APRIL 27, 2012

The Fight for Liquor Liberty Continues

The fight to free Pennsylvanians' drinks from government control is far from over, according to House Majority Leader Mike Turzai.

Rep. Turzai is expected to give a much needed face-lift to his liquor store privatization legislation, House Bill 11, and expects a vote in the House before November. According to The Patriot-News, the proposal increases the number of licenses auctioned off, allows residents to have out-of-state wine shipped to their doorsteps, and reforms beer laws.

The new plan calls for selling 1,600 licenses, up from the original proposal to auction off 1,250 licenses. A projected sale of retail licenses is estimated to generate $500 million to $750 million in revenue.

Beer distributors also would be permitted to sell six-packs of beer; they currently can only sell cases or kegs. Bars, restaurants and supermarkets with restaurant licenses could sell 18-packs of beer or less.

The latest plan calls for giving beer distributors the opportunity to purchase up to 10 retail licenses to sell wine and liquor.

Under the proposal, the remainder of the licenses would be auctioned off on a county-by-county basis. Dauphin County would be allocated about 32 licenses with a projected value of $548,634 apiece, while Cumberland County would be allocated 28 licenses valued at $635,129 apiece.

In December, the Pennsylvania House gutted HB 11 to remove any privatization of the Pennsylvania Liquor Control Board. Rep. Turzai's proposal restores the legislation to its original intent.

Now is the time to get behind our legislators supporting a common sense reform to get government out of operating businesses.

Learn more at www.letfreedomdrink.com.

posted by KATRINA CURRIE | 10:39 AM | 0 comment

APRIL 27, 2012

States Tap Public-Private Partnerships in 2011

Public-private partnerships aren't just for roads anymore. Reason's Annual Privatization Report, released this week, is packed with diverse examples of states leveraging the private sector to stretch tax dollars.  In California, officials are looking to the private sector to keep state parks open, Ohio privatized its economic development agency, and Puerto Rico is in the process of leasing the San Juan International Airport.

In fact, many of the government functions successfully privatized in full or in part last year are the same functions under consideration for privatization in Pennsylvania.

Liquor Privatization: Nearly 70 percent of Pennsylvanians want to end the antiquated government wine and liquor monopoly. In late 2011, Washington state moved to fully privatize the sale and distribution of liquor via voter initiative. One-time state revenues from auctioning off distributions centers totaled $28.4 million, and the state will reap an estimated $216 million in additional revenues from the new license fee structure.

Lottery Management: The Corbett administration recently announced it is exploring private management of the Pennsylvania Lottery. Illinois' groundbreaking lottery privatization program got underway in 2011. The intiative is designed to generate an additional $1 billion in revenues to the state over the next five years. The contract also includes incentives for extra profits; however the contractor must pay penalties if the company fails to hit revenue targets. The state will continue to control all significant business decisions and the contractor retained all state employees. In fact, Northstar plans to hire an additional 100 private sector workers.

Highway Maintenance: Pennsylvania's transportation crisis stems from poor management, not a lack of revenue. In New Jersey, Gov. Christie is looking to get the biggest bang for taxpayers' buck by bidding out three-year highway maintenance contracts. The contract is designed to give private companies the same flexibility as NJDOT crews, but unlike public crews, they must meet performance standards or risk losing their contract. These include removing hazardous roadkill and debris immediately upon notification, repair potholes within 48 business hours, and arrive at emergencies within two hours.

While Pennsylvania has largely failed to implement any signifanct privatization initiative, it still gets recognition in the report for contemplating opportunities in a section called Corbett Administration Embracing the "Yellow Pages Test" in Pennsylvania.

Using the best practices and lessons learned from other states, Pennsylvania can utilize private sector practices and reap significant savings while providing better service. Now that's a win-win.

Check out the full report for more examples in health care, welfare services, and corrections.

posted by ELIZABETH STELLE | 10:20 AM | 0 comment

APRIL 4, 2012

Lottery Contract Could Make Everyone a Winner

The lottery is on the minds of those in Harrisburg this week, but it has nothing to do with the $656 Mega Millions jackpot won by three lucky ticket holders last week. On Monday, Gov. Corbett announced the administration is considering outsourcing the management of the Pennsylvania Lottery to a private company. Requests for Qualification (RFQs) are due May 1, and there are a lot of questions about what this means for the budget, revenues and the lottery's more than 230 employees.

Based on the experience of Illinois—the only other state lottery to completely privatize management operations—we can draw a couple conclusions.

Contracting out services does not mean current workers will lose their jobs. In Illinois, all the collective bargaining arrangements remained in place. Northstar intends to retain all 170 current lottery employees and has announced its intention to hire an additional 100 private sector employees.

