Senate Majority Whip Announces Support of PLCB Privatization

Video of Press Conference

Privatization will lead to private sector job creation

BETHLEHEM – Calling for private businesses to operate wholesale and retail sale of wine and liquor in the Commonwealth, Senate Majority Whip Pat Browne (R-Lehigh/Monroe/Northampton) announced his support of House Bill 11, sponsored by House Majority Leader Mike Turzai (R-Allegheny), to privatize the sale operations of the Pennsylvania Liquor Control Board (PLCB).  Browne and Turzai made the announcement with several other lawmakers at a press conference today.

“Given the significant movement of the Pennsylvania system of distribution of wine and spirits away from it core government mission of control, it is time for the commonwealth to divest of its operations into the private sector. It no longer serves a legitimate public function,” Senator Browne said. “Through dynamics of private marketplace which maximize system efficiency, the divestment of the Pennsylvania Liquor Control Board’s wine and spirits distribution operation will serve to better realize the PLCB’s current priority of consumer choice and profit maximization to the benefit of consumers and the private sector workforce.”

“It’s great to have Senator Browne on board. He is not just joining me, but the vast majority of Pennsylvanians who want the government out of the alcohol business,” Turzai said.  “We have an opportunity to move the Commonwealth out of the Prohibition era, while at the same time creating thousands of private-sector job opportunities, strengthening enforcement of liquor laws and offering better convenience for consumers.”

Currently only two states, Pennsylvania and Utah, have complete control over wholesale and retail operations.  Turzai’s proposal privatizes the wholesale and retail operations and shifts the PLCB’s role to focus solely on regulation and education.

Specifically, House Bill 11 proposal would:

  • Eliminate the 18 percent Johnstown Flood tax and the 30 percent markup by the PLCB.
  • Implement a fairer gallonage tax.
  • Enhance enforcement of liquor laws by providing concurrent jurisdiction for state and local police; require retail managers and employees to attend Responsible Alcohol Management Program (RAMP) training; mandate the use of ID scanners with age verification software; require retail operations to be maintained in a separate area dedicated to the sale of liquor and all retail store employees to be at least 21 years old; and subject retail licensees to “age compliance checks” to ensure against selling to minors.  Licensees who fail to adhere to these standards will face heavy penalties and possible suspension or revocation of their licenses.
  • Offer current PLCB employees the following opportunities: hiring preference in other state jobs; tax credits for employers to hire them full-time; and education grants to help retrain employees to perform other jobs.

For more information or to review the legislation, visit RepTurzai.com.

Media contacts:

For Rep. Turzai:  Tricia Graham, 717.260.6296, tgraham@pahousegop.com
For Sen. Browne:  Matt Moyer, 610-349-2879, mmoyer@pasen.gov


Senator Pat Browne
Senate Majority Whip
Remarks on Liquor Store Privatization
October 6, 2011

Remarks

I am pleased to stand here today with my friend and colleague, House Majority Leader Mike Turzai in support of the efforts to privatize Pennsylvania’s state store system.

It goes without saying that one of the primary responsibilities of elected officials in all divisions of government is to consistently evaluate the core goals and objectives of the respective public jurisdiction and to make deliberate determinations on what role the jurisdiction will play in accomplishing them.  If made responsibly and in the best interests of overall wellbeing of its citizenry, these determinations should necessarily be made in the context of what history has consistently shown is the most appropriate venue to control and offer goods and services.  If the rise of the human experience in western democracy has proven anything, it is that in the creation, development and offering of consumer and commercial products, it is in the competitive dynamics of the private sector where the individual or enterprise purchaser is best served.

Given this experience, if the elected fiduciaries of a public jurisdiction decide to supplant the successful prerogative of the marketplace in the provision of a consumer or commercial good or service, it must be justified by a countervening public purpose which makes government control and delivery more compelling.

In this regard, to sincerely and deliberately consider the merits of Pennsylvania’s divestment of its wine and spirit wholesale and retail distribution operation, it is imperative that decision makers consider the framework and public policy pronouncements from which the current platform was established and determine whether this underlying foundation is still being met and served.

To accomplish this, one must step back nearly 80 years ago to the end of prohibition in the United States.

Recognizing the impact of the repeal of Constitutional Amendment banning the sale and consumption of alcohol, then-Pennsylvania Governor Gifford Pinchot and the General Assembly created the Pennsylvania Liquor Control Board to regulate and oversee the sales and distribution of alcoholic beverages in the Commonwealth.

Keeping in mind that Governor Pinchot and many in the legislature at the time were deeply concerned about the countries abandonment of its prohibitionist constitutional principles and were strongly opposed to the use of alcohol, an overriding, clear and specific purpose was given the PLCB when they created it in 1933.

