Why this interest in privatization?
To the editor: In response to Rep. Kurt Masser's comments regarding his support of legislation to deregulate the control of alcohol sales and allow privatization of beer, wine and liquor, these facts should be recognized and reviewed.
Is selling wine and spirits a core function of government? Pennsylvania has been doing this in a competitive-free market for more than eight decades. Previous attempts to privatize this business were unsuccessful because of the strength of union workers, organizations like Mothers Against Drunk Driving and conservative teetotalers.
Currently, the state operates 620 stores. Some have been modernized with 75 premium outlet locations throughout the state. In the past few years, nearly 50 unprofitable stores have been closed. Currently, there are about 3,000 state store workers.
Why is this issue being discussed? The state is desperate for cash! Some estimates note a sale would generate $1 to 2 billion into the treasury. However, it's a one-shot deal and doesn't consider the $90 million annual profit the state will lose in revenue, nor does it consider the transition cost from the current state-controlled liquor system to a market-controlled business, which could cost $1.4 billion.
The current bill notes the Department of General Services, not the Pennsylvania Liquor Control Board, would unravel the state store system. It sets pricing for licensing fees and groups them into Class A and Class B. It also notes they would help liquor store workers who lost their jobs find new employment and also provide them with a severance bonus. (I suspect that is to make them "feel good" when they apply for unemployment).
Hours and days of operation at new locations would be increased and include Sunday sales.
Fees would vary for licenses depending on the type of business. However, beer distributors which now pay $700 a year would be required to pay $150,000 for a new authorization and $10,000 to renew it!
Consider these various points: If consumption /purchasing goes up, taxes collected - sales, income and business, will also increase.
Currently, you must buy beer by the case or purchase at a very high cost, in limited quantities, from a local bar. That would change and you could buy a six pack from a distributor.
For those individuals who cross state lines to make purchases at a lower cost, the privatization would be a welcome relief (especially since gas costs are on the rise).
Now consider this: Washington State had a similar liquor system which contributed $465 million into their treasury in fiscal 2011. They voted to privatize. They raised $30 million in auction of existing store licenses (not billions or even hundreds of millions) and only $150 million for wholesale permits (they were looking for $600 million).
Washington state had to add new taxes to compensate for revenue loss - retail prices were up across the state. The border states of Idaho and Oregon reported massive sales gains after the Washington privatization.
The number of sales locations did rise from 300 to more than 1,500 businesses.
Privatization did deliver on convenience, but selection went down and prices went up.
We're told the estimated revenue of $1.02 billion in upfront money over three to four years would be used to support public school programs. Do you really believe that?
Personally, I have never been dissatisfied with the service I received at any state store. I appreciate the controls this system places on liquor sales. Over the last four years, there have only been two documented sales to minors among the current 620 stores throughout the state. Rep. Masser's stated that business owners have much to lose if they sell items to minors. Business owners cannot and will not be at their locations during every hour of operation, and they cannot control what and to whom their employees sell items.
The state has been continually renovating and modernizing its locations.They have increased selections and made products more available. Do you really think private owners will increase selection and variety after they spend huge fees to purchase licenses?
I don't see a need for additional locations to purchase wine and spirits. The state has enjoyed a dependable source of revenue for many years. Let's stop this attack on union workers, the potential loss of jobs and the further erosion of our economy.