The private sector can guarantee and secure revenues. Illinois awarded Northstar a lottery contract in fall 2010 guaranteeing $4.8 billion in revenues by 2016—a more than $1 billion increase over projected revenues under state management. Guaranteed revenues protect the state from risk in down years and guaranteed profit-sharing ensure favorable ratios in boom years. As long as the contracts are performance-based, including penalties for failing to raise revenues, the state benefits.

The Pittsburgh Post-Gazette gave Corbett's hunt for more funding a ringing endorsement. But more important than finding more revenue is returning state government to its core functions. Of course, the devil is always in the details so a private management agreement on the Pennsylvania Lottery may or may not make sense based on the response to the RFQ.  But if the Commonwealth does contract with a private company to run its Lottery, we will be one step closer to ending "Yellow-Pages" government. 

posted by ELIZABETH STELLE | 05:20 PM | 0 comment

FEBRUARY 23, 2012

Goodbye Gus, Hello Private Partnerships

Say goodbye to the second-most famous groundhog in Pennsylvania. Not having Gus in Pennsylvania lottery commercials will save $140,000.

But changes in the state lottery may not end with dropping a mascot. In a budget hearing this week (subscription) Revenue Secretary Dan Meuser explained the lottery is looking to bring in private companies to assist in modernizing the agency to boost revenues.

We're saying that by law, our Lottery is an entity of the Commonwealth, so it's not like it could be sold or it could be completely privatized as one might think. What we're talking about here is bringing in some private management firms, but have the lottery still intact but under the stewardship of the Department of Revenue.

Pennsylvania isn't the only state that has considered partnerships with private firms to increase lottery revenue. Illinois awarded Northstar a lottery management and advertising contract in the fall of 2010. In return, the company guaranteed revenues of $4.8 billion by 2016, more than a $1 billion increase over projected revenues if the state were to retain management. In August, total sales were 13.7 percent ahead of the prior year.

Any contracting undertaken by Pennsylvania should tie compensation to performance, or as Secretary Meuser put it, benefits-based procurement. Contracts with very precise goals ensure services are not compromised to achieve savings.

Private partnerships can be valuable not just for lotteries, but any state function where an expertise already exists in the private sector. We've pointed to many of these opportunities including partnerships in road finance and construction, state parks and higher education financing just to name a few.

posted by ELIZABETH STELLE | 11:50 AM | 3 comments

FEBRUARY 16, 2012

State Liquor Stores' Soviet-style Socialism Fails

The Pennsylvania Liquor Control Board once again proves it does not know how to manage a business, and its Soviet-style socialist control fails to satisfy customers.

More than a month ago, the PLCB abruptly closed a liquor store in West Philadelphia that ranked among the top 100 most profitable stores because of building safely concerns. As the Philadelphia City Paper reports, the next closest liquor store is now absurdly backlogged. Customers are being turned away and long lines are common. In fact, the reporter's mother was forced to wait outside in winter's cold because of limited space. To this, the PLCB responded that making customers wait outside in Philadelphia is normal. Normal? As we've mentioned, the PLCB does not understand customer satisfaction.

Even more absurd, the PLCB is looking to replace the closed store with locations that are a 30-minute bus ride away from the previous location, failing to relieve the congestion in the West Philadelphia liquor store.

Despite many examples of customer service incompetence, like this one, policymakers are currently considering expanding the PLCB (through SB 1287), instead of ending its unique monopoly over booze that hurts taxpayers and consumers. Lawmakers should listen to consumers and taxpayers that want their freedom back and privatize the state-run liquor stores.

posted by KATRINA CURRIE | 05:00 PM | 0 comment

DECEMBER 13, 2011

Pennsylvania Pols Pass Potent Potables Perestroika

Today, the Pennsylvania House amended HB 11 and then sent it on to the full house for consideration. The first amendment guts any privatization of the Pennsylvania Liquor Control Board. The state would still run retail stores and operate wholesale operations for both wine and spirits.

The amended bill would allow narrow competition with the PLCB in wine, but spirits would remain a PLCB monopoly. Under the new bill:

• Beer distributors could get an enhanced license for a $50,000 one-time fee and $15,000 annual fee to sell wine. Grocery stores currently allowed to sell beer would also be eligible, as would some additional grocery stores that keep alcohol sales in a separate contained area.
• Bars and hotels could sell a few bottles of wine for off-premises consumption.
• New wine wholesalers could enter Pennsylvania and compete with the PLCB, for the mere price of $100 million dollars.
• The PLCB would have more flexibility with Sunday hours and sales, offering coupons, flexibility in pricing, and even avoiding state law for procurement by government agencies (allowing for more no-bid contracts and the like). This was all part of the PLCB's "Alternatives to Privatization" that would allow it to "act more like a private business."

