Drawing Liquor Lessons from the Turnpike Commission
Editor’s Note: This commentary first appeared in the Patriot News.
The legacy of patronage, nepotism and cronyism of the Pennsylvania Turnpike Commission continues to cost Pennsylvanians dearly in the form of higher tolls and massive debt. As Attorney General Kathleen Kane’s recent charges reveal, the Turnpike Commission remains a playground for powerful senators, their political appointees and wealthy campaign funders—and this is after they’ve claimed to have reformed.
When then-Governor Ed Rendell attempted to abolish the Turnpike Commission in 2007 by contracting out its operations, taxpayers would have realized nearly $13 billion in upfront revenue.
But this didn’t happen. Defenders of the moribund status quo won the day, and the Turnpike Commission and its beneficiaries have put taxpayers nearly $8 billion in debt and forced drivers to pay the Turnpike’s ever-increasing tolls.
The Turnpike issue bears a striking resemblance to the current debate over the Pennsylvania Liquor Control Board. Following last week’s House vote, the Pennsylvania Senate has the opportunity to end similar corruption and taxpayer costs by dismantling the PLCB—the Turnpike Commission’s cousin in wasted money and broken models.
Consider Joe Conti, the former Bucks County Republican senator, who in 2006 was appointed by Gov. Rendell as the PLCB’s new CEO—a newly created, $156,000 per year position. The move so angered then-PLCB Chairman Jonathan Newman that he resigned.
Under Conti’s watch—who is under investigation by both the Inspector General’s Office and the State Ethics Commission for accepting gifts and favors from vendors and other businesses with an interest in liquor regulation—the PLCB has been mired in boondoggles and mismanagement of the government-run liquor monopoly.
In 2011, former Auditor General Jack Wagner uncovered that the PLCB spent more than $66 million taxpayer dollars (and counting) on the Enterprise Resource Planning system, a computerized inventory management tool that caused widespread shortages and surpluses at PLCB distribution centers, crippling commerce, and costing two-and-a-half times the original plans (and counting, with estimates nearing $100 million).
As if that wasn’t bad enough, the PLCB management demanded purchasers order excess inventory due to the shortages. This led to a surplus in inventory, some of which was then sent to non-temperature-controlled trailers despite heat exceeding 100 degrees, at a cost to taxpayers of more than $500,000.
Then, under Conti’s direction, the PLCB wasted millions on a failed wine kiosk program. Remember that great consumer-friendly idea where adults had to blow into a breathalyzer in the supermarket so a state employee could confirm their sobriety before buying a bottle of wine from a vending machine? Well, despite the PLCB’s own internal recommendation against the program, the kiosk contract was awarded to a vendor that donated to Gov. Rendell’s campaign. The vendor then stiffed taxpayers $1 million (and counting).
At the same time—unbeknownst even to board members, let alone the public—the PLCB used tax dollars to brand, buy and market numerous in-house brands of wine and spirits that now compete against private industry, including Pennsylvania mom-and-pop wineries and distilleries.
But at least the PLCB is a cash cow for Pennsylvania, right? Not so. The agency ended the fiscal year with negative $9.8 million in net assets.
The good news is that the recently passed House bill would end the 80-year reign of this Prohibition-era vestige. But it can only reach Governor Corbett’s desk if it first gets past the Senate where the Law and Justice Committee Chairman Chuck McIlhinney has heretofore expressed opposition to ending the PLCB’s booze monopoly.
But the facts are indisputable, whether you’re sitting in the Senate or waiting in line at the PLCB. The broken government-run monopoly is rife with unethical behavior and wastes tens of millions of taxpayer dollars. We’re paying for these same failures on the Turnpike every day. But we don’t have to do the same for the PLCB. Let’s seize the opportunity to end these abuses, give consumers what they demand, and get government out of the booze business once and for all.
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Matthew J. Brouillette is President and CEO of the Commonwealth Foundation.