The big new controversy, or is the same old controversy, of the year is the rumors that the PLCB’s will be ended when Governor-Elect Tom Corbett takes office. As more and more people get frustrated with the laws and restrictions associated, privatization of liquor stores seems like an increasingly popular option to give Corbett a quick “win” to start his term. With such a contentious issue, there are many sides to consider, which may be why this issue has failed three times in the rather immediate past.
Taxes: To help with a $5 billion PA defiicit, selling 620 stores can easily generate $2 billion, a move much needed when Corbett has promised to neither raise taxes on the citizens nor tax Marcellus Shale businesses. While a good short term decision, it is important to decide how many taxes are too many to keep the current revenue the PLCB brings in if stores are privatized.
Drunk Driving/Underage Drinking: The PLCB currently has its own policing system to deal with these issues and can point to the low underage drinking numbers of Pennsylvania as evidence. Removing this force may or may not give local police more responsibility and may or may not lead to increases in both problems, but it will certainly enrage such groups as MADD which could be formidable opponents to Corbett’s gubernatorial service.
Jobs: Privatization will result in a rather immediate loss of approximately 5,000 jobs for those working in PLCB stores, most of whom are part of the state-wide union, the United Food and Commercial Workers Local 1776. Some discussion has ensued regarding the requirement of hiring the same people for positions in new stores. This requirement seems fraught with problems, especially when considering smaller businesses.
No More Kiosks: Really, that’s my own issue, but I’ll be glad if they’re gone since they cost the state a bundle and are already down for maintenance like not giving customers their wine. Genius.
In the current plan, the PLCB would still exist, the number of stores sold is up for discussion, additional stores would likely result, and it is likely that jobs would increase.
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January 6, 2011 at 10:52 PM
Denise Fike
hmmmm, so the incompetent, rude folks will be hired by private shop owners?
I hope not. And once they are no longer employed by the state, they will not receive their bloated pensions that keep Pennsylvania in turmoil.
I HOPE PRIVATIZATION BECOMES A REALITY
January 6, 2011 at 10:59 PM
Thirsty Girl
It would certainly be nice to have people in the stores who try get recognize and those who don’t get ousted. I’m a big fan of accountability and while the PLCB attempts do do this on the macro level, it tends to ignore the micro, or the customer facing side.
January 6, 2011 at 11:09 PM
spoon
The kiosks are an absolute joke. This was true when all machines went down for the holiday season.
What killed me about the PLCB was 2 years ago when it came out they paid a hefty price to TEACH their Customer Service employees… customer service skills.
I’m welcoming this move and after the bullshite Philly Beer Raids last year I’m ready to see it finally struck down.
January 6, 2011 at 11:20 PM
Thirsty Girl
I don’t know if I trust it yet. 3 failures does not make me hopeful, but I can still have little fantasies. I’m curious to see if Corbett can get past the lobbyists and make it happen, but there are a ton of subtleties that need to be decided, every one a possible land mine.
Here’s to getting a beer together when it happens!
January 8, 2011 at 3:29 PM
Left PA
I worked as a state manager for a supplier in PA and had many dealings with the PLCB before returning to my home in British Columbia. We have a successful split system here. Poorly run and unprofitable state run stores were sold or shut down, new licences were issued for areas with little to no service, and the effect was one of more selection and compitition (although pricing is still set by the state) and a forcing of improved service from the state run stores. Its not perfect, and has its detractors, but it satisified the unions and created a parallel private system.
January 8, 2011 at 4:02 PM
Thirsty Girl
Thanks for the info! It seems like a good model to follow. I’d be curious to hear more about your interactions with the PLCB.
January 12, 2011 at 11:59 PM
Matthew
I am one of the many state liquor store clerks that would be losing my job if PA becomes privatized; so obviously I have a built in biased against privatization.
That being said: While I do not agree; I do understand the argument for privatization; and if this bill had anything to do with a fair and competitive market environment for wine and liquor sales, I might even support it.
However, this bill has little to do with the privatization of liquor stores, so much as it has to do with the corporatization of them. Yes, I just made up a word. Let me explain: They are hoping to get at least 2 billion dollars for 700 retail licenses, and 100 wholesale licenses. That works out to about 2.5 million dollars just to buy that retail liquor license. However, wait… remember how I said ‘at least 2 billion dollars’? Well, you see, that is because this bill does not propose selling the licenses, but rather auctioning them off.
Now, I have in my time as a liquor store clerk, met more than a handful of millionaires, and more than one of them has expressed interest in hiring me and a few of my coworkers should the stores privatize. However, their private millions will never be able to outbid Walmart, CVS, Rite Aid, Giant, BJs, Costco, Trader Joes, etc’s corporate millions.
The bill proposes that to counteract this effect, any one entity will only be able to obtain 10% of the licenses. This is a nice measure in theory, however, there are certainly at least 10 massive retail chains that could easily afford to outbid all comers on these licenses.
This privatization bill is not about offering the consumer greater convenience, or greater selection (two things which in this industry are mutually exclusive. Don’t believe that? Go to a grocery store in a privatized state and look at the wine selection. If you are not in a major metropolitan area, or wine country, it will probably be pretty bleak. Now look up wine shops in that same area, and you will see you probably have a nice drive ahead of you.) Rather, this bill is about being able to temporarily balance the budget, while claiming not to raise taxes.
