Corbett makes his case for privatizing the LCB

Posted: February 02, 2013

Pressing his campaign to privatize Pennsylvania liquor sales, Gov. Corbett borrowed a staff member's smartphone at a Philadelphia news conference to show a photograph and drive home a point.

" 'Welcome, visitors. Sorry, no beer. We sell only wine and spirits. Beer is sold four lights up at 12th and Walnut Streets,' " he said, reading from the photo of a sign posted at a state liquor store in Center City.

"That speaks to what we are talking about," the governor said. The point of his plan, he said, is consumer choice and convenience.

As he had Wednesday when he announced the plan, he said that privatization would create a one-time windfall of $1 billion by auctioning licenses to private liquor dealers - and that the money would go to educational initiatives in public schools.

"In Philadelphia we know that there are a few people - make that many people - who get in their cars and travel down 95 into Delaware or over into Jersey to buy their alcohol. I want a system that gives our people the flexibility to [make] purchases here," he said. "Selling alcohol is clearly not a core responsibility of government, but education is."

Flanked by Lt. Gov. Jim Cawley and a dozen or so other officials and legislators, Corbett said he had a choice about how to apply the money that he expected the plan to generate.

In a state with many critical needs, he said, "it could go to pensions, it could go to roads. ... But we have a $40 billion hole in the pension system right now. So $1 billion wouldn't have made a difference."

He said he had decided education was the place where the state could get the most for $1 billion.

Under his plan, which would be phased in over four years, schools could use the money to enhance school safety; early learning; science, technology, engineering and math courses; and individualized learning.

He acknowledged that it isn't a long-term solution for beleaguered school districts - "This is money that shouldn't be baked into anybody's basic education-funding formula."

To assist Liquor Control Board employees who may lose their jobs if privatization comes, Corbett has proposed tax credits for businesses that hire them. "This means good private-sector jobs for employees who want to stay in the liquor business," he said.

On top of the revenue from sales tax and a special liquor tax, the LCB contributed about $80 million last year to Pennsylvania's general fund.

"We are going to make that up in what goes to New Jersey and Delaware right now," said Corbett. LCB officials, he said, "can tell you that we are losing millions of dollars a year in people purchasing their alcohol by going around the system. If people have the convenience here, they'll pay their taxes."

How would the plan affect prices? "It's a free-market system," he said, "and competition tends to drive costs down." Asked whether he was sure prices would drop, Corbett turned gruff: "Can you say for certain that the sun is going to come up tomorrow?"

Though privatizing wins in every recent poll, it still faces entrenched opposition. Critics of Corbett's proposal warn that deep-pocketed interests will edge out smaller beer distributors when it comes to bidding for licenses.

As a guard against big players dominating, Cawley said, the plan stipulates no applicant can own more than 5 percent of the 1,200 licenses that will be available.

"They will be divided by county," the lieutenant governor said, "and because of location, some licenses will be more expensive than others. ... We tried to steer it in a way that provides opportunity for a broad base."

The plan envisions about 5,000 additional outlets for alcohol, including groceries, supermarkets, and convenience stores. Pennsylvania is below the national average for liquor outlets per population, said Corbett: "This will bring us up to average, and the market will drive it."

As for concerns that an increase in outlets will prompt an uptick in social problems tied to alcohol: "I've seen comments that say there will be an outlet on every corner. That's not true. The market won't allow that to happen," said Corbett. He added that his plan called for funding alcoholism treatment and law enforcement.

"I have not had one person ... tell me this is a mistake," he said. "I've seen some unions that are not supportive of it."

At a meeting of the United Food and Commercial Workers, Local 1776, in Plymouth Township late Thursday, about 75 LCB retail clerks met with legislators. Spokesman William Epstein said the local has hired consultants to help fight privatization, with LCB workers paying extra dues to fund the effort.


Contact Michael Matza

at 215-854-2541 or mmatza@phillynews.com.

Staff writer Jessica Parks contributed to this article.

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