PFM Study Validates Privatization of Liquor and Wine Sales, Turzai Says
10/25/2011
HARRISBURG – House Majority Leader Mike Turzai (R-Allegheny) responded to the public release by the governor of the Public Financial Management (PFM) study of the operations of the Pennsylvania Liquor Control Board (PLCB):

“The PFM study reinforces what the vast majority of Pennsylvanians already know to be true – government should not be in the business of selling alcohol.

“Under the current system and leadership, the PLCB is very successful at growing expenses much faster than taking in revenues. You do the math: expenses grew at a compound annual growth rate of 5.5 percent, yet revenues over the same period grew at only 3.5 percent. The agency’s profitability is decreasing; in fact, its net income was down 41 percent in the 2009-10 fiscal year.

“The PFM study shows the PLCB's profitability will continue to decline in the coming years and that only a privatized system affords the state the best opportunity for real customer convenience and optimal financial benefits for Pennsylvania’s residents.

“No one can deny the many responsibilities of government, from safe roads and bridges to better schools and public safety… but selling and promoting alcohol isn’t one of them.

“It is time to sell Pennsylvania’s state liquor and wine stores.

“According to PFM, the state could reap between $1 billion and $2 billion by auctioning licenses… that is money which otherwise wouldn’t be available. Further, and more importantly, privatization would mean new wholesale and retail business opportunities for entrepreneurs, which in turn will create thousands of private-sector job opportunities throughout the state—something a government agency truly cannot mimic.

“House Bill 11, which I introduced, will privatize wine and liquor sales, while at the same time strengthening enforcement of liquor laws and offering better convenience for consumers.”

Currently only two states, Pennsylvania and Utah, have complete control over wholesale and retail operations. Turzai’s proposal privatizes the wholesale and retail operations and shifts the PLCB’s role to focus solely on regulation and education.

Specifically, House Bill 11 would: 

        • Eliminate the 18 percent Johnstown Flood tax and the 30 percent markup by the 
          PLCB. 
        • Implement a fairer gallonage tax – which is easy to verify and track according the 
          PFM study. 
        • Enhance enforcement of liquor laws by providing concurrent jurisdiction for state and 
          local police; require retail managers and employees to attend Responsible Alcohol 
          Management Program (RAMP) training; mandate the use of ID scanners with age 
          verification software; require retail operations to be maintained in a separate area 
          dedicated to the sale of liquor and all retail store employees to be at least 21 years 
          old; and subject retail licensees to “age compliance checks” to ensure against selling 
          to minors. Licensees who fail to adhere to these standards will face heavy penalties 
          and possible suspension or revocation of their licenses. 
        • Offer current PLCB employees the following opportunities: hiring preference in other 
          state jobs; tax credits for employers to hire them full time; and education grants to 
          help retrain employees to perform other jobs.

To view the report, visit http://www.budget.state.pa.us/portal/server.pt/community/liquor_privatization_analysis__final_report/4575. For more information about the legislation, visit RepTurzai.com.
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