Corbett Announces Liquor Privatization Plan; $1 Billion in Proceeds to Fund Education

“Our plan gives consumers what they want by increasing choice and convenience, and helps to secure our future by adding $1 billion in funding toward the education of our children, without raising any taxes,” the governor said.

Gov. Tom Corbett, joined by Rep. Mike Turzai, R-Allegheny County, on Wednesday announced his plan to privatize the liquor system in Pennsylvania and committed $1 billion in proceeds from the process to education funding.

Corbett said the $1 billion will be used to create the Passport for Learning Block Grant, which will provide flexibility to schools, allowing our public schools, instead of Harrisburg, to decide what their students need.

The grant will focus on four priority areas: school safety, enhanced early education programs, individualized learning and science, technology, engineering and mathematics courses and programs.

“Our proposal is part of my commitment to changing Harrisburg, streamlining
government and moving Pennsylvania forward,” Corbett said. “Our plan gives
consumers what they want by increasing choice and convenience, and helps to
secure our future by adding $1 billion in funding toward the education of our
children, without raising any taxes.”

The $1 billion in revenue will come from the three to four year process of selling the LCB: $575 million from the wholesale license process, $224 million from the wine and spirits retail auction process, $107 million from the wine/beer license
application process and $112.5 million in the enhanced beer distributor application process.

“Pennsylvania and Utah are the only two states in the country who have fully state-controlled liquor systems,” Corbett said. “Our plan sells both the wholesale and retail arms of the state-run liquor business.”

He continued: “I want Pennsylvanians to enjoy the same convenience that virtually every other American today has today. My plan gets the state completely out of the liquor business. The state will no longer be a marketer of alcohol; instead, it will now focus on its role as a regulator. It also creates an unprecedented opportunity for economic expansion for private sector employers while remaining revenue neutral for the state.”

Currently, there about 600 state stores in Pennsylvania, the governor’s plan allows for 1,200 wine and spirits stores.

During the previous decade, the state stores’ expenses have grown faster than their revenues, Corbett added.

He said his plan will offer Pennsylvania consumers greatly increased convenience and choice, because they will be able to buy the products they desire in a simpler, more accessible and more rational way. For example, consumers will be able to buy beer and wine where they shop for groceries, buy six-packs of beer at a distributor instead of being forced to buy an entire case, and buy a six-pack of beer at a convenience store.

Currently, Pennsylvania has far fewer alcohol retail establishments per resident than the average state. This proposal would allow the number of establishments to be naturally driven by the market, as it is in other states.

Corbett said his plan balances the increased amount of retailers with additional enforcement measures.

The governor’s plan calls for significantly enhanced fines for selling to minors and visibly intoxicated patrons, with penalty ranges increasing from $1,000 to $5,000 to $5,000 to $10,000. The additional money from license surcharges and increased fines will be designated for enforcement efforts of the Pennsylvania State Police, Bureau of Liquor Control Enforcement, who will see a 22 percent funding increase under this plan. Corbett also proposes a 75 percent funding increase for alcohol treatment and prevention efforts.

New alcohol retailers, such as wine and spirits stores, grocery stores, pharmacies and convenience stores must all use an ID scanner device before they can sell alcohol.

Corbett also explained that his proposal is fiscally neutral. Every dollar not returned to the state due to the divestiture of the LCB is returned to the state through restructured fees. He also noted that history in other states shows that many of the private sector jobs created will have comparable compensation.

Corbett also noted that his plan includes measures for affected LCB employees,
including tax credits for businesses that employ separated workers, educational
credits, civil service credits, individual employment plans and a multi-agency
committee to help displaced employees find re-employment.

What do you think? Good idea? Bad idea? Leave your opinion in the comments section below.

