Liquor privatization debate poised to resurface in PA House


By Andrew Staub | PA Independent

When the calendar flipped from November to December, Pennsylvania lawmakers who made a Sisyphus-like effort to push a liquor privatization plan out of the state House saw their legislative boulder tumble back to the bottom of the hill.

The House made history in 2013 when it passed legislation that would have phased out the about 600 state stores, but the proposal stalled in the Senate. When nothing made it to Gov. Tom Corbett by Dec. 1, the start of the new legislative session, lawmakers were automatically forced to start over.

ANOTHER ROUND: Liquor privatization efforts stalled this year, but the next legislative session is likely to bring renewed talks about the future of the Pennsylvania Liquor Control Board.

Less than two weeks into the current session, there are already signs the boulder pushing will begin anew, with the familiar privatization debate already taking shape again in the House.

While state Rep. Gene DiGirolamo, R-Bucks, hasn’t heard of any official privatization plan, he has already introduced his own alternative to modernize the Pennsylvania Liquor Control Board. The House Democratic Caucus hasn’t heard anything official from Republican leadership, either, but the thought is it’s coming.

“There haven’t been any talks or anything, but I would be shocked if it wasn’t one of their top priorities,” said Michael Herzing, communications director for the Democratic Caucus.

House Speaker-designate Mike Turzai, R-Allegheny, who ushered privatization legislation through the House as majority leader, didn’t return an interview request made through his spokesman. New Majority Leader Dave Reed, R-Indiana, also didn’t return a message seeking comment.

That gave the stage mostly to DiGirolamo, who said he hopes privatization efforts are “dead.”

“I just think the idea of privatization is just the worst, worst idea in the world to try to do for a variety of reasons,” said DiGirolamo, contending the move would trade a steady stream of revenue for a one-time payoff, threaten 5,000 jobs and lead to health and humans services “disaster” should alcohol become more accessible.

DiGirolamo estimates his modernization plan, almost identical to legislation he proposed in the past session, would pull in an additional $185.5 million in profit while leaving the state store system intact. Most of that, $75 million, would come from getting rid of mandated mark-ups and allowing the PLCB to use best pricing practices, he said.

Most of DiGirolamo’s plan probably sounds familiar to those who have followed the privatization debate. He also wants to lift Sunday sales restrictions, allow the direct shipment of wine and spirits to Pennsylvanians and the PLCB to ship out of state, join a consortium of other control states to secure better pricing and put lottery machines inside state stores.

BREAKING RANKS: State Rep. Gene DiGirolamo is one Republican who doesn’t think the state should auction off its liquor stores. He has his own plan.

DiGirolamo’s plan also calls for expedited reviews of new leases and renewals so state stores could more quickly locate to more convenient places.

Democratic Gov.-elect Tom Wolf also favors similar modernization moves, which his press secretary, Jeffrey Sheridan, said would “produce new revenue that can be used to fund vital programs while preserving good-paying middle-class jobs.”

While Corbett wanted to make 2014 the “last call” for state-controlled liquor, Wolf’s ascension could instead mean privatization advocates will be cut off. The next governor’s veto pen would be an “enormous hurdle” for privatization supporters to clear, DiGirolamo said.

Barring any surprise session days before Wolf takes office Jan. 20, lawmakers will indeed have a steep task to muscle any privatization legislation by the new governor. And that’s assuming Republicans could even muster enough support in both chambers.

While Nathan Benefield, vice president of policy analysis for the free-market Commonwealth Foundation, said it’s still unclear what would happen in the Senate, where some lawmakers just want to just sell wine in grocery stores, others don’t want to impact the beer industry and others favor full-blown privatization.

It seems more likely the privatization efforts will gain the most traction in the House, where it already passed once. Republicans also picked up eight seats in November to build a potentially dominant 119-member majority.

“House Republicans still seem very bullish on the prospects,” Benefield said.

The state’s precarious budget situation could facilitate negotiations. Wolf and lawmakers are facing a potential $2 billion shortfall, and though it was eventually removed from the current budget, House lawmakers once thought they could net $380 million this fiscal year through privatization.

Wendell Young IV, president of the United Food and Commercial Workers Local 1776, which represents state store employees, said that ignores the transition costs of dismantling the current system. A study commissioned by the Corbett administration found the unwinding of the system could cost upward of $1.4 billion.

“It sounds to me like the taxpayers of Pennsylvania would be losers day one, that there’d be no extra money to fill a budget gap,” Young said.

Young instead views DiGirolamo’s proposal as the best way forward. It would modernize liquor sales, but leave intact a government monopoly that some conservatives and free-market advocates loathe.

That’s a recipe for another two years of Republicans pushing their boulder up the hill as Democratic lawmakers and Young try to send it rolling away.

“We have spent 40 years fighting privatization,” Young said. “We’re never going to stop fighting privatization.”