Pennsylvania’s alcohol sales system on Monday was attacked as a “relic against consumers born of one-man contempt for alcohol consumption” and a few minutes later was defended as a powerful profit generator.
Contradictory views on the Pennsylvania Alcohol Control Board system have come to legislative hearings about a new attempt to privatize the sale of alcoholic beverages.
The privatization proposal from Republican State Representative Natalia Mikhalek of Alegen County differs from the previous ones in that an amendment to the Constitution is used, which allows state voters to make a final decision.
Michalek referred to the “only man” of former Pennsylvania Gov. Gifford Pinchot, who, Mikhalek said, hated alcohol and was in office when the LCB was established in 1933 as a state monopoly.
Most states now have open non-governmental alcohol sales systems. Witnesses at the hearing said 17 states have some level of state control.
David Voynar, senior vice president of the U.S. Distilled Spirits Council, said only a handful of them – including Pennsylvania – oversee the retail sale of spirits.
Mikhalek’s proposal would add a sentence to the Constitution: “The Commonwealth should not produce or sell or retail alcoholic beverages,” and it would enter into force 18 months after the approval of voters.
Proposed amendments to the Constitution must be approved by the legislature in two sessions and then approved by state voters.
Wendel Young IV, a longtime opponent of privatization and president of United Food and Commercial Workers Local 1776, said voters would not get a choice at all because the bill said nothing to replace the state system. The UFCW represents working LCBs.
Young argued that privatization would reduce tax revenues in the state, raise alcohol prices, reduce consumer choices and leave thousands unemployed. He said talking about Pinchot was a “waste of time” because the LCB system has changed a lot over the past 80 years.
Young said the LCB costs taxpayers no money and has earned a “net profit” of $ 265 million over the past year.
While Walmart stores in other states sell alcohol at a profit of 3% and Target stores up to 4.2%, PLCB consistently sells at a profit of 10% or more, according to Young.
He attributed higher profits to the efficiency of having one entity operate both a retail and a wholesale system.
The hearing was controversial from the beginning.
Democrats argued that it was not properly advertised; Chairman of the Republican Committee MP Carl Metzgar of Somerset County rejected the claims.
Democratic MP Mary Isaacson of Philadelphia said past privatization proposals have included “thousands of pages” of information, as opposed to the two-page bill presented by lawmakers at the hearing. Her request to postpone the meeting for two weeks was rejected.
Metzgar accused what he called the reluctance of the administration of the Democratic Party of the Wolf to cooperate with the legislature for the use of the Republican process of amending the Constitution.
Mikhalek had several sharp exchanges with Young.
When she asked Young how much he had spent on political advertising over the past five years, Young said he would return to it. He said any advertisement in which he said Michalek’s bill was horrible was a “representative” accusation.
Mikhalek replied: “Well, as for the representative meeting, how much do you plan to spend against me on political advertising for the presentation of this initiative?”
Young said, “All we can do.”
Members of the Pennsylvania Association of Restaurants and Housing strongly support privatization, said Director of Government Affairs Zach Pizick.
In Pennsylvania, he said, restaurants “pay some of the highest costs in the country for wine and spirits” and believe the system is “inconvenient, limited and unreliable.”
Pennsylvania Chamber of Commerce and Industry President and CEO Gene Barr said he was “not sure” that tax revenues would decrease.
LCB alcohol sales rose 13.7% for the year ended June 30 to $ 2.3 billion. The system operates about 600 stores, where it provides about 5,800 jobs in addition to 850 administrative jobs.
Warrior said spirits producers believe Pennsylvania is “sadly underserved” with the ratio of liquor stores to the population about one-third of what is in other states.
MP Manuel Guzman of Berks County and other Democrats asked for more hearings on what Guzman called a very difficult issue.