Deal remains elusive on privatizing liquor sales

HARRISBURG, Pa. - Amid the crush of wrangling and debate that annually precede passage of Pennsylvania's state budget, advocates of getting the state out of the business of selling liquor and wine are hoping to advance their cause before lawmakers break for the summer.

House Majority Leader Mike Turzai, the Legislature's leading privatization champion, is trying to line up votes for his latest plan. Among other things, it would give the state's 1,200 beer distributors the first shot at buying licenses to sell beverages currently available only at state-owned stores.

On Friday, Turzai announced plans for a House GOP caucus meeting on privatization next week in preparation for a still-to-be-scheduled vote on his plan. Lawmakers are slated to reconvene Monday for a busy June schedule, the main task of which is to pass a budget for the fiscal year that starts July 1.

Turzai's plan has evolved substantially since he unveiled his original bill nearly a year ago — through public hearings, a study by an outside consultant and a watershed committee vote — and he warned that the latest proposal is likely to undergo more revisions before it hits the House floor.

"It's merely a draft, that's all it is," the Allegheny County Republican said this week. "The final product has to be geared toward the citizens of Pennsylvania ... to provide consumers with the best service, prices, convenience that they demand and that they see in other states."

Under the latest proposal, according to people familiar with it, the state would issue 1,600 licenses for the retail sale of liquor and wine. Beer distributors would be given the right of first refusal and licenses that are not sold to them would be auctioned off to other private companies.

Also, the 600-plus state stores would be closed over five years, and supermarket chains currently licensed to sell takeout beer could not be licensed to sell liquor and wine for 10 years.

Turzai, whose efforts are backed by Gov. Tom Corbett, said many Pennsylvanians want privatization.

"They travel to other states. They don't understand why New York, New Jersey, Maryland, Delaware, Ohio and West Virginia can seem to do it in a responsible manner and Pennsylvania is so antiquated," he said.

But the plan has drawn a tepid response from trade groups involved in the sale of alcoholic beverages and relentless opposition from the union that represents about 2,500 state-store employees.

Jay Wiederhold, president of the Pennsylvania Beer Alliance, which represents beer wholesalers that supply retail distributors and restaurants, said many retail distributors would be squeezed by the price of the licenses. Prices would be set by county, ranging from $60,000 in rural Juniata County to more than $800,000 in the Philadelphia suburb of Montgomery County, he said.

"Here's the best advice I have: ‘Slow down,'" Wiederhold said. "This is a huge change. We've been doing this since coming out of Prohibition in 1933."

David McCorkle of the Pennsylvania Food Merchants Association said Turzai's plan calls for too much state regulation and too few licenses that cost too much.

"I just don't understand the business structure that's he's proposing," said McCorkle, whose group speaks for 1,000 food retailers including Sheetz, the only convenience-store chain that sells beer in Pennsylvania.

The renewed push for privatization in Pennsylvania coincides with Friday's voter-approved dismantling of Washington's state-run liquor system, which was expected to result in retail price increases reflecting new state fees designed to make up millions of dollars in lost state revenue.

Turzai said that would not happen in Pennsylvania because his proposal will be "revenue-neutral" for the state treasury.

His original plan called for replacing the state stores with twice as many privately operated stores, whose licenses would be sold at auction, and overhauling state taxes on wine and liquor.

In December, Republicans on the House Liquor Control Committee rejected it and endorsed an alternate plan that would keep the state stores open and allow beer distributors to apply for licenses to sell wine. The only action since then has been the behind-the-scenes efforts to forge a compromise.

The head of the Pennsylvania Malt Beverage Distributors Association called the proposal a moving target and was withholding judgment until the details become clearer. The group has pressed for changes that would allow beer distributors to sell six-packs — in addition to cases — so they can compete against major supermarket chains that are doing that already.

"''We've followed the rules for 80 years," said Mark Tanczos, who owns a Bethlehem distributorship. "We're hoping they consider that in anything they do."

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Allentown, PA 18102




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