For more on the revamped bill, see stories from the Patriot News, the Pittsburgh Tribune-Review, and the Post-Gazette.

While this move might give consumers a bit more flexibility in buying wine, it fails to address the conflict of interests in a government agency buying ads both to encourage liquor sales then others suggesting drinking too much will get you raped. It does nothing to address the government monopoly over spirits, and maintains the government business which has made blunder after blunder costing taxpayers...and, oh, by the way, ended last fiscal year $30 million in the hole.

Lawmakers don't need to allow a government agency to act like a private business, they need to realize that government in the booze business is a lose business.

With the bill now going to the house floor, there are expected to be many additional amendments for discussion, and lawmakers will have the opportunity to restore the legislation to its original intent.

posted by NATHAN BENEFIELD | 03:15 PM | 0 comment

DECEMBER 13, 2011

WTF! Why the Failure?

In a move requiring mental gymnastics that would make even Nadia Comaneci pack it in, some Pennsylvania House members are praising an "historic" liquor privatization bill that cleared the House Liquor Committee this morning.

Trouble is: It does nothing to privatize the stores.

In fact, the PLCB would still operate state stores, which would remain the only places in Pennsylvania where consumers can purchase liquor.  The amended bill also allows beer distributers to sell wine on a very limited basis. 

So let's review what is left in place if this bill goes through:

Monopoly?  Check.

Conflict of interest?  Check.

Bootlegging?  Check.

Government waste and control?  Check.

Taxpayer-paid advertising?  Check.

Freedom?  Bounced check.

While true the House may continue to amend the bill while on the floor, we remain skeptical that the needs of taxpayers and consumers will be held in higher regard than those of special interests.

Not only would the current bill fail to undo the public monopoly, but it would further convolute an existing private monopoly, thus delivering a death blow to those seeking true liquor liberty.

Until that great day when we let freedom drink, stay thirsty comrades.

www.letfreedomdrink.com

posted by JAY OSTRICH | 01:45 PM | 0 comment

DECEMBER 8, 2011

PLCB Rape Ad Illustrates Conflict of Interest

Like a pyromaniac preaching fire prevention, the Pennsylvania Liquor Control Board is at war with itself in a costly conflict of interest that sees the agency wasting tax dollars.   On one end of the market, it recklessly spends millions of tax dollars advertising and promoting alcohol sales in a MONOPOLY.  On the other end of the market, it spends millions more in advertising campaigns to educate the consumers on the dangers of alcohol. 

Does this make any sense?  Pennsylvanians don't think so, and a new controversial ad campaign using your tax dollars, which some critics say blames the victims for rape, has brought this painful conflict to light.  CF Senior Policy Analyst Priya Abraham and Policy Analyst Liz Stelle discuss the damages.

www.letfreedomdrink.com

posted by ELIZABETH STELLE | 04:20 PM | 0 comment

NOVEMBER 23, 2011

PLCB: Buy More, Drink Less, Embrace Hypocrisy!

From the growing library of Pennsylvania Liquor Control Board doublespeak comes a PLCB news release today urging responsible drinking over the holiday season.

What's wrong with that you ask?  Well, nothing if you are solely focused on the alcohol education and enforcement business.  But if you are the PLCB, you are also in the pinot pushing and policy perestroika business. And therein lies the turkey in this rub.

On one end of the market, the PLCB uses taxpayer money in the millions to design and buy advertising, thus promoting wine and liquor sales while competing unfairly with in-state beer and out-of-state private enterprise (see these great taxpayer-funded holiday ads in Harrisburg saying government-sold booze is as American as Thanksgivng and pumpkin pie).  On the other side of the market, the languishing liquor lords are putting out the fires they helped start by spending more of your money with an education, regulation and enforcement mission. While the latter is noble and necessary, the former fermented farce is not.

‘Tis the season to be folly I suppose.

On another note, while we salute the new PLCB Chairman Joseph Brion for rightly supporting libation liberation and for his shout out to the troops this season, his words today present another interesting conflict of interest.

"It is our hope, that everyone will take a few moments throughout the holidays and every day to pay honor and respect to our men and women in uniform, especially military personnel serving here and abroad who may not be home to enjoy a traditional Thanksgiving meal," said Brion.

Hear, hear, Chairman! As someone who sat one Thanksgiving on the Tigris tackling terrible turkey and terrorists, I appreciate the words.  What I just don't get is why these same troops who fight for freedom while serving our commonwealth and country have to come home and fight their commonwealth for the freedom to be served.

Until that great day when this hypocrisy is removed, stay thirsty my comrades.

posted by JAY OSTRICH | 00:26 PM | 0 comment