Op-ed by Senator Jim Brewster
Just last year, a significant effort to modernize liquor sales in Pennsylvania was signed into law as Act 39. The new law expands locations where wine can be sold to include grocery stores, restaurants and hotels, allows the direct shipment of wine and the auctioning of revoked or not renewed licenses – a sale that involves approximately 700 additional licenses.
These new locations and means to purchase wine are in addition the more than 600 retail wine and spirits stores that are operated by the Pennsylvania Liquor Control Board.
Now, less than year after the new, bipartisan law was adopted, House Republicans are pushing two more “reform” measures that would expand sales venues and privatize operations. These new proposals would dismantle the system, reduce state revenues, disrupt working families, and aggressively spread liquor. The provisions contained in House Bill 991 and House Bill 438 are too much, too soon and go too far.
The House Republican plan would expand liquor sales by adding over 2,000 franchise stores and permit retailers who now sell wine to sell liquor. If these measures become law, Pennsylvania would be awash in both liquor and red ink.
Those on the short end of this plan include our taxpayers – revenues and taxes are expected to yield nearly $750 million in 2016-17 – and the 4,000 workers and their families who now serve the public in the wine and spirits system.
Proponents note that the expansion of franchise stores may yield $300 million in additional revenue and that an expanded system would better serve rural areas. However, others, including the Pennsylvania Budget and Policy Center (PBPC), have a different read. According to the PBPC, privatization would cost the state the liquor system’s profits and slash tax revenues by half. The center estimates that the total cost to the taxpayer of privatization could be $400 million per year.
The plan would put the liquor system into uncharted waters. There is little solid information available about the value of franchises in rural areas or what the market value of the franchises would be if they were geographically assigned to regions where few people live. As important, advocates have not produced any data, survey, study or analysis that conclusively proves that this approach is consumer friendly. Will a wide range of products be available at affordable prices if profit-driven franchise stores in rural areas dictate availability?
Given that Act 39 is new and the impact of the changes made have not yet been fully examined, it would be useful to give the modernization approach a chance to work. The more than 4,000 workers that serve the public via the new consumer-friendly wine and spirits store approach should be given the opportunity and time to put a business plan in place.
As someone who worked in the private sector for decades, I know that change in business is healthy and profitable if there is time to let markets react and business plan improvements take hold.
The General Assembly and Gov. Tom Wolf only recently opened the liquor system and modernized its operation. Time and analysis are needed to evaluate if other steps should be taken to ensure that a consumer-friendly, controlled and fully operational system that is generating solid value for taxpayers and family-sustaining jobs for workers should be changed again.
This plan offered by House Republicans is too much, too soon.