A proposal to sell off most of Pennsylvania's state-owned liquor system and its wholesale distribution network moved ahead with a vote on the Legislature on Monday, although its prospects to become law remain uncertain.
The state House Liquor Control Committee voted 15-to-10 to advance a Republican-backed proposal that was very similar to a bill that passed the House but stalled in Senate during the last legislative session.
"At the end of the day, this is a private retail and wholesale business that, in every other state except for one is managed by the private sector," said Rep. Chris Ross, R-Chester, the committee chairman. "We don't have state grocery stores. We don't have state gas stations."
The proposal would create 1,200 licenses for retail businesses to sell wine and liquor, giving the existing beer distributors the first shot at buying them. Grocery stores would only be able to sell wine, not liquor. All but 100 of the 600 government-owned and -operated liquor stores would gradually close and employees there would get help finding new jobs.
Democrats, who voted unanimously against the similar bill in 2013, raised questions about whether the law would create the short-term windfall its supporters have projected, money that could help plug a state budget hole this year.
"What’s going to happen down the road? They’re saying they’re not going to raise taxes, but if they’re not getting the money that the wine and spirits stores are putting into the states funds now, they’re going to have to get it somewhere. Their [idea] of selling it off [is] a one-time fix sort of like a band aid,” said Michael Troyon President of Independent State Store Union.
Two years ago Washington privatized liquor sales, and now liquor prices there are the highest in the country. Troyon fears that would cause Pennsylvania residents to travel elsewhere for liquor.
Rep. Matt Bradford, D-Montgomery, said he wanted to know the appraised value of the state's existing stores.
"Are we truly maximizing the value, are we giving the taxpayers back the money they put into the system?" Bradford asked.
Ross said there has been "an extensive effort" to value the system, but different locations have different values and part of the proposal is to try to help businesses that are already selling alcohol.
"We have a chance, in a historic way, to move outside of a failed system that was never meant to really be successful, if we think about it honestly," Ross said.
The license fees will vary, depending on the population of the county where they are located. After beer distributors get the first chance to buy them, they will be sold to the public at a much higher price.
“The only people that are going to be able to afford the licensee that they’re offering are bigger companies. The Wal-Marts, the Giant Eagles, Sam’s Clubs, Costcos, places like that, where the little ma and pa stops that they keep talking about, I don’t know if they’re going to be able to compete,” said Troyan.
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