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Privatization of liquor sales: good or bad idea

In the latest attempt to dismantle the Pennsylvania Liquor Control Board, a Western Pennsylvania state representative has proposed a constitutional amendment to ban the state from selling alcohol. If it passes the state Senate and House, it will go before voters as a ballot question.

“When it comes to the purchase of alcohol, our laws are antiquated and inconvenient,” state Rep. Natalie Mihalek, R-40th, said when introducing her legislation.

The Keystone state has heavily regulated booze since the end of Prohibition in the 1930s. It has gradually eased restrictions on beer and wine sales, most recently in 2016, but state-owned stores still control hard liquor. Under that system, state government gets to keep a portion of store profits and earned $185 million for agencies and projects just last year.

We are one of two states in the nation with a government monopoly on the sale of liquor. In 48 other states, the business community has shown that it can sell alcohol responsibly.

Advocates for the current system are correct when citing revenue the PLCB transfers to the commonwealth as a reason for staying the course. Yet, more than 75% of money transferred to the General Fund last year came from taxes, which presumably would be retained by employers under a private system. And once the private sector improves customer convenience and choice, sales — and tax revenues — almost certainly will increase.

Last fiscal year, the PLCB reported sales reached nearly $3 billion, with a record net income of $270 million.

But the PLCB’s 2020-21 report shows serious areas of concern and predicts a worsening financial situation for the existing system over time. Despite operating a profitable enterprise, the report concludes that the system is running a roughly $1.3 billion deficit when all assets and liabilities are considered. It also shows pension costs and other employee retirement liabilities continue to increase.

David Wojnar of the Distilled Spirits Council of the United States told House lawmakers earlier this month that the 580 retail stores the state operates are spread too thin to properly serve customers.

“We think the commonwealth is woefully underserved,” Wojnar said. “There is less than one store per 10,000 (people), and that’s well below the national average … so there is room to grow.”

And Zak Pyzik, director of government affairs for the Pennsylvania Restaurant & Lodging Association, said its members overwhelmingly support privatization, believing it would reduce the cost of alcohol for consumers and for the 19,000 active liquor license holders.

Pyzik also said many of the 26,000 restaurants and 1,500 hotels his organization represents have said they find the current system to be inconvenient, limited and unreliable.

But the United Food and Commercial Workers union argues, as it has in the past, that thousands of state jobs would be at risk if liquor stores were handed over to private owners.

Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, said the private sector is “desperate” for more workers and he has a “high degree of confidence” that the 7,000 who are estimated to lose their state jobs via privatization will find jobs post-privatization.

Simply put, state government should focus its attention and resources on enforcing the laws it creates, not selling alcohol. It’s time to get Pennsylvania out of the booze business.

Webster defines democracy as government by the people especially, rule of the majority. It’s time to let voters decide the future of liquor sales in Pennsylvania.

— JGG

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