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Pennsylvania Liquor Store

Liquor Privatization Bill Introduced

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The legislation essentially puts the plan Governor Tom Corbett outlined in January into bill form, and House Majority Leader Mike Turzai (R-Allegheny) is optimistic.  “People recognize Pennsylvania needs to change in a positive direction. We’re now talking about the details of how you structure that change.”  Turzai is the bill’s prime sponsor and perhaps the legislature’s biggest proponent of liquor privatization.    

While Turzai believes the concepts and objectives of liquor privatization will remain the same, he recognizes the details could change through the legislative process.  An amendment already being explored by Liquor Control Committee Chairman John Taylor (R-Philadelphia) would reportedly allow state-run liquor stores to compete with private sector licensees. 

State Rep. Mike Turzai (R-Allegheny)

House Republican Leader Mike Turzai

Turzai suggests that sort of plan merely takes a different route toward the same destination.  “In my mind, once the private sector gets the opportunity to sell wine & spirits, the state stores are – over time – they’re not going to be able to compete.”

The bill (HB 790) appears to be on the fast track.  Turzai tells reporters he’s eying a March 18th committee vote and final House passage in late March or early April. 

The timetable should raise red flags, according to House Democratic Leader Frank Dermody (D-Allegheny).  “Most legislators want to discuss ways to improve service and convenience for customers through the normal committee process, including hearings,” Dermody says in a statement.  “The more complicated his plan becomes, the faster he wants to vote on it with not committee hearings.”

Liquor Board’s Balancing Act on Display at Budget Hearing

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As the battle lines are being drawn on Governor Tom Corbett’s liquor privatization plan, the legislative debate may come down to privatization vs. modernization.  But the issues can be mutually exclusive.  Peppered by repeated questions from the Senate Appropriations Committee, Liquor Control Board Chairman Joseph Brion said he is not personally opposed to privatization.  “I don’t think the state should be in the liquor business.  But – by the same token – we are in the liquor business.  So my attitude is – if we’re going to have a liquor business – make it the most profitable and best that you possibly can.” 

Others have suggested that modernizing the system now, will make it more valuable for possible privatization in the future. 

The Liquor Control Board transferred $530-million dollars to the state’s General Fund in the current fiscal year, but Monday’s testimony in the Senate hearing room indicated that more than 80% of the cash was generated by taxes, which would still be in place under a privatized system. 

Not lost on lawmakers weighing these difficult issues is the cost of enforcing the state’s liquor laws.  “Clearly if you’re going to have more licensees, you’re going to need more feet on the ground, and that’s okay, but we have to take that into contemplation when we review the legislation,” says state Rep. Scott Petri (R-Buck), a member of both the House Appropriations and Liquor Control committees.   

State Police Commissioner Frank Noonan, last week, estimated that his agency would need an additional $5-million dollars under a privatized liquor system.  Liquor Control Board officials have indicated that they’re regulatory costs total $38-million dollars today, but those are currently covered by the revenue they generate. 

Forthcoming legislation would appropriate $5-million more dollars for PSP’s Bureau of Liquor Enforcement and hike fines for liquor law violations.  House Majority Leader Mike Turzai’s latest bill is set to be introduced on March 4th.

Reactions to Lottery Decision Pouring in

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The contract to privatize Pennsylvania Lottery Management has failed Attorney General Kathleen Kane’s “form and legality” test.  Reactions abound from stakeholders and elected officials, and their statements are providing a few hints as to what’s next.  Check them out for yourself:

Governor Tom Corbett:

“I’m deeply disappointed. I don’t agree with the attorney general’s analysis and decision, and we will review our legal options.

My job is to protect Pennsylvania’s seniors, and we will continue to do that.

We have a growing population where one in four Pennsylvanians will be over the age of 65 by 2017. My goal is to ensure that funding for senior programs keeps pace with that growth.”

(note that in his public comments in Pittsburgh, Governor Corbett said that one in four Pennsylvanians will be over the age of 60 in the next 17-years)

Camelot Global Services:

“We are disappointed with Attorney General Kane’s decision to reject the private management contract. We guarantee our proposal will produce unprecedented profits for senior programs and we have backed our investment in Pennsylvania with $200 million – transferring all risk from state taxpayers. Camelot has indicated it would headquarter in Pennsylvania, pay all taxes required of any commonwealth business, and keep all lottery jobs in the state. We have also publicly stated we would not oppose union organization by our employees. We have no further comment at this time.”

Speaker of the House Sam Smith / House Republican Leader Mike Turzai:  

“The administration’s interest was always about growing Lottery proceeds to increase funding for programs, thus helping the state serve its expanding senior population. We also realize many may feel this action by the attorney general ‘saves the Lottery.’ However, given that the Lottery has contracted out significant portions of its current operations, and has done so for many years, we hope the attorney general’s decision does not set the current operations back.   

