The Tribune Democrat, Johnstown, PA

State News

March 21, 2013

Phase-out of state liquor stores passes House

HARRISBURG — A Republican plan to phase out Pennsylvania's 600 state-operated liquor stores and raise millions in revenue by selling licenses to private businesses passed the House easily Thursday and was sent to the Senate.

The 105-90 vote after about seven hours of debate was a victory for members of the majority Republican caucus and their ally, GOP Gov. Tom Corbett. Five Republicans and no Democrats crossed party lines.

The bill would give existing beer distributors the priority in purchasing 1,200 wine and spirits licenses. It also would allow groceries to sell wine and enshrine their current ability — won through court rulings — to sell takeout beer.

Corbett said the vote put the state a step closer to getting out of a business it should never have entered.

"We're actually telling our citizens that we know you're adults and you should have the ability to choose, and you should have convenience," he said at a news conference afterward.

Democrats warned that it would put thousands of state store employees out of work, cost more and generate less revenue than supporters predict and that it would make alcohol more widely available, bringing with it a range of social problems.

"This is not a business friendly bill," said Rep. Margo Davidson, D-Delaware. "This measure has the potential to destroy small businesses and ravage communities."

Supporters said the state should not be selling alcohol and said private businesses would improve customer service, create jobs and put an end to a Depression-era system of state control that was almost unheard of across the country. They said sales would increase in part by recapturing customers from Pennsylvania who purchase wine and liquor from other states, particularly New Jersey.

"We are moving in the right direction," Majority Leader Mike Turzai, R-Allegheny, said during the floor debate. "There are going to be thousands of new private-sector jobs, not only in retail but in wholesale."

After the vote, Turzai called the bill "an A-plus product and I think Pennsylvanians, should it be enacted into law as it is, will be saying, 'Why didn't we do this 40 years ago?'"

Both sides said the proposal was likely to see changes in the state Senate, where the Republican leader said discussions would soon begin regarding how that chamber will respond.

Corbett, who supports privatization, said the fees from the licenses — at least hundreds of millions, perhaps as much as $1.1 billion — should go to improving public education.

But the bill does not dictate how the money is spent, only that it should be deposited in a special account. Legislative officials said the spending would be determined in separate, future legislation.

Democrats were skeptical of the revenue projections.

"To get to that $1.1 billion, you'd almost have to have a perfect storm," said Rep. Joe Markosek, the ranking Democrat on the Appropriations Committee. "Something far lower is far more likely to occur."

Rep. Jake Wheatley, D-Allegheny, was one of several members who expressed concern that some communities would be flooded with new retail booze outlets.

"When this thing is fully instituted, and we see an increase of alcoholism, or we see an increase of destruction that happens in our neighborhoods because of accessibility to a drug, then we have a responsibility to pay for that," Wheatley said.

Senate Majority Leader Dominic Pileggi, R-Delaware, said earlier that the goal should be improving selection, price and convenience.

"I don't think anyone expects the Senate to just take up the House bill and move it to the governor's desk as-is," Pileggi told reporters in a conference call. "I think the focus should be on what the system would deliver to the citizens of Pennsylvania."

Corbett said he hoped to start work with the Senate when its members return to Harrisburg next month.

Under the bill, the state would continue to operate liquor stores in otherwise underserved markets until the number of stores dips below 100. It provides for special job placement benefits for displaced Liquor Control Board employees. State taxes, including the 18 percent Johnstown Flood Tax, would continue to be levied, and supporters noted that the private retail operators would also be contributing payroll and business taxes.

It also provides a system by which those buying licenses can finance them over four years.

 

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