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New Plan to Privatize Pennsylvania's State Stores

Proceeds from sale to add $1 billion to education

by Hudson Cattell
tom corbett pennsylvania governor
Tom Corbett is the latest in a line of Pennsylvania governors to attempt to topple the state liquor monopoly.
Harrisburg, Pa.—On Jan. 30, Pennsylvania Gov. Tom Corbett unveiled a new plan to end the state’s monopoly over the sale of liquor and wine. According to this proposed plan, closing the state’s 620 stores and auctioning off 1,200 wine and liquor licenses would generate approximately $1 billion in revenue over the next four years to finance public school education.

Gov. Corbett’s proposal would nearly double the number of outlets for wine and liquor compared to the current number of state stores. Of the 1,200 licenses, 800 would be for large retailers such as box stores, with 400 licenses for smaller businesses such as convenience stores and drug stores. Beer distributors, which are not part of the state’s monopoly, stand to benefit from Corbett’s plan because they would be allowed to sell beer in smaller quantities than by the case. In addition, they could apply for the wine and liquor licenses and thereby become the only places where customers could buy liquor, wine and beer in one location.

If Corbett’s plan is passed by the legislature, it is estimated that the closing of state stores could begin within six months and be completed within the next year. Taxes on alcoholic beverages would remain unchanged, and prices consumers would have to pay would be little changed.

A history of attempts
Past Pennsylvania Govs. Tom Ridge and Dick Thornburgh tried unsuccessfully to end the state’s liquor monopoly. When Corbett became governor two years ago, he made privatization a priority, and House majority leader Mike Turzai led the effort to pass the necessary legislation. When he was unable to get the support of the House, he discontinued the effort.

Corbett’s second attempt has a new twist in that the proceeds from his new proposal would be earmarked for the state’s public schools. The state faced financial problems when Corbett took office, and his budget heavily trimmed state support for public education. School funding remains a problem, and the prospect of $1 billion for education could win additional support for privatization. Also working in Corbett’s favor is the formation of a grass-roots Coalition to End the Liquor Monopoly, which was announced in advance of the governor’s speech. Also backing Corbett’s proposal is the National Federation of Independent Business.

Opponents to effort
Opposition to the proposal surfaced quickly, including long-time opponents such as the state store employees union, which claims that closing the stores would put thousands of people out of work. The Pennsylvania State Education Association, the largest teachers union, came out against the proposal, saying that Pennsylvania students shouldn’t have to count on liquor being available on every corner in order to have properly funded schools.

Other groups have called the privatization plan shortsighted, saying the estimated $575 million in revenue from the sale of the state stores—and the $225 million from auctioning off the new licenses—is too little considering that the state stands to lose $550 million annual markup on sales in the state stores. But Gov. Corbett has heard all this before. “I want Pennsylvanians to enjoy the same convenience that virtually every other American today has,” he said.

The day that the state monopoly ends may be inching closer, but it remains to be seen if privatization will happen this year.

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