Guess what though? This bill does raise taxes, and in a way stated clearly in the bill: That the 6% sales tax will be assessed at the final point of sale. This means that when a restaurant buys a $10 bottle of wine, they will no longer pay the extra 60 cents at wholesale location. Rather, they will have to tack the 6% sales tax onto the price they charge their customer. A good rule of thumb for wine mark up is x3 by the glass, and x2 by the bottle. There are 5 standard glasses of wine in a single bottle of wine. Meaning that 10 dollar wine costs you between 4-6 dollars by the glass at the bar. So the final sales tax on this bottle will be increased from 60 cents to as much as $1.80. Consider also a fifth of grey goose vodka. Retails for about $30 across the country. It contains fifteen shots of vodka, which a bar will charge you 6-8 dollars for. Right now, a dollar and eighty cents is the sales tax collected, regardless of whether the bottle is going to a bar or your home. Under the proposed bill, the tax will raise to $5.40-$7.20.
Lets be clear, when we are talking about who will most likely end up owning these retail licenses, we are talking about big business. In contrast, most bars and restaurants are truly examples of small business. Bars are all ready suffering a slump in sales due to the economy. If they are forced to charge sales tax on every drink they pour, the obvious result will be a further loss in sales. So not only do Turzai and Corbett admit that there is a tax increase in the bill; but it is a tax increase that will fail at its goal: To help offset the lost annual revenue of 500 million dollars that the state stores add to PAs coffers.
The bill also claims that the increase in corporate net income tax will easily make up for the loss of money. That might be true, if the bill included a measure to close the Delaware corporate tax loop hole. As it is, any corporation in PA that wishes to can avoid either the majority or all of their corporate income tax. Since the majority of the retail licenses will most likely be bought by some of the worse abusers of this loop hole, do not expect this to work.
Bored with all the above? Here’s a simple example: If I offered you 4 years of your current annual salary, on the condition that you could never earn another cent in your entire life after that, would you take that deal?
Again, I’m not entirely opposed to truly privately owned wine shops and liquor stores. I am confident in my knowledge of the business and the product, and know I would have a job waiting for me at a privately owned store.
However, when you are talking about privatization, you can either have mom and pop shops; or you can make a boat load of money for the state government. But you can’t make both things happen at the same time.
January 19, 2011 at 3:38 PM
Tony
Matthew,
You make some good points, and I’d hate to see you or anyone else lose their job. I admit that you seem more educated on the issue than I am, especially since you are employed by the current system. However, my reason for supporting privatization is simple. I’ve seen both sides of the coin. I have lived in 3 different states including PA and visited many more, and aside from Utah, Pennsylvania was the only that had state run liquor stores. I have never seen higher prices, less selection, and been more incovenienced in my alcohol purchases than I have in Pennsylvania. Liquor stores in Colorado for instance had hundreds of types of beverages that I never even knew existed. Why does the state of Pennsylvania deem that I shouldn’t be allowed to buy these, when other citizens of our country can? I am an adult of legal age, and I don’t like the state limiting my options.
The competition in other states really seemed to drive down prices as well. There were weekly circulars in the paper advertising sales. (BTW: those circulars provide jobs too). A bottle of my usual vodka, Svedka sells for $24.99 at regular price in PA. That same bottle is $17.99 at regular price in Florida or Colorado. That’s a huge difference. I’m not sure what I’m paying for in that extra $7.00 per bottle. If its for someone else’s pension, than I’m not a big fan. I work very hard, and have to budget closely and put my own money away to make sure I have enough for retirement.
Lastly, privatization makes life so much more practical. I’m fine with getting an OK bottle of wine at the grocery store. If I’m having people over for a football game, I don’t want to have to stop at the grocery store, liquor store, and beer distributor. It just doesn’t make any sense. When I have friends come visit me in Pennsylvania from out of state, it is almost embarrasing when they first experience our liquor store situation. Every last one of them from all over the country is literally in absolute shock when they discover how absurd and antiquated it is. Bottom line is that I cannot imagine the situation being any worse than it already is, and even if what some of what you say is true, I think the vast majority of Pennsylvanians are ready to take their chances on privatization, because anything would be better than what we’ve got now.
February 3, 2011 at 8:13 PM
Ray
Matthew, you do have good points but your missing one valuable one and that is competition! There won;t be 650 stores….there will be 2,000 stores across the state. All according to population at the beginning. Then commerce will take over. Mom abd Pop locations will be in rural areas and only 2 licenses per entity across the state. So COSTCO may get 2 but no more! State store and PLCB employees will no longer be needed but they will find employment within the industry. State costs of doing business will be slashed…taxes will be raised on lesser costs…..Other states have done this for many years……privatization works!
February 4, 2011 at 10:09 AM
Matthew
Ray… you should actually Read House Bill 2350. That’s Turzai’s privatization bill. If you had read that, you would know that almost everything in your post is incorrect. 750 stores, not 2,000. Licenses will be considered “franchise zones” (hey, there words, not mine.) The licensee will have exclusive rights to sell wine and spirits inside that franchise zone. The number of zones with in a given county is to roughly match the current level of service through out that county. So competition? Not really. If your store is still the only one in a county, or in a township, or (like my store) the only one in a small city… there really isn’t much competition there. And if you have to buy from the same wholesaler that everyone else in the county buys from (which you will), then it really doesn’t leave much room for competitive pricing.
Hey, maybe I’m wrong. But read the Bill, otherwise you won’t know if I am or not.