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February 1, 2013

Gov. Corbett's state store privatization plan gets off on the wrong foot

HARRISBURG — Nothing Gov. Tom Corbett said Wednesday explained why his effort to end the state’s liquor monopoly would be any more successful than earlier attempts, and the governor’s bid got off on the wrong foot by snubbing many lawmakers who were not a preview of the plan before it was announced.

Under the governor’s plan, the entire liquor retail and wholesale system will be owned and operated by private entrepreneurs.

The plan calls for auctioning 1,200 licenses for retail sales of wine and spirits by county with an estimated $1 billion in proceeds pegged to go for a handful of specific uses in school.

Grocery stores, convenience stores, pharmacies, large retailers and beer distributors can file an application to simply sell beer and wine and/or bid on one of the 1,200 licenses for wine and spirits.

The system created under the plan would allow for a business to be a one-stop retail shop where beer, wine, and spirits are sold under one roof.

“(Dick) Thornburgh tried and failed. (Tom) Ridge tried and failed,” said Sen. John Wozniak, D-35 of Cambria County, mentioning previous Pennsylvania governors.

“I cannot argue with the ideologues that argue that the government should not be in the business,” Wozniak said. “But it makes a lot of money for the state, it largely keeps liquor away from those under 21, the state stores are safe and they provide family-sustaining jobs.”

Wozniak noted that while the governor was surrounded by a group of Republican House members, there were no members of the Senate at the announcement.

Two Republican Senators contacted before and after the governor’s announcement said they have been provided no information from the governor’s office about his plan.

“We haven’t heard anything,” said Sen. Gene Yaw, R-23 of Lycoming County. “We are totally in the dark. Unfortunately, it has been characteristic of this administration that we don’t hear anything until we start getting calls from reporters.”

Despite the lack of communication in advance, Yaw said he believes lawmakers will judge the governor’s plan on its merits.

Sen. John Gordner, R-27, of Columbia County, said that he had seen no specific information about the privatization plan, but noted that there a variety of concerns that would need to be addressed, including how the sale would impact the state budget over time.

Lawmakers on both sides of the aisle expressed concern that any plan that would award licenses through bidding might create situations where rural areas could be shut out, unless there are specific protections in place.

“For instance, in Northumberland, Union and Snyder counties there are currently state store locations in Mount Carmel, Coal Township, Sunbury and Milton; Lewisburg and Mifflinburg; and Selinsgrove,” Gordner said. “It is possible that if licenses are sold to the highest bidder and those bidders can take their licenses wherever they wanted that you may end up with a license in the college towns of Lewisburg and Selinsgrove and nowhere else.”

Lawmakers also expressed concern that privatization would force many well-established family businesses to close.

“He’s going to wipe out 6,000 family businesses with the stroke of a pen,” Wozniak said. “That’s not good public policy.”

Rep. Jaret Gibbons, D-10, of Lawrence County, said that the interests of the people already involved in the sale of liquor and beer cannot be ignored.

“There are families with hundreds of thousands or millions of dollars invested in their businesses,” he said. “The increased competition is going to have an impact on them.”

Democrats pointed to privatization efforts in other states to argue that ending a state monopoly will not lead to better selection and price for consumers. Rep. Mark Longietti, D-7, of Mercer County said that when the liquor system was privatized in West Virginia, there were a number of more rural counties that ended up with no liquor licenses.

Gibbons said that, in addition to the other concerns, there are also questions about how the state will replace the revenue generated by the liquor monopoly once the licenses are auctioned off and the operation is in private hands.

The liquor system provides almost $500 million in revenue to the state each year, but 80 percent of that money is in the form of taxes that the state would receive, whether it operates the system or not, according to data from the Pennsylvania Liquor Control Board.

Finnerty works out of the Harrisburg Bureau of Community Newspaper Holdings Inc., which represents The Johnstown Tribune-Democrat, The Meadville Tribune, The New Castle News, The Sharon Herald and The Sunbury Daily Item.

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