Category: State Stores

Why Did Corbett Punt On Privatizing Booze In Pa.? — This article by Chris Freind is being republished with his kind permission.

Last November, Pennsylvanians elected Tom Corbett to solve the state’s problems. But instead of leadership, they’ve received task forces and blue ribbon panels. In just three months, commissions have been formed to deal with Marcellus Shale natural gas (with a whopping 31 members), explore the core functions of government and figure out how to privatize liquor.

Sorry, but isn’t that why people elect politicians? Isn’t it their job to solve these problems?

Commissions and task forces are simply code for passing the buck and kicking the can down the road. We might as well just hang a sign that reads, “Welcome to Pennsylvania, Blue Ribbon State.” And if GOP leaders don’t start following through on campaign promises, the only “Red” they’ll see is voter anger when the state turns Democratic Blue.

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Since privatizing liquor is one of the only issues which enjoys a large consensus, and since it would provide billions to balance the ballooning budget deficit, it’s baffling why Corbett would punt away such political capital when he needs it most. Delaying the privatization initiative by instituting yet another study commission was a move that left many observers scratching their heads — and state store union employees punch-drunk with elation.

Even more perplexing is that Corbett has a solid ally in House Majority Leader Mike Turzai, who had been spearheading privatization legislation for years. Turzai had a right to expect that, with strong GOP majorities in both houses, the Governor would come charging out of the gate on an issue that was a cornerstone of his campaign. Instead, Corbett felt compelled to reach into the “Business As Usual” drawer and pull out another meaningless commission, which looks increasingly like a bad political calculation.

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Sometimes you have to walk out your door to realize that the grass really is greener somewhere else. For Pennsylvanians, that “green” is all the money saved by consumers in other states because they aren’t gouged when purchasing alcohol.

For the uninitiated, following is a primer for how the Pennsylvania alcohol monopoly works:

Pennsylvania is the largest purchaser of booze in the world. The state government, through the Liquor Control Board (LC, controls the purchase, distribution and sale of all wine and liquor. You might think that with such immense purchasing clout, its citizens would have outstanding selection and competitive pricing. But as any Pennsylvanian knows, that’s clearly not the case.

Interestingly, the LCB is charged with two distinct, and inherently contradictory, roles. While it’s responsible for raising revenue through the sale of wine and liquor, it’s also charged with controlling the sale of booze throughout the state. By definition, if the LCB is succeeding at one, it must be failing at the other.

Every bottle of liquor bought in the state comes with an added bonus: an 18 percent “temporary” tax, in addition to the 6 percent sales tax. So a $10 bottle jumps to $11.80 before the sales tax is calculated, totaling a whopping $12.50. In all fairness, the 18 percent tax was well intentioned—it was passed by the legislature to rebuild Johnstown after a devastating flood that destroyed the town.

In 1936. So much for “temporary” taxes.

Anyone who’s traveled outside Pennsylvania knows how refreshing it is to enter a grocery store and, remembering that you need a bottle of wine for dinner, walk two aisles over to the plethora of vino at your fingertips. Since others accomplish this with little difficulty, it’s incomprehensible that the nation’s sixth largest state can’t—or, more accurately, won’t—do the same.

It is infinitely more efficient when a private company, responsive to the needs of the free market (instead of bureaucrats), stocks its shelves with items that consumers want, at a fair market price. It is the core principle on which America was founded.

But Pennsylvania remains stuck in the Dark Ages, and what makes the sin mortal is that it chooses to remain there. It hasn’t dawned on the politicos in Harrisburg that they are losing untold revenue because of their Draconian system, with millions of residents crossing state lines to fill their liquor cabinets. (No offense to Governor Christie, but anytime New Jersey offers a better alternative, you know you have major problems).

And despite the Interstate Commerce Clause of the U.S. Constitution, if you’re caught bringing alcohol into Pennsylvania, it’s a criminal offense. In fact, such “criminals” used to have their cars confiscated for doing so.

To be fair, today’s LCB has made substantial progress in its operations and “customer service.” Not too long ago, all of its locations were “counter” stores, meaning that customers had to know exactly what they wanted before placing their order, since browsing was not permitted. The clerk would then disappear into the bowels of the store, only to return five or 10 minutes later, more often than not stating that they were “out of stock” and asking for a second choice. Now imagine this scene playing out at Christmas time, with 25 people in line.

But that’s not all.

Nothing in the store was chilled. No ancillary items, such as tonic water, were sold. No employees were permitted to offer advice. And no LCB stores accepted credit cards.

And all this because former Governor Gifford Pinchot, who as a young man became violently sick while imbibing in Germany, became bound and determined to make alcohol as difficult as possible to obtain.

But the LCB’s improvements amount to being valedictorian of summer school. The whole system has to be scrapped.

The ultimate irony is that the Keystone State, birthplace of American democracy and cradle of liberty, continues down the path of state control and government regulation, to the detriment of its twelve million citizens.

And what are liquor privatization’s chances? Dead for the spring session, possible in the fall and virtually nonexistent for 2012. With the makeup of the legislature sure to change next year, the time to take a “shot” is undoubtedly now.

The people have awakened from their stupor, demanding change. Instead, all they get is a (Pabst) “Blue Ribbon” commission.

Time for another drink.