Liquor Store Privatization
Wolf’s reasoning can be summarized as this:
We shouldn't get rid of a "government asset." Prices will go up if we privatize. Despite rampant corruption at the agency, we should keep state control and "modernize" the asset.
This mirrors almost exactly the arguments made against leasing the Pennsylvania Turnpike eight years ago:
We shouldn't get rid of a "government asset." Tolls will go up if we privatize. Despite rampant corruption at the agency, we should keep state control and "monetize" the asset.
A proposed lease of the Pennsylvania Turnpike, proposed by Governor Ed Rendell and supported by the Commonwealth Foundation, would have netted Pennsylvania $12.8 billion in upfront lease payments. It would also have capped toll increases (after a planned increase in 2008) to 2.5 percent per year. Instead, lawmakers passed Act 44 of 2007 to "monetize" the Turnpike, requiring annual payments to the state funded by new debt (and backed by higher tolls).
This week, the Pennsylvania Turnpike Commission announced that tolls would increase by 6 percent next year, and 4.5 percent every single year through 2044. Cash tolls have already more than doubled since 2008, and there is no end in sight to increases.
The cost of a one-way car ride from Ohio to New Jersey has gone from $21.40 in 2004 to $48.90 next year.
Instead of leasing the Turnpike and receiving $12 billion in upfront funding with a cap on toll increase, Pennsylvanians instead have a massive increase in their debt and skyrocketing tolls.
Gov. Wolf is repeating the same mistakes of the past.
Instead of a liquor privatization plan that would generate additional revenue for the state—while providing consumers greater choice, convenience, and, yes, lower prices—Wolf is pushing for "modernization" which literally calls for raising prices on wine and liquor products.
Gov. Wolf promised to be a governor who would eliminate Pennsylvania’s destructive status quo. So how did he respond when state legislators put a budget without tax increases, a bill to privatize the liquor business and a bill to give more funding to schools on his desk?
Gov. Wolf promptly scribbled his veto pen across all of them, ensuring the status quo lives on.
Matt Brouillette spoke with WPHT’s Rich Zeoli about Gov. Wolf’s decision to veto all of these bills.
He explains Gov. Wolf executed his veto power to “take care” of public sector unions (his biggest campaign contributors) while ignoring the concerns of average Pennsylvanians.
Matt clarifies why Gov. Wolf’s own budget plan got zero votes in the House, saying it “presented spending and tax increases that exceed the other 49 states combined”. Gov. Wolf needs to lose the “my way or the highway” attitude and start chipping away at the status quo rather than allowing it to continue.
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Gov. Tom Wolf’s veto pen may be running out of ink.
In the span of one week, Pennsylvania’s “different kind of governor” vetoed a no-tax-hike budget, liquor privatization, the school code and the fiscal code. He is currently debating whether or not to veto pension reform, as well. But that’s not an exhaustive list.
By vetoing the budget bill, Gov. Wolf turned down a $100 million increase for Basic Education, a $20 million increase for Special Education, a $30 million increase for early education, and $50 million more for higher education. He even vetoed the implementation of a new, bipartisan school funding formula—particularly curious since the formula, which would distribute funds based on student need, has been universally applauded.
At every turn, Gov. Wolf has embraced and perpetuated the myth that Pennsylvania schools are underfunded and suffering from a phony “billion dollar cut.” The administration conveniently ignores the fact that Pennsylvania spending per student ranks 10th in the country, and total school spending is at an all-time high. Seemingly nothing can deter Gov. Wolf on his quest to raise taxes—in the form of income, sales, and severance taxes—on families and small businesses.
Rather than seek common ground or areas of compromise, the governor insists on a budget—his own—that was voted down 0-193.
Thankfully for working families who would be burdened by Wolf’s tax increase, even 4 billion vetoes cannot enact $4 billion in new taxes.
Last Thursday, Gov. Tom Wolf vetoed legislation passed by the general assembly that would allow private retailers to sell wine and liquor. As my colleague Bob pointed out, his reasons don’t hold up to scrutiny.
Others have noted the inconsistencies and lack of rational thought in Gov. Wolf's veto message. Jacob Sullum, writing for Reason, points out
The prediction of higher prices is not only inconsistent with basic economic principles and the experiences of the three dozen or so states that already have private liquor sales. It is also inconsistent with another major argument used by opponents of privatization, who say abolishing the state monopoly will lead to more drinking and more alcohol abuse.
The Pittsburgh Post-Gazette editorial board contrasts Wolf’s claim with the experience in neighboring states, where most Pennsylvanians actually shop for lower prices and better selection
But in written remarks Thursday, the governor claimed the bill made "bad business sense," saying it would mean "selling an asset and risking higher prices and less selection for consumers." Apparently, he's never had the far-better experience of buying a bottle of wine to go with dinner ingredients or the vast selection of adult beverages that is available across the state’s borders in New York, Ohio, West Virginia, New Jersey and Maryland.
