HARRISBURG - Don't privatize - modernize.
That's the message top officials from Pennsylvania's Liquor Control Board sent Tuesday as they unveiled details of their new defensive strategy against Gov. Corbett's push to privatize their agency.
LCB officials say they want the legislature to give them more flexibility in pricing and hiring, let them stay open later on Sundays, and, in a major shift, allow Pennsylvanians to have wine shipped directly to their homes.
Those changes, they testified during a budget hearing in the Capitol, would allow them to get better products to customers at better prices while improving the agency's bottom line - not to mention the money it kicks in annually to state coffers.
It could also knock the wind out of efforts by the administration and some top Republicans in the legislature to sell off the liquor stores for a quick influx of much-needed cash.
"We've endeavored to create a world-class retail operation that is best of class when compared to other institutions in the business of selling wine and spirits," Liquor Control Board Chairman Patrick J. "P.J." Stapleton III said at a hearing Tuesday before the Senate Appropriations Committee. "Unfortunately, we are limited in certain respects by the Pennsylvania liquor code, which has been in place for over 75 years now."
Whether the legislature comes through for the LCB in its efforts to run less like a bureaucracy and more like private business remains a question mark.
Historically, making any changes to the liquor code has been a long and arduous process in the legislature, where arguments for keeping the status quo have trumped most efforts to make major changes to the system.
Yet Corbett campaigned heavily last fall on getting the state out of the business of selling wine and liquor. And his arguments for doing so - among them, getting a huge influx of cash in tough economic times - seemed to be gaining traction in the legislature.
Until recently, that is. As it stands, there is no working bill to privatize the agency, and the governor isn't pushing for it to help plug the projected $4 billion deficit in next fiscal year's budget, which must be adopted by July 1.
On Tuesday, senators on the committee - even those who say they see the merits of privatization - seemed receptive to the LCB's "modernization" plan.
Sen. Jim Ferlo (D., Allegheny) called the agency "a great public asset" and said privatizing would be financially "foolhardy." This year, the agency is kicking $105 million just in profits into the state treasury, he and others noted.
And while Sen. Jake Corman (R., Centre), who chairs the committee, wondered whether Pennsylvania should fall in line with 31 other states and privatize wine and liquor sales, he acknowledged: "I don't have people knocking down my door for privatization."
Among the changes the agency is seeking is in how it marks up wine and liquor on its shelves. As it stands, the Liquor Control Board is required to slap a 30 percent markup on all products, from the cheapest wine to the most expensive bottle of scotch. That is before it tacks on the 18 percent so-called Johnstown flood tax, as well as the state's 6 percent sales tax.
LCB officials want to be able to mark up different products differently - for example, mark up wines at 20 percent and certain hard liquors at 40 percent.
They also want lawmakers to ease civil-service requirements in order to get "the right person in the right job," Stapleton said.
Essentially, the agency wants to be able to hire outside civil service, as well as remove underperforming or insubordinate employees. Stapleton stressed that this would not disturb collective- bargaining agreements or process.
"We have some of the greatest employees in the state," Stapleton said, but the civil-service requirements make it hard to move them into jobs that would translate into higher sales and better service for customers.
For instance, he said, civil-service tests do not assess an employee's knowledge of wines, or how to serve customers.
"Having the ability to put the right people in the right position is . . . important to the long-term success of the organization," Stapleton said. "And it will also be part of our initiative to grow profits - if you have the right people in the sales positions, you will see profits grow."
What also would help in that arena: expanded hours for stores that are open on Sundays. Now, they close at 5 p.m.; the agency wants to keep them open until 7. It also wants to increase the number of stores are allowed to open on Sundays (only 25 percent of stores, or roughly 160, can do so now).
That, Liquor Control Board officials said, would translate into a multimillion-dollar increase in sales annually.
And in the spirit of running more like a private business and giving the customers greater choice, the board is asking the legislature to finally take action on the issue of direct shipments of wine from out-of-state wineries.
For year, Pennsylvania has dragged its feet on complying with a U.S. Supreme Court decision saying such shipments are legal. The state prohibits most out-of-state wineries from shipping directly to state residents, but it does allow small instate wineries to do so.
In the past, the Liquor Control Board has been largely silent on the issue, and Stapleton's call Tuesday to allow direct shipments - with controls to ensure minors aren't the ones receiving them - was a significant shift.
Still, Stapleton argued that the state's liquor stores are fighting "a war of perception over reality," and that they do, on the whole, provide good selections and service.
"We are being asked to run as a private business," Stapleton said, "and we're doing that."