to be a viable solution. Instead of looking to privatization as a solution to problems that do not exits, Corbett needs to get a new hook for his re-election campaign. While $2 billion seems like an easy way to bring in a bucket of money that typically takes the PLCB four years to earn, the fact is that they money that the state bring into the state each month from the sale of alcohol is ongoing. When the $2 million is gone, there will be no more wine and spirits stores to sell to bring in new profit. With the stores being a money maker and a multitude of jobs at stake, privatizing alcohol only seeks to reward Corbett's image among voters and enhance his prospects at re-election.