State Store Privatization
February 24, 2011
Hi, I’m Gene Barr, vice president of the Pennsylvania Chamber. Welcome to this month’s PA Chamber Minute.
Privatization of the state store system to allow the Pennsylvania Liquor Control Board to focus solely on enforcement is a legislative debate that has taken place before. But now with greater support among elected officials and the general public, serious attention is being given to the issue.
Two principles are driving the privatization movement. One is the Commonwealth’s fiscal situation. With limited financial resources and taxpayers wallets stretched thin, properly funding the essential functions of state government is a growing challenge.
Some have estimated that the upfront revenue from privatization would generate between $1 billion and $2 billion.
Additionally, money the system provides to the Commonwealth through sales tax revenue and state store profits would be replaced by taxes under a privatized system, including taxes currently not being paid by the government-run stores.
The other point is the fundamental question about what is the proper role of state government. Many say, and the Pennsylvania Chamber agrees, that liquor and wine sales would be better left to the private sector, where innovation in products and services and additional conveniences can take hold.
The PA Chamber supports the concept of privatization. It represents an opportunity for government to redirect resources to other services and reduce or limit operating expenses, administrative costs and liabilities.
Lawmakers have begun holding hearings on the topic, including one proposal to auction 750 retail licenses, which is more than the 600 or so existing wine and spirit outlets currently in the state.
There are some, including the Pennsylvania Chamber, who would like to look more broadly at how alcohol, wine and beer are distributed and sold in Pennsylvania. However, the approach favored by many lawmakers is to make privatization of the state store system a starting point.
Naturally, there is opposition from groups concerned about enforcement, and from unions representing state store employees. Under privatization, alcohol sales would be enforced much in the same manner as are tobacco sales. And the PLCB would stop having a contradictory dual role of both promoting and enforcing the sale of wine and spirits.
There are many details to work out, but privatization is a debate whose time has come. The Pennsylvania Chamber is actively involved in this issue, and will be seeking additional input from members in the development of our position.
We welcome and encourage your feedback.
Thank you for spending a minute of your time with the Pennsylvania Chamber, and thanks to APPI Energy for their support of this month’s message.
