New Castle News

Closer Look

March 4, 2013

Critics: privatizing liquor Less profitable

CNHI — Advocates say that if the state privatizes the liquor system, shoppers will enjoy greater selection and easier access to beer, wine and hard liquor.

That access could translate into increased tax revenue to help offset the lost profits that now pour into the state coffers from Pennsylvania’s government-run liquor monopoly.

But even before Republicans fully unveil the latest legislative proposal to dismantle the liquor monopoly, critics are warning that the math just may not add up in a way that bodes well for shoppers or taxpayers.

Proponents for dismantling the monopoly say that the upfront license sale will generate $1 billion. Gov. Tom Corbett has proposed using that money for a special grant program for schools.

But once the liquor system is privatized, the state must replace the millions of dollars of profit that has been generated by the state Liquor Control Board each year. Last year, the LCB transferred $80 million to the state.

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State Rep. Kurt Masse of Northumberland County is a member of the House Liquor Control committee, which will first consider any privation legislation. He said that in addition to the revenue from annual license fees, advocates believe that by significantly increasing the number of places where beer, wine and liquor is sold, sales will increase, which will translate into more sales tax.

“Government is not a core government function,” Masser said. “If the plan is revenue-neutral, and there are reasons to believe privatizing may be better than revenue-neutral, then I think it is something we should explore.”

Masser said he has concerns about the plan, including how it will impact beer distributors. He has a meeting planned with beer distributor owners in his district in the coming days.

A financial analysis commissioned by the Corbett Administration indicated that the state would generate $138 million a year through annual license renewals, ranging from $2,500 a year for the 1,200 stores selling wine and liquor, to up to $35,000 for big-box stores to sell beer and wine. The plan calls for as many as 5,000 beer and wine shops.

Beer distributorships would be required to pay $150,000 up-front, then $10,000 a year for the right to sell wine and liquor in addition to beer. There will be 1,000 of these licenses available.

Overall, the plan calls for a total of 7,200 licensed retail stores selling beer, wine, liquor or all of them. There currently are 600 state stores selling wine and liquor and about 1,200 beer distributors.

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