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Pennsylvania House pushes liquor system privatization bill through

| Thursday, Feb. 26, 2015, 3:51 p.m.
Bottles of wine for sale at a Wine & Spirits store in Hempfield.
Guy Wathen | Tribune-Review
Bottles of wine for sale at a Wine & Spirits store in Hempfield.

HARRISBURG — For the second time in two years, the state House on Thursday approved comprehensive legislation to privatize the state liquor system by selling the wholesale operation and phasing out most of the 600 state liquor stores.

“It is time to get Pennsylvania out of the alcohol system once and for all and move Pennsylvania into the 21st century,” said House Speaker Mike Turzai, R-Marshall, the leading advocate. “Pennsylvanians deserve convenience and choice enjoyed by residents of 48 other states.”

The Republican-controlled House in March 2013 approved an almost identical bill with 105 votes, but it stalled in the Senate. The vote Thursday was 114-87, even though four eastern Pennsylvania Republicans defected.

An uncertain future awaits the bill in the Senate, but Turzai said “receptivity is higher” now that Republicans have increased their majority from 27 to 30 of the chamber's 50 members.

“There is an inevitable feeling about this, how we're moving toward privatization,” said House Liquor Committee Chairman Chris Ross, R-Chester County.

“We will give the liquor privatization bill a full review, but admittedly it's not a priority in the Senate and won't move through the Senate like it did in the House,” said Jennifer Kocher, a spokeswoman for Senate Majority Leader Jake Corman, R-Centre County.

Getting pension costs under control is the top Senate priority, Kocher said.

Democratic Gov. Tom Wolf has threatened to veto the bill in its current form. Turzai claimed to be undeterred, saying liquor store divestiture will be “on the table” for negotiation with other issues Wolf wants in the budget.

“It's an archaic system, and we know Governor Wolf is a reformer,” Turzai said.

Pennsylvania's system of 600-plus state stores was a product of the end of Prohibition in 1933. Then-Gov. Gifford Pinchot, who was pro-temperance, said the state-controlled system for liquor and wine was intended to deter alcohol consumption and to be as “inconvenient and expensive as possible.”

Four governors have tried unsuccessfully to sell the state stores. Late Democratic Gov. Milton Shapp made an attempt near the end of his time in office in the 1970s. Three former Republican governors pushed for elimination and a private system: Dick Thornburgh, Tom Ridge and Tom Corbett. Wolf defeated Corbett in November.

Pennsylvania and Utah are the only states with total control of wholesale and retail operations. Utah allows sales of 3.2 percent-alcohol beer in grocery stores and individual bottles of full-strength beer in liquor and wine stores. Pennsylvania allows more than 240 supermarkets and convenience stores with sit-down eateries to sell carry-out beer.

The Turzai-sponsored bill envisions one-stop shopping in many locations. The bill would allow the sale of 1,200 retail wine and spirits licenses. Beer distributors would have the first shot at them.

Grocery stores could buy licenses to sell wine. Restaurants with eateries would have expanded opportunities to sell beer. State liquor stores would be phased out, though Pennsylvania would keep a minimum of 100 stores.

Wolf and Democratic lawmakers support improving state stores to garner more revenue as the government contends with a $2.3 billion deficit. Proponents of privatization, too, believe their proposals could help address the deficit, but estimates of how much revenue might be gained through privatization vary from hundreds of millions of dollars to $1 billion.

So-called “modernization” proposals by privatization opponents include removing limitations on Sunday sales, allowing mini-state stores in supermarkets and direct shipment of wine to consumers. Wolf is expected to outline such propositions in his budget address Tuesday.

“We have a system that works and makes a lot of money,” said Wendell W. Young IV, president of United Food and Commercial Workers Local 1776, which represents liquor store clerks.

Most of the LCB's “5,100 people would lose their jobs” if Turzai's bill becomes law, Young said.

Ross said there will be opportunities for laid-off employees to get jobs. Some would be eligible for jobs in licensing at the Liquor Control Board, and others would be helped by preferential civil service hiring.

“This measure will result in consumer convenience, better selection and competitive pricing of wine and spirits in Pennsylvania,” said Kevin Shivers, executive director of the National Federation of Independent Business in Pennsylvania.

Matthew Brouillette, president and CEO of the Commonwealth Foundation, hailed the vote as “an important step on the road to ending Pennsylvania's government-run liquor monopoly and joining the other 48 states that provide consumers with greater convenience, lower costs and more efficient government.” He estimated the House's plan would, if enacted, net $1 billion to $2 billion for the state.

The debate in the Republican-controlled House highlighted polarizing positions and contradictions.

“The other side is talking about alcohol like it's milk and bread,” said Rep. Anthony DeLuca, D-Penn Hills, who voted against the bill.

The House bill “would ultimately cost us jobs and jeopardize public safety,” said House Minority Whip Mike Hanna, D-Clinton County.

“If this (current system) is such a good idea and such a cash cow, why are other states not implementing our system?” said Rep. Justin Simmons, R-Northampton.

Brad Bumsted is Trib Total Media's state Capitol reporter. He can be reached at 717-787-1405 or bbumsted@tribweb.com.

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