According to the records of the time, Governor Pinchot said the purpose of the PLCB was to discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible.

It’s fairly well recognized that up until the last twenty years, the PLCB has for the most part held to its original charter and mission statement. Up until that time, the PLCB’s retail wine and spirits operations were simple, uniform, uninviting and utilitarian – truly in line with the mission of not overtly attracting citizens’ interest, purchase and consumption of alcohol.

However, given recent and significant priority shifts in the operation of the system as marked by recently implemented and to be implemented marketing, distribution and branding initiatives, it is now abundantly clear that the PLCB is embracing and prioritizing objectives of commercial enterprise at the expense of its core public function of controlling public access to fermented and distilled alcoholic beverages.  In doing so, the PLCB is operating effectively as a quasi-commercial entity that rivals and embraces the efforts of private retail establishments.  A government enterprise which once structured its operations solely around its chartering mandate of controlling access, now promotes private sector prerogatives of “revenue generation”,  “profit maximization”, “customer convenience” and ‘customer choice” as core operating and strategic principals.  Examples of operational initiatives which mark this policy shift are many and point to an agency whose private sector objectives can only be undermined by further government control.

It’s hard, if not impossible, to see where the advertising efforts of the PLCB fit in with its core mission as directed by Governor Pinchot. In fact, this promotion of alcohol sales and use is completely counter to the set mission of the “control” that is an integral component of the very name of this organization.

Similarly, the ill-fated attempt to establish wine kiosks with access during extended Sunday hours is another direct counteraction to the core role and mission of the PLCB. In retrospect it was plain and simply a focused attempt to raise revenues without proper direction and oversight from the PLCB.

The on-going and expanding effort by the PLCB to open specialty stores, the PLCB opening its boutiques as adjuncts to retail outlets, its strategic retail services, its customer convenience focused staff training, market based pricing, customer loyalty programs, the allowance of business hospitality to senior staff and executives, its comprehensive rebranding of retail operations and last, but in the future, far from least, its redesign of the on-line e-commerce wine and spirit purchasing experience all indicate and organization which wishes to accomplish private sector objectives on behalf of the Pennsylvania citizenry under the umbrella of a public monopoly.

Narratives provided by the PLCB describing their justifications and objectives for these initiatives strongly reinforce this point.

In presenting the details of and reflecting on these various initiatives, I am not commenting on their generic effectiveness as a means to promote the sale of wine and spirits.  But rather, given that they are being implemented within a public sector framework, will be less effective in achieving their objectives than if implemented within the proven competitive and system efficiency dynamics of the private sector.  Given the universal acceptance of the private sector in the provision of consumer products, the current priorities of the PLCB are less likely to be realized and more likely to be undermined as long as they are the responsibility of a Commonwealth public operation.

Pursuant to the responsibilities of Pennsylvania’s elected officials to identify our states goals and objectives and to advance the most appropriate means in which accomplish them, in the distribution of fermented and distilled beverages, it is time to make a choice between two mutually exclusive platforms- are we to be a state that controls the sale of distilled and fermented beverages through direct retail sales by a government entity as a means to prioritize public health and safety  – or, do we want sales to be open, convenient and with the specific purpose of revenue generation and profit maximization?

Given the PLCB’s investment and prioritization of the later platform over the last generation, I believe, along with my colleagues here today, Governor Corbett and what I am confident will be a majority of the General Assembly, that it is only proper that this function, similar to the majority of other states, be turned over to the private sector with the proper state regulation and oversight. The PLCB has already taken the initial, significant steps to convert its state stores into commercial enterprises.  It’s only proper then that we take the next step and complete this evolutionary process by privatizing the system. Simply, if liquor sales in Pennsylvania, similar to the offering of all other consumer products, are is to be run like a business, then it’s more than appropriate that we turn those operations over to private businesses and let the PLCB refocus to its primary mission of alcohol regulation, control and enforcement.

The Lehigh Valley Economic Development Corporation is a testament to the potential for business growth and job creation that can be achieved in private sector. The officials of LVEDC work with organizations every day who utilize market dynamics to maximize system efficiency which in turn leads to higher available cash flow for new initiative support and job creation.  By embracing a private sector platform for its wine and spirit distribution operations, the PLCB will not be jeopardizing it new strategic objectives and initiatives, but will allow them to flourish thus producing optimum revenue generation and profit maximization for the benefit of Commonwealth’s taxpayer’s.  This is the PLCB’s vision for the future – that vision will have a clearer focus if pursued in Pennsylvania’s private sector. I look forward to working with Representative Turzi, Governor Corbett and all my colleagues in General Assembly both house and senate to make the private distribution of wine and spirits in the Commonwealth of Pennsylvania a reality.   Thank You.