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Despite budget setback, debate on liquor privatization in Pennsylvania expected to continue in the fall

July 3, 2013

Forgive Pennsylvanians if they feel like Charlie Brown lining up to kick the football when they hear lawmakers say they are closer than ever to getting the state out of the booze business.
Lawmakers failed to include liquor privatization in last weekend’s budget bill. Similar efforts failed in 2012 and have befuddled the last two Republican governors.
But supporters say things will be different this fall when the General Assembly returns to session. For one thing, the House and Senate have each taken the unprecedented step of passing measures that would eliminate the state’s liquor monopoly, and no one wants to squander that progress.
“There are enough common elements in both bills that we can come to a reasonable accommodation across the building to get something done,” said Sen. Pat Browne, R-Lehigh, who supports privatization. “This has never gotten this far before.”
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The latest sticking point has been what to do with the Pennsylvania Liquor Control Board’s role as the state’s only wine and liquor wholesaler. Privatization proponents in the House want to turn that over to the private sector, while the Senate wants to keep the state in that business for now.
Privatization opponents, including the union that represents state store workers, are hoping to play Lucy and yank the liquor football away one more time if the issue resurfaces when lawmakers return from their summer recess.
United Food and Commercial Workers Local 1776 will try to change the debate by pushing plans to modernize the existing state store system, making stores more convenient and liquor and wine purchasing more consumer-friendly.
The futile focus on privatization has prevented state store reforms, hurting consumers, argues union President Wendell Young IV.
But Young admits that with deep-pocketed private businesses itching to enter Pennsylvania’s untapped wine and liquor market, and Gov. Tom Corbett making the issue one of his top priorities as he faces re-election in 2014, it’s unlikely to just go away.
“It is going to come back,” Young said. “This governor needs that kind of political coin and friends to get re-elected, and [House Majority Leader] Mike Turzai needs it to keep control of his caucus.”
House and Senate versions of the legislation left on the table are different, and neither looks much like the initial plan floated a year ago by Turzai and Corbett that supporters said would raise more than $1 billion in up-front cash by auctioning off retail liquor licenses.
In the Senate’s bill, beer distributors would be the only retailers licensed to sell beer, wine and liquor. State stores would be closed in any county where they are outnumbered 2-1 by beer distributors selling hard liquor. Supermarkets with eatery liquor licenses, such as the Allentown Wegmans, would be able to sell wine, and convenience stores could add beer.
Taverns and supermarkets could sell up to three six-packs of beer at a time, and beer distributors would be able to break up cases to sell six-packs. And after two years, the Liquor Control Board could investigate leasing the wholesale wine and liquor business to a private operator.
The House version, which passed in March, gives beer distributors the first shot at 1,200 wine and liquor sales licenses, but gradually expands sales to supermarkets and big box retailers as state stores are closed gradually across the state and 600 additional retail licenses are added.
Oddly enough, efforts to pass liquor privatization may hinge on whether lawmakers can reach an accord on another major priority: a transportation funding package that also failed to get the necessary votes to pass during the budget process, said Sen. Chuck McIlhinney, R-Bucks, author of the Senate’s liquor bill.
During the budget process, the two initiatives were linked in behind-the-scenes deal-making, and they are likely to stay that way, he said.
“I think they end up staying kind of linked because there has been so much discussion already,” said McIlhinney, who anticipates the Senate’s version of liquor privatization will be used as the starting point because it has already gotten Corbett’s support.
Sen. Lisa Boscola, D-Northampton, said it might be time to start talking about incremental steps, such as reforming the state store system, allowing supermarkets that now sell beer to add wine and offering taverns and distributors flexibility in the amount of beer they can sell.
“When you talk to your constituents, that is what they want: to be able to buy wine and beer in the grocery store, or in the same location,” Boscola said.
Most consumers are just looking for improved convenience, said Jay Weiderhold, president of the Pennsylvania Beer Alliance. Even small changes like extending state liquor store hours, allowing beer distributors to sell six-packs and limited expansion of wine sales could be considered a win.
“I don’t believe the consumer is going to care who is selling it to them,” he said. “If they see something different that takes effect and it’s something they like, you can say, ‘Look what I did.’ We moved a step forward.”
Lt. Gov. Jim Cawley, who has been Corbett’s point person on liquor privatization, said the state really needs to get out of the business to achieve the administration’s goal of creating better selection, convenience and price competitiveness for consumers. He remains optimistic it will get done.
“I think there is more than some chance,” Cawley said. “We have already moved the issue further than it ever has been moved in the 75 years since the Liquor Control Board structure was originally set up.”
While privatization proponents say they are in the red zone, they have yet to score, and with 2014 and the legislative paralysis that often accompanies an election year rapidly approaching, the clock is ticking.

Source: Morning Call,0,739434.story