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Hearings planned on privatizing liquor stores

February 20, 2008


Pennsylvania legislators plan to hold a public hearing this summer about privatizing retail liquor sales, the chairman of the House Liquor Control Committee said yesterday.

"Let's put it out there and see what kind of response we get," said Rep. Robert Donatucci, D-Philadelphia, following a House appropriations hearing for the Pennsylvania Liquor Control Board yesterday.

The bipartisan hearing would be held jointly by the House Liquor Control Committee and the Senate Law and Justice Committee, probably after a state budget is passed.

At present, Mr. Donatucci doesn't think privatization supporters have enough votes for the bill to advance.

"I don't think it's even that close," he said. And he expects legislators first will deal with beer packaging initiatives that would allow consumers to buy six packs instead of whole cases at distributors.

Sen. Rob Wonderling, R-Montgomery, introduced the privatization bill this month, arguing that the state should not be in the liquor business. In the bill's current form, about two-thirds of the 623 state stores would be sold to the highest bidder and the remaining stores would be offered to a private equity firm. Proceeds from the sale would go toward improving health care for the state's residents.

"Even if it was viable, they would have to make some changes," said Mr. Donatucci. "When you put the facts on the table, privatizing the system in Pennsylvania is not as easy as it sounds."

At yesterday's hearing, PLCB Chairman Patrick J. Stapleton said privatization raises issues of possible social costs, including increased underage drinking, and financial implications. The PLCB last year alone returned nearly a half-billion dollars to the state treasury.

"We're not sure the numbers add up to being a plus for the commonwealth" if the system were made private, he said. He added that private retailers likely won't want to operate in remote areas of the state, forcing residents to travel long distances to purchase wine and spirits.

"I think the arguments against it [privatization] are even stronger than they were 10 years ago," when Gov. Tom Ridge tried unsuccessfully to privatize the system, he said.

Following a four-part Pittsburgh Post-Gazette series on Pennsylvania's liquor control system last month, reader responses showed widespread consumer frustration with the state store system.

But the complaint that selection is limited "is just not the case," Mr. Stapleton said yesterday, noting that the agency has 12,000 different wines in the system. "We're fighting a war of perception."

Rep. Ron Raymond, R-Delaware, agreed, saying with improvements in recent years "we have arguably the best liquor stores in the country."

That, plus the millions the system generates for the state, "makes a pretty compelling case for keeping the system the way it is," he said.

The appropriations portion of yesterday's hearing was brief, as the PLCB is one of the few state agencies that gives back money to the state each year.

Mr. Stapleton said sales had increased by "a little over 5 percent," but were below the agency's projected sales by about 1.5 percent. He attributed the missed sales goal to a general slowdown in the retail market. He said the agency is doing well when compared with neighboring states.

By Steve Twedt, Pittsburgh Post-Gazette
Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963.

 
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