Gubernatorial Campaign Leaves Liquor Privatization Behind

Oct 16, 2014

A once popular issue is now falling into the background, especially in the upcoming gubernatorial general election: the privatization of liquor.

Back in January of 2013, Governor Tom Corbett proposed changing Pennsylvania’s liquor laws and joining the already “48 other states,” whose sale and control of wine and spirits rests in the hands of the private market. Utah is the only other state with controls similar to Pennsylvcania's.

Although state liquor laws vary greatly and government oversight – or lack thereof – is by no means uniform from state to state, Corbett was adamant about eliminating the barriers in place that restricted the sale of wine and liquor to state-stores only.

Corbett, like Republican governors Tom Ridge and Dick Thornburgh before him, called for a full privatization of the industry, similar to New Jersey, Delaware and Maryland.

In Corbett’s re-election bid, however, he has spoken very little on the privatization of liquor.

House Majority Leader Mike Turzai, on the other hand, is not dropping the issue so easily. Describing the state’s regulation through the Pennsylvania Liquor Control Board as both “antiquated” and “out of touch,” Turzai believes that change is necessary.

“Every state around us is essentially a private sector operation” when it comes to liquor sales, Turzai said. “We think it something that public has asked for years. We don’t know why people cannot get a bottle of wine in the grocery store.”

When Turzai says “we,” he is referring to his fellow Republican representatives who voted in favor of a full privatization bill back in March of 2013. House Bill 790 passed by 105-91 majority vote, with only four Republicans voting against the bill. All who voted in favor of the legislation were Republican.

But a Republican majority in the Senate is not as open to the idea of liquor privatization as its House counterpart. Thus far, Turzai and his Republican House co-sponsors have been unable to garner the necessary 26 votes needed for the bill to pass in the Senate. Turzai himself referred to his Senate colleagues as “more old school and less reform-minded,” thus explaining their lack of support for the bill.

Dr. G. Terry Madonna, political scientist at Franklin & Marshall College, has a different view of the Senate Republicans.

“In the Senate the big difference is you have a lot of moderates, particularly in the Philadelphia suburbs, who want to do what they call ‘modernization.’”

Modernization would keep the sale of wine and spirits in state hands. However, modernization could entail expanding Sunday operation hours at state stores and making the alcohol shopping experience all-around more convenient for the consumer.

Turzai balks at the idea of stopping short of full privatization.

“Modernization is just phony -- it’s not getting out of the business. It’s designed to keep the patronage and the conflict of interest. We want out of that. That’s old school politics.” Turzai is quick to point out the difficulties that come along with state LCB both promoting and regulating the sale of wine and spirits in Pennsylvania.

Democrat Tom Wolf is a fan of modernization and believes that privatization of the liquor industry is not the answer. In an interview for WTAE in Pittsburgh Wolf recognized that more could be done to make the purchase of wine and spirits easier for customers but he worried about the loss of middle-class jobs that are the result of the state-run liquor stores.

And although Turzai defends privatization on the grounds that state store workers “are going to be scooped up by the private sector,” he didn’t go as far to say that his plan protected everyone who might lose their job in privatization efforts. He admitted, “This is not meant to be an employment bill.”

However, Turzai did stress, “The folks that are in this business for the government are of value. The folks that know the business are hard workers.”

For both Turzai and Corbett, the argument against state-run liquor sales is part of a larger belief in the merits of smaller, less bureaucratic governance.

“They [the LCB employees] are never going to make decisions like the private sector does. It’s extra layers that are not necessary. It’s extra bureaucracy that is not necessary.”

Turzai emphatically added: “It’s not our job” to run the liquor business.

It is that strong sentiment against big government that makes this privatization push different from its predecessors.

As Madonna points out, former Pennsylvania Governor Tom Ridge, like current Governor Corbett, had a Republican dominated legislature during his 1995 to 2001 tenure and was not able to pass a privatization bill. However, after the Tea Party wave of 2010, there was an “ideological shift more towards the notion of privatization,” Madonna said.

But that notion of privatization may have only swayed House Republicans. And as an unpopular governor vying for re-election, privatization is low on Corbett’s list of priorities.

Another problem is the mounting evidence that the public, although in favor of privatization, is not looking at it as a key issue. Back in May of 2013, a Franklin and Marshall poll only had 47% of respondents favoring privatization, and when told about the efforts of modernization, only 37% were then in favor of full privatization.

Turzai is correct when he says that popular opinion is in favor of privatization. Moreover, there is certainly an opportunity for a windfall of funds flowing into state coffers if privatization was to take place and licenses were to be sold to beer distributors and other interested parties.

However, it is clear that the issue is losing steam as Governor Corbett puts top priority to reforming public pensions and winning his re-election bid. His campaign does not include a strong effort to privatize the sale of wine and spirits.

Madonna points out, “The liquor operation gives money, makes a profit, and gives revenue back to the commonwealth.” He explained that the rational of Wolf and many state Senators is thus: “Why interfere with an operation that is working and that is sustaining thousands of middle-class jobs?”