Battle Over the Booze: Will Corbett Take On the Unions?
The arguments for selling the state liquor system far outweigh the reasons to maintain the status quo. The public favors privatization. The political support is solid, at least on the Republican side that controls the House and Senate.
But the great unknown remains Governor Corbett. He favors selling the state stores, but his leadership on the issue has been tepid at best.
After House Majority Leader Mike Turzai, a Republican from Allegheny County, finally introduced a bill last week to privatize the state stores, Corbett said he didn’t think the Commonwealth should be in the booze business. That was a good start. But then Corbett quickly added: “How you get to that point and what you privatize and how much revenue comes into it, that has to be worked out.”
Hardly a ringing endorsement.
Then again no one is ever going to mistake Corbett for Winston Churchill. Leslie Nielsen, maybe. But when it comes to strong leadership, Corbett is a long way off from his political role model, Governor Christie.
Someone should remind Corbett this is not the gas-drilling industry that he likes to coddle. This is about allowing free-market enterprise 78 years after the end of Prohibition. While the public is clamoring for privatization, it’s not going to happen without strong support from Corbett.
As expected, Turzai is running into a buzz saw of union opposition over his plan to sell the state liquor store system. The United Food and Commercial Workers Union is running ads opposing the sale, and urging members to call Turzai’s office. (Supporters are also free to call: 412-369-2230. Or email firstname.lastname@example.org.)
The union leaders represent the roughly 5,000 state store workers, so it’s clear where they are coming from. But less clear is why state taxpayers should subsidize employees who sell wine and liquor. If that makes good economic sense, then the state should purchase the Wawa chain and add those convenience store clerks to the state payroll.
Besides, it’s not as if all of the state store jobs will disappear. Some private sector jobs will be created, and new stores will open. Plus, Turzai’s bill includes incentives to help state employees transition to other jobs.
The union also argues that privatization will mean increased drinking, more underage drinking and more drunk driving. This is a stretch. The drinking age will still be 21, and there is less incentive for private operators to risk losing a license for selling to underage drinkers.
Not to mention, the Centers for Disease Control and Prevention studied the issue in 2006 and 2007, and found insufficient evidence that showed privatization resulted in increased drinking. Duquesne University professor Antony Davies (no relation) found that DUI deaths were actually higher in states that controlled liquor and wine sales.
The union has also argued that auctioning off the liquor licenses will not produce the $2 billion in revenue that Turzai has touted. That may or may not be correct. Frankly, the amount of money generated from the sale of licenses is all gravy. The main reasons for any sale are the lower prices, increased selection and better service that will come with privatization.
The union also argues that the current system generates about $500 million in revenue for the state. But only about $100 million ends up in the general fund. That’s after almost $1.9 billion in wine and liquor sales. Hardly a great margin.
Turzai’s bill aims to offset the lost revenue with other fees. Meanwhile, his measure eliminates the Liquor Control Board’s 30 percent markup; the 18 percent tax put in place to pay for damage after the 1936 Johnstown flood and the handling fee that ranges from 70 cents to $1.50 a bottle.
In its place is a gallonage tax that is based on volume and alcohol content. If anything, the state should see an increase in sales tax revenue as fewer shoppers travel to New Jersey or Delaware to buy their booze.
Past efforts to privatize the state store system have been thwarted, largely because of union opposition. This time around, the public and the political leadership support the sale. Corbett has an opportunity to succeed where other governors have failed. But he needs to belly up to the bar.
Paul Davies spent 25 years in the newspaper business, including stops at the Daily News, the Inquirer and the Wall Street Journal. He can be reached at email@example.com.