Corbett is thinking big on liquor privatization
HARRISBURG – It will be big, and it will be bold.
And when it comes to the fight over privatizing Pennsylvania’s state-run liquor stores, Gov. Corbett is sending word that he intends to take no prisoners.
The governor is preparing to roll out his much-anticipated plan to sell off the wholesale and retail operations of the Pennsylvania Liquor Control Board, according to several groups with a stake in the liquor market who have met with the administration over the last two weeks to discuss the proposal. All shared details with The Inquirer on the condition that their names not be used so as not to alienate Corbett and his team as they work to complete their privatization plan.
Though he has yet to put anything in writing, the governor and his team are sending strong signals that they want the system squarely in private hands, and that they are leaning toward opening up the wine and beer market to grocery stores, convenience stores, restaurants and taverns, and big-box stores.
One businessman who met with the governor’s aides described the administration’s tentative plans as “an all-out attack” on the state system that has been in place since Prohibition.
Corbett spokesman Kevin Harley said Thursday he would not discuss details of what the administration wants but said a proposal would be revealed soon, likely before the governor’s Feb. 5 presentation of his annual budget.
Harley noted that Corbett had long wanted to get the state out of the business of selling alcohol: “The governor is a proponent of bold privatization. That has been his consistent position from day one – and it hasn’t changed.”
Corbett has said since his 2010 campaign that he sees an inherent conflict in the LCB’s dual mission of both regulating and selling booze. Private industry, he believes, can do the job better, and offer better service and lower prices to consumers.
But in the last two years he has remained largely quiet as fellow Republicans in the legislature championed privatization ideas. This plan would mark the first time he stakes out a specific stance on the issue. And he is putting his second-in-command, Lt. Gov. Jim Cawley, in charge of the push.
Those who have met with Cawley and other administration officials say Corbett envisions auctioning off both the wholesale and retail operations of the LCB, much as House Majority Leader Mike Turzai (R., Allegheny) had proposed last year in a bill that died for lack of support.
And, like Turzai’s proposal, the governor is looking to incorporate beer into the equation. Those who attended meetings said administration officials wanted to auction off State Stores and offer some of the licenses to beer distributors, who now can sell beer only by the case or the keg. Groceries, too, would be allowed to apply to sell wine and beer, as would convenience stores and big-box stores such as Walmart and Costco.
Though the administration did not provide hard and fast numbers, at least two groups were told Corbett is considering allowing for 2,000 retail outlets. As it stands, Pennsylvania has just over 600 wine-and-spirits stores and some 1,200 retail beer distributors. Under the administration’s tentative plan, beer distributors would be the only ones allowed to sell the booze trio: beer, wine, hard liquor. Grocery, convenience, and big-box stores could sell only wine and beer.
A big part of the equation – and one that does not seem to be set in stone yet – is what quantities of beer and wine could be sold.
One person who met with the governor’s staff, and who also requested anonymity, said he was told the administration was considering allowing beer distributors to sell six-packs of beer, along with cases; grocery stores to sell up to two six-packs; and big-box stores to sell beer by the case.
Matt Brouillette, who heads the Commonwealth Foundation, a free-market think tank in Harrisburg, was among those who met with the administration in recent weeks.
Brouillette, a staunch supporter of privatization, said Thursday he was hopeful that what Corbett ultimately outlines will be what the public has consistently said it wants: an unapologetically privatized system.
But he acknowledged it will be a tough sell that will require a tremendous negotiating campaign.
“This is an issue that has defeated many governors in the past,” Brouillette said. “To get it over the goal line will be an incredible policy feat. Despite the public’s belief that this is an easy layup, it will take quite a bit of moving of heaven and earth in the legislature.”
Mixed metaphors aside, Corbett’s plan is sure to face a fight in the General Assembly, which has been loath to change the system. The typical arc of privatization proposals has been this: A bill is introduced. If sponsors are lucky, they get a hearing. In the meantime, counterproposals are offered. And the issue gets mired in inaction, or other issues are addressed while LCB privatization is pushed to the sidelines until the legislative session ends.
Still, Corbett’s proposal will mark the first time since Republican Tom Ridge that the state’s chief executive has thrown his weight behind privatization. And Corbett will have the public on his side: Poll after poll shows consumers overwhelmingly favor a private system that offers the convenience of buying wine and beer under one roof.
Opponents – ranging from the LCB clerks’ union and its Democratic allies to socially conservative Republicans who want liquor tightly regulated – counter that privatizing would have dire social and financial consequences.
Reached for comment Thursday, Wendell W. Young IV, president of the United Food and Commercial Workers Local 1776, which represents 3,000 State Store employees, said he and his members were not among those summoned to the Capitol to hear Corbett’s plans.
“Some people have worked for the system for two or three decades – and they don’t even talk to us about it?” Young said. “I’d say that is a pretty cold and callous position to take.”