Liquor Privatization
4:46 pm
Tue June 4, 2013

Senate's Last Liquor Hearing Comes with Spirited Debate

Tempers flared at the third and final state Senate hearing focused on the governor's liquor privatization proposal and related plans to change the way alcohol is bought and sold in Pennsylvania.

By the end, the committee's chairman was barely closer to nailing down the details of a proposal, saying a final plan should allow Pennsylvanians to buy alcohol in "more places," while phasing out the state wine and spirits stores, and without necessarily getting rid of the state-owned wholesale system.

The dramatic high point of the hearing came when the ranking Democrat on the Senate Law and Justice Committee, Jim Ferlo (D-Allegheny), railed against state health and education officials as well as the state police commissioner for appearing at the hearing to support the governor's plan to sell off the state wine and spirits stores.

"We have a great system, we have a modernization bill, and I'd be embarrassed to come here and tout the rhetoric..." Ferlo said, the end of his sentence drowned out of cut off by cheers from the hearing room gallery, where the rows were filled with the yellow-shirted people representing United Federation of Commercial Workers Local 1776, the union of the state store clerks.

"What should be embarrassing to you is the way you just impugned the character of three very excellent public servants," responded Lt. Gov. Jim Cawley, testifying on behalf of the administration.

"I'm impugning their testimony," Ferlo said.

"No — you attacked them as individuals," Cawley said. "You attacked their motivations, sir, and I think they should be given a right to respond if they so choose perhaps though they wouldn't even dignify a response like that."

They didn't. Cawley looked to his left and right, inviting a response. "No need," said State Health Secretary Michael Wolf. Cawley later insinuated that Ferlo was just playing to the crowd in the room. He was booed.

To the panel's chairman, Sen. Chuck McIlhinney (R-Bucks), spirited debate comes with the wine and spirits territory.

"That was the point of why I had these hearings," McIlhinney said. "I wasn't going to put an artificial limit on what could be said ... What everybody wants to say was able to be said."

This trio of hearings has showcased much of the same fault lines and flash points that have marked the debate over the state's liquor system and what might be done to improve it and the patchwork system for selling beer. Tuesday's hearing featured unsurprising testimony from those urging some change to the system to maximize its revenue (e.g., the Liquor Control Board) and urging some change to maximize their revenue (e.g., beer distributors).

Private wholesale companies suggested the state wouldn't be able to handle more retail outlets with its current wholesale distribution capacity. A University of Michigan professor in labor relations testified that the liquor privatization bill that passed in the state House in March would inflate alcohol prices and boost alcohol consumption while depressing state revenue from the sale of alcohol.

McIlhinney has given himself another two weeks to write his own proposal for what he's called alcohol reform. Its contents aren't clear to him yet, but one thing is relatively certain: It will be simpler than the House bill, which was criticized for being clear as mud, with wine and spirits sales opened up to some retailers but included other provisions prompting people to wonder if it would create a more confusing consumer experience.

What McIlhinney's crafting, he said, is a proposal that allows Pennsylvanians to buy alcohol in "more places than they can now — trying to open up the wine and spirits and beer and the package sizes of the beer into newer, more convenient outlets, but utilizing the existing system, without adding new licenses."

McIlhinney said he'd like to see wine and spirits sales opened up to existing licensed retailers, enhancing licenses that currently allow private retailers to sell some kind of alcohol. He wants to see beer distributors able to smaller quantities of beer, like six-packs.

He said he's not sure the state's wholesale system should be privatized, as would happen under the House-approved liquor proposal. He said opening up the sale of all manner of alcohol might increase the value of the wholesale system, so he'd be more inclined to revisit the issue of selling it off in later years.