Corbett plan concerns legislators, business owners around Norwin
Local legislators are split on Republican Gov. Tom Corbett's plan to privatize state-owned Wine & Spirits stores.
The state House is expected to begin discussing the proposal during the legislative session that started on Monday. The plan would require the state to auction off its 1,200 retail wine and liquor licenses over four years. Retailers would be permitted to bid on licenses.
Pennsylvania has about 600 state stores, including 74 Allegheny and 23 Westmoreland county locations. In the east suburbs, state stores are located on Main Street in Irwin, the Norwin Hills Shopping Center in North Huntingdon, and the Haymaker Village Shops and the Miracle Mile Shopping Center in Monroeville.
“If we privatize the liquor system, there will be more choices and options for consumers,” said Rep. George Dunbar (R-56th). “I don't know why we're in the liquor business to begin with, but certainly, an advantage would be competition and convenience for constituents.”
State Rep. Joe Markosek (D-25th) said he does not support privatization right now because it could put about 5,000 Wine & Spirits employees out of work.
“Most of those employees have a reasonably good salary and benefits, so I think any talk or privatization needs to come when our economy is better,” Markosek said. “Laying off that many in one fell swoop is a very bad idea.”
He added that he also is cautious about how much money the privatization could generate and how the money would be spent. He said the governor's estimate of up to $1 billion could be an overblown figure.
“This would really be the sale of a very valuable and lucrative business for the state, and it won't bring us that much money over four years,” Markosek said. “That money would be a one-shot deal and could only fund new programs for a short time, before they would need cut, or we'd have to find even more money.”
Corbett estimates the licenses would bring in up to $1 billion, which would set up a block grant for public schools for use in early-education programs; school safety; individualized learning; and science, technology, engineering and math courses.
The plan keeps the 6 percent sales tax and 18 percent Johnstown Flood Tax intact, and offers tax credits to businesses hiring former state store employees.
State Sen. Kim Ward (R-39th) said the plan is a step in the right direction, but she would like more details,
“We don't want to start a program we can't fund in five years,” Ward said.
“Whenever a program receives funding, it gets used to it, and when the funding runs out, it becomes a hardship.
“I want to make sure what the governor is proposing could be maintained.”
Dunbar said he has already heard several concerns about the privatization plan, especially when it comes to supporting existing beer distributors.
Corbett's plan allows distributors to purchase an enhanced license for a one-time $150,000 fee that could allow them to sell beer in smaller packages than a case.
“Not all of our distributors have the capital or space to purchase the enhanced license, and we don't want to force any businesses out,” Dunbar said. “What I'd like to see is for the state to assist our current distributors' needs with some type of state-backed loan.
“We want to make sure the smaller guys still exist and that the state isn't overrun by large retailers.”
Steve Zugai, owner of Z's Beer in North Huntingdon, said the proposed plan could put him out of business.
“Our customers are walk-ins off the street. I service no bars or clubs,” Zugai said. “If the state takes case sales away from me, which will happen if cases of beer are available in grocery stores, then there is no use for me to be in business.”
Zugai said the enhanced licensing fee for sales of less than a case is unaffordable for most small business owners. It would require him to remodel his store and purchase coolers to house six-packs, he said.
“The six-pack business is small potatoes, so that's a large investment for minimal to no profit,” Zugai said. “If this goes through, I'll have to do something else, like sell cigars or run lottery machines just to survive.”
Tony Bealko, owner of TJ's Beer in Pitcairn, said he is wary of the plan granting retailers the ability to sell cases of beer and allowing distributors to sell six-packs and wine.
Bealko said smaller beer distributors could be hurt financially, or even forced to close.
“He thinks he's throwing us a bone by letting us sell wine, even though it's going to cost us more in licensing,” Bealko said.
“How many distributors have the capital or space to do that? Not many.”
Aside from state-store employees possibly losing their jobs, there are more than 2,000 beer distributors in Pennsylvania, which would all be affected by privatization, Bealko said.
“They could be putting a lot of people out of work,” Bealko said. “They're messing with my livelihood, and it just doesn't make sense to me.”
Brad Pedersen is a staff writer for Trib Total Media. He can be reached at 412-856-7400, ext. 8626, or firstname.lastname@example.org.