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Privatization Is Political Victim in Pennsylvania

Supporters of dismantling state liquor monopoly expect bid to see more success in the fall, when legislature reconvenes

by Andrew Adams
The Pennsylvania State Capitol became the site of political wrangling during the most recent legislative session when, in spite of pleas from Gov. Tom Corbett, the state Senate failed to pass legislation related to the state liquor monopoly.
Harrisburg, Pa.—The drive to privatize liquor and wine in Pennsylvania made it all the way to the goal line but ultimately faltered and failed amid political wrangling.

This March, Pennsylvania’s House of Representatives made history by passing a bill that would dismantle the state monopoly on wine and liquor sales as well as loosen beer distribution and sales. An amended version of the bill had passed committee in the state Senate, where it appeared to have support from enough lawmakers for approval.

On June 30, Gov. Tom Corbett released a statement urging senators to pass the bill and send it back to the House for concurrence so he could sign it into law. “This bill as amended is a historic step, and we must not lose this opportunity to deliver a reform the people of Pennsylvania want and deserve.”

State senators, however, failed to pass it. They reportedly balked at the bill because they couldn’t be assured lawmakers in the House would pass legislation for increased spending on transportation infrastructure, another of Corbett’s top priorities.

With a state budget approved by the July 1 deadline, lawmakers adjourned for their summer break leaving privatization in limbo and Gov. Corbett’s agenda in doubt.

Support remains
“We don’t think it’s dead by any means,” said Katrina Anderson, a senior policy analyst and director of government affairs for the free market advocacy group Commonwealth Foundation in Harrisburg. “We’re confident they’re still hearing from constituents when they return home this summer.”

Anderson said privatization is supported by a majority of voters in the state and the legislature’s inability to pass some type of reform was decried as a failure in several newspaper editorials.

She said after the historic vote on privatization by the House, the Senate was unprepared to move forward on the issue. State representatives had passed a privatization bill that would have dismantled the state-run liquor business. The Senate, however, has favored a milder “modernization” approach that would phase out the state’s role in wine and liquor sales.

The fact that senators were able to advance an amended version of the House bill shows they are more open to a direct privatization approach. When the legislature reconvenes in the fall, Anderson said she expects the debate to start from there.

Republican Sen. Chuck McIlhinney, chair of the law and justice committee, helped draft the Senate legislation. In a statement released July 3, McIlhinney defended the bill as a commonsense approach to privatize the state system and “rejected the special interests who play political game and aren’t accountable to taxpayers or voters.”

He said the bill would allow beer, wine and specialty liquor sales at grocery stores and wouldn’t require consumers to purchase food and alcohol from two separate checkout areas. “My legislation also makes it legal for direct wine shipments from wine producers to our homes—something consumers have been demanding for decades.”

The bill offers “clear direction” on closing state liquor stores and also requires two years of monitoring to ensure privatization doesn’t trigger any negative effects on the state economy.

Opposition from union, beer distributors
Anderson said privatization faced strong opposition from the influential Malt Beverage Distributors Association of Pennsylvania. The group argued that the privatization proposal would spell economic doom for its members as well as flood the state with outlets selling alcoholic beverages. The union of liquor store employees also vigorously campaigned against the measure.

In an op-ed piece published July 7, Wendell W. Young IV, the chairman of Local 1776 of the United Food and Commercial Workers Union, argued privatization did not pass because the House and Senate were working on “radically” different pieces of legislation and many lawmakers didn’t want to approve anything that would put independently owned beer distributors out of business.

He argued most state residents favor modernizing the existing system because it’s the best way to give consumers what they want while not putting state or private employees out of work. “Modernization is not complicated—and it’s not ideological,” Young wrote.

According to the state’s online lobbying database, $957,493 has been spent on alcoholic beverage lobbying in 2013. The database only had what was spent in the first three months of the year, but top spenders included the United Food and Commercial Workers, which spent $54,038 to lobby against the effort and three retailers, Wegman’s Food Markets, Sheetz Inc. and Giant Eagle, which spent a combined total of $175,439 for privatization. MillerCoors spent $21,961 and Anheuser-Busch spent $37,008 lobbying against privatization.

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