Jonathan Adler, writing on the Volokh Conspiracy blog of the Washington Post, makes a mockery of Wolf’s veto message.
Pennsylvania Governor Tom Wolf vetoed the legislation, claiming allowing private wine and liquor sales would lead to "higher prices and less selection" for consumers. No, really. That was the explanation.
Adler, with his title, suggests Wolf doesn’t understand economics, or at least has other reasons.
To be clear, Gov. Wolf absolutely understands economics, and knows that a market-based system will result in lower prices and greater selection.
And Gov. Wolf certainly understands that "modernization" proposals, which literally call for government increasing the price of wine and liquor, will result in higher prices.
No, Gov. Wolf is simply parroting the rhetoric of government union leaders who gave $3.4 million to his campaign and now are demanding political return.
Of course, Gov. Wolf can't say in a veto message that he's beholden to union leadership and trying to raise money for a new PAC, so he pretends he doesn't understand economics and has never bought alcohol in another state.
The Pennsylvania legislature made history yesterday. For the first time since the creation of the state-controlled liquor system in 1933, both houses of the General Assembly voted to remove government from the business of selling wine and spirits.
The privatization plan, HB 466, would gradually phase out the state stores and lease wholesale responsibilities to the private sector for a period of 10 years. After the 10 years is up, the state would completely divest itself of the wholesale system.
The bill gives beer distributors the exclusive right to purchase a permit to sell wine and spirits for six months. After six months, any remaining permits will be auctioned off to interested buyers. Establishments with a "R" license (taverns, restaurants, hotels, grocery stores) will also be allowed to purchase a permit to sell wine and liquor. The entire plan is expected to net the state $220 million annually, mainly through the sale of permits, licenses, and renewal fees.
While the bill is far from perfect, it takes a big—historic—step toward ending the PLCB's stranglehold on one of the last vestiges of Prohibition in the country. Now, the only person standing in the way is Gov. Wolf. Let's hope he sides with the majority of voters over special interests.
Join us in thanking the legislators that voted for this bill. To see if your lawmaker was one of them, click the vote counts above and take a minute to send them a note of thanks.
- Strip club entertainment
- A stay at the Ritz Carlton
- Pittsburgh Steelers tickets
- Philadelphia Eagles tickets
- iPad 2
- World Series ticket
This is a just a short list of the items that former Pennsylvania Liquor Control Board (PLCB) official Timothy Fringer illegally accepted, according to the State Ethics Commission and reported by Kari Andren at the Tribune-Review.
Mr. Fringer joins a long list of PLCB officials accused of accepting bribes and committing ethics violations (you can read more from CF about those here, here, here, here, here, here, and here). In fact, Mr. Fringer is the fifth official to be charged just this year.
Corruption and waste have become synonymous with the PLCB. And it's important to remember that as long as the governor and the government unions blast privatization the culture of corruption at the PLCB will remain.
PLCB ineptitude is hardly the reason why the vast majority of Pennsylvanians—liberal, conservative, Democrat, Republican—support privatization. In short: Government has no business selling and advertising alcohol.
In addition to ending corruption and complying with public opinion, privatization makes financial sense. The vast majority of the PLCB's "profits" are simply tax revenue—revenue that would be generated by privately-owned businesses as well. Privatization would help recover the millions lost in border bleed to states like Delaware. And it would allow entrepreneurs to innovate, create jobs, and meet customer demand.
Until we get out of the booze business corruption will continue, Pennsylvanians will continue to cross state lines to buy their booze, and the PLCB will struggle to increase revenues.
Is liquor privatization in Washington State a “failed experiment"? That's the bold assertion from opponents of unshackling Pennsylvania from the chains of a government liquor monopoly. It’s also wrong.
Washington State’s Office of Financial Management released a report back in January on the impact of liquor privatization. Their findings decimate the claims that privatization is a failed experiment. On the contrary, privatization led to a number of positive developments:
- Liquor sales increased by 13 percent.
- Revenue collections increased by 18 percent.
- The number of liquor stores increased by 327 percent.
- Liquor store employment increased by 91 percent. (The report states that some of this growth may have occurred absent privatization.)
- Per-liter prices increased by 8 percent on average. This increase can be attributed to additional fees included as part of the privatization conversion and the state’s $35.22 per gallon excise tax— the highest spirits excise tax rate in the country.
- The costs of running the liquor system fell by 77 percent.
If Pennsylvania turns over the sale of liquor to the private sector without increasing taxes and fees (and we’re one step closer!), expect more jobs, better convenience, and competitive pricing.
For more on liquor privatization, check out this one-stop shop.
