Pennsylvania Liquor Control Board against private sales
State Rep. Mike Sturla
Pennsylvania Liquor Control Board and House Democratic leaders said on Tuesday that the system of state stores is too valuable to turn over to private operators as many top Republicans are pushing to do.
"To now divest ourselves of that business and lose $500 million a year in profits doesn't make sense," said Rep. Mike Sturla, D-Lancaster, chairman of the House Democratic Policy Committee.
If private operators take over, prices would increase and the enormous selection the state leverages through buying power would shrink, Sturla said, adding that such a move could erode $400 million a year that the state gets from taxes, including a 30 percent markup on all booze and an 18 percent "Johnstown Flood" tax, he said.
"Nobody else, anywhere, has a selection of 30,000 bottles of wine and liquor," Sturla said during a meeting with Tribune-Review reporters and editors. "We are the largest purchaser of alcohol in the United States because we buy as one wholesaler, which gets us a discount price beyond anyone else's."
In Harrisburg, LCB officials outlined proposals to make the stores run more like private businesses.
House Majority Leader Mike Turzai, of Bradford Woods, said he plans to introduce a plan to privatize the stores, which fellow Republican Gov. Tom Corbett supports.
Board Chairman P.J. Stapleton told the Senate Appropriations Committee that the LCB wants to choose how much it marks up products -- particularly high-end wines and spirits. Such a change could boost profits $20 million to $70 million a year.
Stapleton said the board also wants the Legislature to permit it to sidestep the state procurement code on some contracts and purchases and to ease civil-service requirements to allow officials to "put the right person in the right job."
"All of those (proposed changes) could be arguments to be made for why privatization is necessary," said Sen. Lloyd Smucker, R-Lancaster County.
Stapleton defended the "world-class" retail operations -- 620 stores -- as sources of thousands of products through purchase or order.
Allowing many wholesalers to purchase alcohol would eliminate the state's buying power, Sturla said.
He believes most of the liquor licenses would be purchased by small convenience stores that have shelf space for a small fraction of the 2,000 to 3,000 bottles of wines and spirits in many state stores.
"The numbers just don't add up," he said.