John Baer: Time again to suggest state stores' demise?
YOU JUST knew this would pop up. In the wake of last month's silly state beer busts, and in the face of faltering state revenues, here comes another plan to pull Pennsylvania out of the booze biz.
YOU JUST knew this would pop up.
In the wake of last month's silly state beer busts, and in the face of faltering state revenues, here comes another plan to pull Pennsylvania out of the booze biz.
State Rep. Mike Turzai, R-Pittsburgh, today will announce legislation to auction state stores to high bidders and end the state's 18 percent tax on your favorite hooch and wines.
I'll drink to that.
We are, as in so many things, virtually alone in the antiquated, Prohibition-era practice of government controlling spirits and vino.
Only Utah - a state that has (I'm not making this up) an official state cooking pot, the Dutch oven - also fully regulates sauce.
Utah's the home of Donnie and Marie Osmond. Enough said.
It never made sense that the state's in this biz. Heck, 14 other states have legal marijuana. And given foreboding fiscal facts - end of stimulus money, a multibillion-dollar public-pension crisis, the feds kiboshing the tolling of I-80 and its $450 million windfall, a recent Commonwealth Court ruling that the general fund must cough up $808 million to pay hospitals' and docs' malpractice premiums - it makes even less sense now.
And, yeah, it's been tried before, and probably has little immediate chance, but this new plan is well thought out and could signal the start of change.
Turzai, a member of the House GOP leadership, says that selling 750 retail and 100 wholesale licenses (there are 621 state stores) would bring in $2 billion, an estimate he calls "cautious."
He also says that lost liquor tax is more than made up through license renewal and transfer fees, taxes from 850 new businesses and increased sales. When I ask what bottom line the state might see, Turzai says "upwards of $500 million" a year.
The Liquor Control Board says that it made $234 million last year: $109 million in sales tax and a $125 million profit. But Turzai says that the five-year profit average is about $96 million.
The state would still collect sales tax on booze, but it would be assessed at the final sales point rather than on bars, restaurants and clubs, as it is now.
Turzai says that sales-tax income would rise due to more purchases being pushed by lower prices, longer hours, more selection and fewer out-of-state buys.
As to roughly 4,000 LCB employees, the bill retains enforcement, licensing and inspection functions and, therefore, personnel in those areas. For others, it provides preference in applying for other civil-service jobs, tuition assistance for further education and tax credits for employers hiring them.
The bad news is, the bill does not apply to beer, so there's still a risk of Keystone Kops cavorting among the suds. And it faces, as always, political hurdles, especially from unions, religious and family-values groups and organizations such as Mothers Against Drunk Driving.
The last serious efforts to dump state stores came in the '80s and '90s from GOP governors Thornburgh and Ridge. And Democratic Gov. Rendell says that he doesn't believe there's political consensus for privatization now.
And the LCB? It's no coincidence that the agency is pushing to make more money and be friendlier with lottery machines in its stores, wine kiosks in grocery stores and discount coupons for regular customers (aka frequent fliers?).
Also, CEO Joe Conti tells me that past studies say that over time the LCB provides the state more money than a private system promises. He adds, "The board and our agency work diligently to increase the revenue we return to taxpayers, and we let the Legislature and the governor deliberate over privatization."
I hope they do - if not this year, then soon.
While the system is better than it once was, it's still a backwards approach to governing and a source of revenue far preferable to increasing taxes.
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