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Oren Spiegler January 31, 2013 at 11:18 AM
Governor Corbett is absolutely right on this issue, but he will have a difficult time getting his plan passed over entrenched interests that have always stood in the way of modernity, reform, and freedom. One can recognize the massive toll that alcohol takes on our society through a variety of means and the need for government to keep it out of the hands of minors, but its consumption is legal and shall always be legal for those over the age of 21. If government agents are all that is keeping us from societal breakdown due to alcohol overuse, then should we not allow only government agents to sell cigarettes? If Pennsylvania's system of alcohol distribution and sales is a model for the nation, why has no state other then Utah followed in our monopolistic footsteps?
Robert A. Shoaf January 31, 2013 at 02:32 PM
While I applaud Gov. Corbett's plan, I regret to say that it will likely fail, as others have done before it. For totally illogical, absurd reasons, the antiquated, overpriced, user unfriendly system will likely continue for the forseeable future. The ridiculous , intellectually dishonest statements made by PLCB supporters fly in the face of common sense. Why, of course, if the PLCB is dissolves, we'll have immediate, rampant alcoholism, and drunks running through the streets, just like in our neighboring states. Why, that's the first thing I look for, when crossing into Ohio, West Virginia,Maryland, New York, New Jersey, and Delaware. Dens of inequity, I tell ya! No wonder we are stuck with the "government" and "public servants" that people mindlessly continue to vote into office.
bob balmer January 31, 2013 at 03:34 PM
Poll after poll shows that the citizens of Pa wants this by a huge margin. Good luck to the governor on this one. He will unfortunately need it.
Bill Yost January 31, 2013 at 10:41 PM
why do we need to make alcohol more accessible. Is competition really going to lower prices. I'm still waiting for my cable,phone & electric bill to go down. Also, good move to sell the lottery business to a company in England. Way to keep it American. Let's support small business.
B February 01, 2013 at 07:22 PM
Have you been to other states? Alcohol in PA is EXPENSIVE compared to other states. In addition, many of the laws are asinine like ONLY being able to buy a case of beer from a distributor. These proposed changes will support small business. Your local beer distributor will have more options and the current state stores will now be independently owned small businesses. Pennsylvania's alcohol laws are the laughing stock of the country.
Duke February 01, 2013 at 08:35 PM
Unfortunately Bryan is living in a dream world if he believes state stores will become independently owned small businesses if the state store system is privatized. There are not that many prospective small business owners who can come up with the capital needed to open and operate a liquor store. You will probably see Giant Eagle, Shop & Save, Wal Mart, Target, K-Mart and maybe even Sears who will receive the licenses to own and operate "private" liquor stores. Just look what happened when slots were legalized in Pennsylvania. How many licenses were awarded to Pennsylvania owned small business owners?
B February 01, 2013 at 09:17 PM
You are really comparing liquor stores to the slot licences? This is why it's not worth arguing with you, you need to make a good point first. WalMart and Target getting into the independent liquor store business is laughable as well. Sears? They have not even posted a net profit in the past 2 quarters and you think they are going to branch out into the liquor store business? You also don't understand what a small business is. Plenty of 'small businesses' make millions of dollars in revenue. There are a number of developers in Upper St. Clair who could likely put up the capital to purchase a liquor store license. Again, have you ever left this state? Just drive over to WV, Giant Eagle isn't running the liquor stores there. The risks we would see would be from the likes of BevMo and Total Wine & More. Given BevMo! is only west coast, Total wine would be the 'big box' company that would come in. Given the size of those stores, I would guess they would only have a single store in the entire south hills. If you honestly think the current system is a good system then you are in the vast minority.
Roger February 01, 2013 at 09:32 PM
Bill, explain to us the relationship between privatization and making alcohol more accessible. As for your electric bill going down, can we assume you have not utilized any of the choices to buy at competitive rates? How many choices of rates did you solicit before making your decision on which to choose? Thanks.
Bill Yost February 02, 2013 at 03:32 PM
When a beer distributor owns a building or signs a lease that supports his business and is locked in for 5 years and is approved to sell liquor what does he do for space. Supermarkets and drug stores have the space to expand their business where a small business owner may not. What does he do now? The state is making money in the business so improve the system just because everybody else does ot another way doesn't make it the right way. You're kidding yourself if you think it will be cheaper.
Bill Yost February 02, 2013 at 04:24 PM
Privatization will open up more outlets to buy alcohol. If there are 600 liquor stores they won't sell 600 licenses. The more licenses the more money the state earns.
Duke February 02, 2013 at 09:25 PM
Bryan - Exactly what do you consider a small business to be? One that has a capitalization of $1,000,000 or less? That wouldn't be enough to secure a retail site, acquire the furniture and fixtures needed and to stock the shelves. As far as the liquor stores in WV, are they independtly owned or a part of a chain? Since I don't buy booze I'm not familiar with their operations.
jack splat February 02, 2013 at 09:29 PM
"Is competition really going to lower prices" from bill. That statement shows a profound lack of faith in Capitialism and free-market economics. If competition doesn't improve service, quality, variety and lower price, what is the point of allowing citizens to start businesses in the first place since supply can be provided by the state?
B February 02, 2013 at 11:00 PM
Duke, small business isn't generally determined by revenue or profit but rather by number of employees. Which is exactly why smaller development firms in the area which have millions of dollars flow through them are still considered small businesses. As far as WV and other states, many of them are independently owned small businesses.


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