Lawmakers Press LCB Officials: Why Not Privatize State Stores?

John L. Micek
Allentown Morning Call

As officials from the Pennsylvania Liquor Control Board made their annual budget pitch to the state Senate Appropriations Committee on Tuesday, lawmakers on the panel said they didn’t want to dwell on the potential privatization of the 70-year-old agency.

But here’s the thing about 800-pound gorillas: They’re awfully hard to ignore.

Again and again, lawmakers grilled liquor board members on how the agency operates, on their efforts to make the LCB more consumer-friendly and whether a privatized system would result in increased access to alcohol by minors.

“I hear you saying that you want to be more like a private business. That begs the question of why not just privatize like 31 other states,” Appropriations Committee Chairman Jake Corman, R-Centre, told agency officials as they wrapped up their appearance.

Gov. Tom Corbett and legislative allies in the House and Senate are pushing for privatization of the state store system, arguing that the state needs the roughly $2 billion that could be raised from a sale. Backers also say that a privately run system would result in greater consumer choice and lower prices.

The board’s chairman, Patrick J. Stapleton, told lawmakers the agency is seeking legislative remedies that would give it greater flexibility on pricing and hiring practices. Right now, the agency is constrained in the discounts it can offer on certain products, and civil service rules have hamstrung its ability to “put the right person in the right job,” Stapleton told lawmakers.

“We’ve endeavored to create a world-class business operation,” he said. “Unfortunately, we’re limited in certain respects by [state law].”

Opponents have warned that offloading the system could cost the state jobs and badly needed tax revenue. The LCB employs 5,700 people, most of them as liquor store clerks and managers. The system returns about $500 million to the state — nearly $400 million in taxes, the balance in profits.

On Tuesday, Sen. Jim Ferlo, D-Allegheny, called the privatization push “financially foolhardy” and said he didn’t know “why we’re in a rush to get rid of a great public asset.”

Lawmakers don’t have a bill before them yet. But a proposal offered in the House last year by current Majority Leader Mike Turzai, R-Allegheny, would have provided for creation of about 700 private licenses. Turzai’s proposal would also have provided retraining and civil service preference in hiring for displaced liquor board employees.

Lawmakers and liquor board officials also focused on the debate over whether state stores provide the broadest choice to consumers. Stapleton and board CEO Joe Conti reminded lawmakers that the state is one of the biggest purchasers of wine and spirits in the world.

Stapleton endorsed, with qualifications, a proposal that would allow for the direct shipment of wine to consumers. He also said customers can special-order items from state stores if they don’t find them on the shelves.

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