Rep. Deasy: Privatizing state liquor system ‘too complex’ for constitutional amendment
—WINE & SPIRITS—
By Elizabeth Perry
The ongoing debate about Pennsylvania’s Liquor Control Board has made another appearance in Harrisburg, this time as a proposal for a constitutional amendment that asks voters to decide on whether to privatize Pennsylvania’s Fine Wine and Good Spirits stores.
Democratic chair of the House Liquor Control Committee, Rep. Dan Deasy, voted against the proposal during a June 8 committee meeting. The bill, introduced by Rep. Natalie Mihalek, R-40, ultimately passed through committee and could be up for consideration by the House.
The issue of privatization is “too complex” to be decided by a constitutional amendment, according to Deasy, D-27.
“It’s just a very short-sighted proposition,” he said.
“The legislature would have 18 months to work out licensing, taxes, divesture of the LCB stores and product availability.”
If those issues are not finalized during the 18-month period, consumers could still purchase beer, but there’d be no hard liquor sales in Pennsylvania, said Deasy.
It’s unclear if the majority of the public is invested in the debate at this time.
A Franklin & Marshall College Poll conducted in March of this year found a majority of Pennsylvanians polled, 34%, did not feel strongly about the issue, 28% were strongly in favor of the referendum to privatize, 26% were strongly opposed to the referendum and 13% didn’t know.
The vote to move the bill through committee fell strictly along party lines and the issue has been framed in partisan terms on both sides of the argument.
In her House memorandum statement, Mihalek wrote, “Gov. Wolf and his accomplices” were stymying the legislation due to “special interests.”
No response was provided by Mihalek when Gazette 2.0 reached out for comment.
Deasy said the “special interests” Mihalek refers to are union members who work at the state’s liquor stores.
UFCW Local 1776 strongly opposes privatization stating the proposal is being championed by Republican “privateers.”
Union President Wendell Young said members are currently lobbying lawmakers with their concerns.
According to union officials, the state store system provides $584 million a year in taxes and profits. Proceeds from the 18% Johnstown Flood Tax levied on hard alcohol sales also goes to the control board.
“If LCB goes away, so does the funding,” said Deasy, who added that much of that tax revenue goes to funding state police departments.
Deasy holds up the state of Washington as a cautionary example. Liquor prices there increased by 20% after the state privatized its liquor sales in 2012. When factoring in inflation, that figure was closer to 8%, according to an investigation by the news team at KREM-TV in Spokane, Wash., but still represented an increase in liquor costs state-wide.
Deasy said rural areas could be negatively impacted if the state were to move out and he did not believe the private industry would fill that vacuum.
“There wouldn’t be a lot of selection in certain areas,” Deasy said.
State employees running the current stores would likely be replaced, or no longer subject to the same benefits structure, noted Deasy.
Including the 3,500 union members, approximately 6,000 jobs exist in support of the state's nearly 600 liquor stores.
Young said putting the issue through a constitutional amendment procedure would not be due diligence.
“This is a large, complex issue with jobs and revenue at stake,” Young said.
Deasy said the passage of compromise legislation designed to provide convenience to customers in 2016 addressed many of the concerns Mihalek has recently raised. The 2016 changes loosened restrictions on where people could purchase alcohol, allowing for grocery stores and convenience stores to apply for permits to sell wine and eliminated Sunday restrictions on Fine Wine & Good Spirits stores.