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Corbett lays out plan for liquor privatization

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Corbett's privatization plan highlights

• Sells wholesale and retail wine and spirits operations and auctions off 1,200 retail wine and liquor licenses; implemented over four years.

• Allows beer distributors to buy an “enhanced” license to sell beer in packages smaller than a case.

• Keeps taxes the same, including a 6 percent sales tax and 18 percent Johnstown Flood Tax.

• Offers a tax credit to businesses that hire former state store employees.

• Expected to produce $1 billion, which would set up a block grant for public schools. School districts could use the one-time money in one of four areas: early education programs, school safety, individualized learning and science, technology, engineering and math programs or courses.

• An unlimited number of licenses would allow other stores to sell beer or wine for an annual fee. Convenience stores and pharmacies could buy a license for $15,000 a year. Grocery store licenses would cost $25,000 to $30,000. Big box stores, such as Wal-Mart or Costco, would pay $35,000 annually.

• Beer distributors could buy an “enhanced” distributor license for a one-time fee of $150,000. Restaurants or hotels could sell 30-packs of beer for a $5,000 annual fee.

Who would sell what

Wine and spirits store: Wine, liquor and beer (if owner also holds an enhanced beer distributor license).

Grocery store: Wine (up to six bottles) and beer (up to a 12-pack).

Convenience store: Beer (one six-pack).

Big-box store (such as Wal-Mart, Target): Wine (up to six bottles) and cases of beer.

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By Brad Bumsted and Kari Andren
Wednesday, Jan. 30, 2013, 2:14 p.m.

A plan to sell the state liquor stores would make beer and wine available in grocery stores and other locations, including six-packs in convenience stores.

The proposal that Gov. Tom Corbett outlined on Wednesday would sell licenses to private store operators to sell liquor. The plan to get rid of the archaic system of selling liquor and wine would generate up to $1 billion for schools.

“I want Pennsylvanians to enjoy the same convenience that virtually every other American has,” Corbett said during a news conference Downtown, accompanied by about a dozen state House Republicans.

When tourists come to Pennsylvania and realize they may need to make three trips for liquor and wine, beer and food, “they say, ‘You guys are crazy,'” Corbett said.

Corbett wants to get rid of the system that began in 1933 after Prohibition. The plan that he first promised during his 2010 campaign would raise money through the liquidation of 619 state stores and the sale of licenses to private retailers.

“The governor is giving the people of Pennsylvania what they want — more choice and greater convenience,” said Matthew J. Brouillette, president and CEO of the conservative Harrisburg-based Commonwealth Foundation. “Pennsylvanians would finally be able to buy bread, beer and Bordeaux all in one stop on privately run shelves.”

Democratic lawmakers and union leaders quickly objected.

“I'm very much concerned about the explosion of outlets that will be able to sell alcohol,” said Senate Minority Leader Jay Costa, D-Forest Hills.

Wendell W. Young IV, president of the United Food and Commercial workers union that represents 3,500 liquor store clerks, said the plan endangers 5,000 jobs.

“You're really going to end up with nearly all people in the agency laid off,” said Young, who serves as president of the PA Wine and Spirits Council. He said the governor is “targeting 5,000 family-sustaining jobs and more than $500 million a year in taxes and profits that this valuable, publicly held asset provides.”

Supporters say the state will provide two-year career training, tax credits for businesses that hire displaced employees and civil service hiring preferences.

“I'm glad to see the governor taking the first step,” said Rep. George Dunbar, R-Penn Township, who attended the Downtown event. “The main thing to me … is my constituents all ask the same question: When are we going to sell the liquor stores? They ask when can we buy liquor and beer in stores. This is going to get us there. It's a good first step.”

Corbett's plan would establish a Passport for Learning block grant to distribute money to public schools over four years. Districts could use the money for four specific programs including early learning and school safety. It could not be used for salaries and operating deficits, Corbett said.

It sounds like “a vague educational pot of money under the direction of the governor and his secretary of Education,” Costa said.

“Linking liquor store privatization to school funding is just another way of holding students hostage to the governor's political agenda,” said Mike Crossey, president of the Pennsylvania State Education Association, the largest teachers' union.

Support for full-scale divestiture is mixed in the Republican-controlled General Assembly, which must approve the plan.

Republican legislative leaders have other ideas.

The Senate's top Republican, Joe Scarnati of Jefferson County, favors what he calls “modernization” of the system, and House Speaker Sam Smith of Punxsutawney tossed out ideas for a hybrid system that would be less than the full privatization Corbett proposed.

Corbett hopes to become the first of three Republican governors advocating privatization over three decades to succeed. Former Gov. Dick Thornburgh tried but failed in 1983. Former Gov. Tom Ridge pushed for the change in the 1990s.

“Hope springs eternal that common sense and good judgment will break through,” Thornburgh said. “I generally want to support the effort to get it done.”

House Majority Leader Mike Turzai, R-Bradford Woods, attempted unsuccessfully last year to line up votes for his own plan. Corbett's plan presents “a really historic opportunity,” Turzai said.

Pennsylvania and Utah have the only two state-owned wholesale and retail operations.

For the past year, problems have beset the Liquor Control Board. The agency came under intense criticism for a series of eight in-house brands of wine and vodka it began to offer in near total secrecy and spent significant resources to promote. Agency CEO Joe Conti and other officials offered conflicting explanations, prompting board Chairman Joseph “Skip” Brion to begin an internal investigation.

Conti is set to retire on Friday from the post he held for six years, but he will return to work for the agency in mid-February as an “emergency” consultant at $80 an hour.

The State Ethics Commission is investigating the agency and former agency officials.

Staff writer Rich Gazarik contributed to this report. Brad Bumsted and Kari Andren are staff writers for Trib Total Media.

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