Study Calls For More Than 1,250 Private Liquor Stores

Charles Thompson
Harrisburg Patriot-News

A draft of a study commissioned by the Corbett administration to find the best way for Pennsylvania to get out of the liquor store business finds some common ground with a bill introduced this summer by House Majority Leader Mike Turzai, R-Allegheny County.

The report suggests, for example, that Turzai’s proposal to auction wholesale and retail liquor sales licenses could get the state its biggest bang for the buck, with an up-front payoff of $1.3 billion to $1.9 billion.

But the Turzai bill is not consultant Public Financial Management’s preferred option. The draft report tilts instead toward two models that provide for more retailers than the 1,250 Turzai proposes in the interest of increasing customer convenience and competition.

Here are other highlights of the draft:

• An auction of 10 to 30 wholesale licenses and 1,500 retail liquor licenses divvied up county-by-county across the state could generate between $1.1 billion and $1.6 billion in up-front cash.

• The other preferred option — with as many as 3,500 retail licenses going to any qualified retailers for a fixed fee — would raise about $475 million to $600 million up front but maximize consumers’ shopping choices.

• Assuming $1.5 billion in up-front revenue, the state could devise a 10-year spending plan that — depending on investment approaches — could yield from $186 million to $230 million annually.

• New liquor taxes required to keep annual revenue even with the take from the state-run system will drive up prices on some products. But the study’s authors also note enhanced competition should keep prices down in the state’s most heavily populated areas and might even lead to net price cuts on most popular items.

• Approximately 3,200 Pennsylvania Liquor Control Board employees would lose their state jobs.

The final version of the Public Financial Management report will likely contain revised numbers or proposals. Corbett, who philosophically supports getting state government out of the liquor business, has said he will present his own thoughts on the privatization issue.

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