On Thursday, the Pennsylvania House of Representatives passed liquor privatization legislation sponsored by Speaker of the House Mike Turzai. You can see how your legislator voted in this interactive graphic from PennLive.com.
Back in 2013, the House passed the first liquor privatization bill since the end of Prohibition more than 80 years ago. With yesterday's vote, the House has recommitted to expanding choice and convenience for consumers by getting government out of the booze business.
We applaud the House for acting in the best interests of taxpayers and consumers and again recognizing that the vast majority of Pennsylvanians—no matter their political leanings—want government out of the liquor business.
Even with this victory, the liquor privatization debate is only just heating up. As talks continue, it's critical that these principles of liquor privatization undergird any changes to the legislation:
- Government should permanently and unequivocally get out of the business of selling alcohol and end the system in which state-run liquor stores, with all their advantages and taxpayer subsidies, compete against private mom & pop businesses.
- Only full privatization ends the conflict of interest inherent in having the Pennsylvania Liquor Control Board both regulate and promote wine and liquor sales with tax dollars. Modernization would allow the PLCB to continue to produce government-brand wine and fiascos such as the failed wine kiosk program, undermining Pennsylvania wineries, consumers, and taxpayers alike.
- Modernization or other measures that maintain the current state store system fail to move Pennsylvania into the 21st century and deliver the choice and convenience Pennsylvanians want. Modernization is like offering consumers a "touch-tone" phone—it's better than a rotary phone, but is a far cry from the smart phones consumers really want in 2015.
- To promote competition, lower prices, selection and convenience, lawmakers should allow the market to decide the number of outlets that can sell wine and spirits. At the least, the number of licenses should be set to the national average of retail outlets based on population, to keep Pennsylvania competitive with the rest of the nation.
- While beer distributors cannot expect to retain their protected oligopoly, proposals should treat them fairly in consideration of how much time and money they have invested in their business, including minimizing the cost of upgraded licenses and guaranteeing loan financing for new licenses.
Opponents of consumer choice will continue to employ the same scare tactics about privatization, but their arguments ring hollow (brush up on your facts and responses here). At the end of the day, government booze doesn't make us safer or economically stronger.
It's time to end Pennsylvania's Prohibition era once and for all.
Practically three-quarters of Pennsylvania’s twelfth graders tried alcohol at least once in their lifetimes, according to a Pennsylvania Liquor Control Board (PLCB) report. This eye-opening statistic confirms the obvious: government control of liquor does not minimize underage drinking.
As a matter of fact, alcohol use among Pennsylvania students in the eighth, tenth, and twelfth grades ranks above the national average. These facts run counter to the narrative of liquor privatization opponents who tout government control as the solution to mitigate social problems, such as underage drinking and binge drinking.
According to the report, the rate of twelfth graders who admitted to binge drinking (defined as consuming five or more drinks in a row in the last two weeks) was slightly below the national average, but the percentage of Pennsylvania college students who admitted to binge drinking was above the national average.
If we're to believe that government control can prevent these social problems, shouldn’t the rate of binge drinking be well below the national average for both twelfth graders and college students? After all, Pennsylvania has one of the most tightly regulated liquor systems in the country, with government operating both the retail and wholesale side of liquor sales.
The answer, of course, is no. As Dr. Raymond Scalettar, the former chair of the American Medical Association pointed out, “Alcohol consumption habits tend to be culturally driven and macro-level control policies have little to do with drinking patterns." Dr. Scalettar’s claim is consistent with the findings in the PLCB report:
Youth who drink underage report they are most likely to get their alcohol for free (93.4 percent), with 44.8 percent reporting they got alcohol from family members or their home. And when they drink, they are consuming “more than 90 percent of their alcohol by binge drinking."
Government's inability to prevent social problems is just one more reason to privatize Pennsylvania’s dysfunctional liquor system.
It’s back! Liquor privatization is once again up for debate and has already cleared its first hurdle, as lawmakers voted yesterday to advance the bill out of a House committee. But not everyone is pleased.
Liquor privatization detractors have reemerged, and they are pushing the same stale arguments against liquor liberty that have been debunked many times over.
Because more misleading attacks are inevitable, we thought it would be helpful to provide some links to our research as a refresher in the fight to free our booze:
Will privatizing liquor sales diminish revenue to state government?
- Liquor privatization will increase revenue to the government.
- Liquor privatization reduces operating costs.
- The future of government booze is bleak.
Do government liquor systems provide more safety?
Has the PLCB served Pennsylvanians well?
- The PLCB is plagued by ethics scandals.
- The list of PLCB boondoogles is seemingly endless.
- The PLCB has a conflict of interest too big to ignore.
- Booze monopoly bad for business.
Is privatizing the PLCB ideological?
- Expanding alcohol competition is the correct liberal position.
- Left, Right, and Center all want liquor privatization.
Where else has privatization worked?
Total Records: 230
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.