Corbett not giving up on getting state out of booze business
HARRISBURG — Bernie Liptak won’t be disappointed if Gov. Tom Corbett fails to check liquor privatization off his legislative agenda this fall.
Liptak, owner of J&D Beer Distributor in Brownsville, said he’d prefer the state’s Prohibition-Era system stay pretty much the same. He fears that small beer retailers like his won’t survive if beer sales expand into grocery stores and gas stations.
“There’s not going to be any more of us little guys,” Liptak said. “We’re going to be out on the street.”
Michael Berchin, owner of Beer Here Distributor in Ellsworth, thinks he might retain an edge over new competitors if larger outlets value stocking a wide selection over buying in bulk. He worries more about the ripple effect that even minor changes — such as letting his store sell six packs — would have on the roughly 28 bars he delivers to within a 20-mile radius.
“I do get a lot of people in here that come in and ask for a six- or 12-pack, but what I do, I send them to the local bars around us,” Berchin said. “I’d actually be taking away their business.”
Small beer distributors are just one type of the dozens of stakeholders with conflicting interests as state lawmakers consider sweeping legislation to address an outdated system.
There are the big-box retailers itching to get into Pennsylvania markets, the rural residents worried they’ll be left without options if state stores pull out, the 4,500 state workers whose jobs are at risk and those concerned about public safety impacts, to name a few. And then there’s the average resident who just wants buying booze to be a bit more convenient.
Liquor privatization is one of Corbett’s “Big 3” priorities this legislative session, along with pension reform and transportation funding. A transportation vote could happen as early as next week, and a slew of new proposals is in the works to address the state’s $47 billion unfunded pension liability.
Of the “Big 3,” a liquor plan came closest to clearing the General Assembly just before lawmakers left for summer break, with the Senate voting on a key amendment at 1 a.m. two days before the July 1 budget deadline.
That bill stalled in the Senate amid gridlock over transportation funding in the House.
At the budget signing ceremony, Corbett conceded no defeats and emphasized the Legislature still had time to make progress on all of his top priorities.
House Majority Leader Mike Turzai said privatization remains a popular idea with the public and with rank-and-file lawmakers, and his office has produced a complicated “proposed compromise,” dated Aug. 15, that shows work on the topic has continued over the summer.
Local lawmakers are mixed on what movement, if any, a liquor plan will make this fall.
“I would say that if the governor and the Republican majorities in the House and Senate would be willing to reach across the aisle and work with Democrats in a bipartisan fashion, you could see significant progress made on transportation and liquor,” state Rep. Deberah Kula, D-North Union Township, said.
State Rep. Tim Mahoney, D-South Union Township, said he doesn’t see a liquor bill advancing, while Rep. Mike Reese, R-Mount Pleasant, said there’s still a chance for Senate leaders to revive the issue.
“I think there’s a shot, but I think it’s slim at this point,” Reese said. “No one in the Senate to my knowledge has really stepped up and said, ‘This is what we have to do; we have to get the state out of this business.’ Every indication is it’s not quite the priority that it is for the House.”
The idea goes back three decades in Harrisburg, though Republican Govs. Dick Thornburgh and Tom Ridge were unable to make it happen. In the United States, only Pennsylvania and Utah retain full control over wholesale and retail liquor operations.
“I think it’s absolutely a no-brainer. We simply do not belong in the retail sale of wine and spirits,” Reese said. “It’s a holdover from Prohibition. I hear it all the time: The residents of Pennsylvania want better choices, better options, better selections and better prices.”
The discussion seems to be shifting from Corbett’s preferred full-blown privatization to so-called modernization, which generally involves less controversial moves to make the system more consumer-friendly.
“I know people want easier access,” Rep. Pam Snyder, D-Jefferson, said. “I believe we can accomplish that by modernizing the system we have in place and making it more convenient for people and, at the same time, keeping the revenue source for the state.”
Modernization could include changes like letting beer distributors sell smaller quantities and enabling shoppers to bring home a bottle of wine with their groceries. Other minor proposals simply call for urging existing state stores to operate more like the private industry.
“I do not support — in any way, shape or form — the dissolution of the state store system,” Kula said. “Nevertheless, I would be willing to consider a modernization of the way we sell alcohol in the commonwealth. Increased availability of certain products and packages in various outlets is an idea worth exploring.”
The state’s system of 605 liquor stores employs about 4,500 people, most of them store employees, and supplements its workforce with hundreds of additional seasonal employees. Last year, the system did $1.7 billion in sales and pumped $512 million into the state’s general fund.
Even full-blown liquor privatization proponents have cautioned against undervaluing the state’s “monopoly” on liquor sales and selling off the state stores too quickly.
“This is a revenue source for us, and no one’s been able to show how they’re going to make up that revenue,” Snyder said.
In April 2012, a U.S. Center for Disease Control task force recommend against privatization in states that hadn’t already done so, over concerns about potential increased alcohol consumption.
Under the current system, Pennsylvania’s rates are worse than the national average for underage drinking and binge drinking, the U.S. Department of Health & Human Services data shows. The Mothers Against Drunk Driving ranked Pennsylvania 35th in terms of DUI safety.
MADD opposes privatization, along with the Pennsylvania Chiefs of Police Association, Fraternal Order of Police and Students Against Destructive Decisions.
The House plan passed in March called for selling off the roughly 600 retail wine and spirit stores and the state’s wholesale system.
“I think it was a very, very good bill,” Reese said. “I think it protected the investment of the small business owners and distributors. It allows them to sort of survive into the next phase of how we sell wine, spirits and beer.”
Under the watered-down plan eyed by the Senate, the state would continue to own the wholesale business of shipping wine and liquor, and rural areas would receive some assurance that their state-controlled wine and liquor stores will not close down without liquor control regulators ensuring that a viable private sector alternative exists.
The bill would allow the state’s 1,100 retail beer distributors to buy permits to sell wine and liquor. Certain gas station food markets and grocery stores with beer licenses would be able to buy a permit to sell wine, but they would have to sell the alcoholic beverages from a separate section of the store and not from their aisles.
The bill carries protections for beer distributors that buy a permit to sell wine or liquor. One such provision imposes a three-fourths-of-a-mile buffer preventing competitors inside of it from applying for an exemption from a restaurant-style seating requirement that they currently must obey.
Most local lawmakers said that liquor ranks low on their lists of legislative objectives, especially compared to addressing the state’s unfunded pension liability and injecting money into highway, roads and bridges.
Senate Republican spokesman Erik Arneson said earlier this month that there has not been a breakthrough, and Senate Minority Leader Jay Costa has said liquor privatization isn’t a big priority for most Pennsylvanians.
A recent poll suggests Costa may be right: Just 5 percent of likely voters ranked liquor privatization as a priority in a late August poll by Franklin & Marshall College.
In early September, the Commonwealth Foundation conservative think tank and liberal-leaning Keystone Politics teamed up to co-sponsor a poll specifically devoted to public views on liquor privatization. In that poll, a full privatization plan won the support of two-thirds of likely voters.
The Associated Press contributed to this report.
Natasha Lindstrom may be reached at nlindstrom@calkins.com.