“The legislature passed the lottery law in 1991, giving broad powers to the Secretary of Revenue to manage the operations. Right or wrong, it’s the legislative branch of government that should decide if the governor has too much say.  Consequently, we expect that the legislature will be reviewing the attorney general’s determination with great interest.”

House Democratic Leader Frank Dermody:

“The effort to outsource management of the Pennsylvania Lottery to a foreign corporation was done largely out of public view and it was wrong. In confirming the legislature’s authority in this matter, the attorney general made the right decision and followed the law.

“Because of her decision, lottery proceeds will continue to benefit older Pennsylvanians rather than being sliced up to benefit corporate shareholders.

“The governor is wrong when he claims the rejection of this improper contract will cost seniors money. I will push during the upcoming budget process to provide even more money than the governor proposed for senior programs and it can be done with the lottery’s current revenue.”

Treasurer Rob McCord:

“I commend the Attorney General for her independent review and subsequent rejection of the administration’s attempt to expand gambling through the state contracting process.

“The administration was repeatedly warned, as early as last year, that the proposed contract would permit new forms of gambling not currently authorized by the Legislature and not regulated by the Gaming Control Board

“Expanding the Lottery is a policy decision that should include the General Assembly, not be done through a closed-door contracting process.  Beyond the legal issues, this proposal also raised serious questions about how best to serve seniors efficiently with the programs that the Lottery pays for.”

Auditor General Eugene DePasquale:

“While I have not opposed all privatization, in the case of the Pennsylvania Lottery, Attorney General Kane and her team of lawyers made the right decision after identifying the legal flaws in the contract that would have led to an unprecedented expansion of gambling without legislative and public input.

“I am concerned that the benefits from the private management agreement would not meet or exceed what the current, very well run Lottery could produce in the same time frame. That concern, and the decision to expand gaming, need to be addressed with input from the public and Pennsylvania General Assembly before we go any further.

“I suspect today’s decision will not be the end of this story, but I hope Gov. Corbett will carefully weigh the cost to taxpayers before he decides to pursue this matter further. My office will continue to monitor the situation and be prepared to conduct and fair and independent audit should the contract eventually be implemented.”

 

Pennsylvania Liquor Store

House Won’t Revisit Liquor Store Debate until the Fall

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With the June 30th budget deadline fast approaching, House Majority Leader Mike Turzai (R-Allegheny) has decided to hold off on further liquor store privatization debate until the fall.  That gives Turzai the summer to build consensus around a privatization plan with the help of Governor Tom Corbett.

“Nobody in Pennsylvania has a better bully pulpit than the governor,” says Turzai spokesman Steve Miskin.  “We expect he’s going to use that and we’re going to get people to the table and get this thing done.  We’re closer now than we ever have been.”

House Democrats have been critical of Turzai’s privatization plans, and Rep. Dante Santoni (D-Berks) is pleased with today’s developments.  “It just didn’t make sense… I think the Majority Leader saw the error of his ways and pulled the bill,” says Santoni, the ranking Democrat on the House Liquor Control Committee.

Santoni supports modernization of the Pennsylvania Liquor Control Board (PLCB) over privatization.  That could include everything from expanded Sunday hours, to flexible pricing and the use of coupons & rewards programs.

But Miskin stresses that the privatization plan is still very much alive.  “We’re going to work on it and we’re going to continue working on it until it’s done; until the liquor stores are in private hands.”

Liquor Store Privatization Update

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Debate began Monday evening on the latest version of a plan to get state government out of the booze business.  Majority Leader Mike Turzai asked, “Why is Pennsylvania so anachronistic? Why is Pennsylvania not willing to focus on its citizens and consumers?” Turzai has been the leading voice on liquor store privatization.

His latest plan would replace the 620 state-run liquor stores with 1,600 private sector wine & spirits licenses.  Pennsylvania’s beer distributors would be given the right of first refusal at a fair market value.  The remaining licenses would be auctioned off to the highest bidder.

But Monday’s House debate was cut off after nearly three hours, and has not resumed since.  Democratic Leader Frank Dermody doesn’t think supporters have the votes.  “I don’t believe they’re there, and we’re working hard to make sure it stays that way,” Dermody explained to Radio PA by phone.  “Even if you’re for privatization, this is a terrible bill.”

While beer distributors would be given first crack at the new licenses under Turzai’s plan, the Malt Beverage Distributors Association of Pennsylvania opposes the language.  “Ultimately when you look at this bill, it’s just forcing your local beer distributor out of business to sell-out to a major corporation,” explains Mark Tanczos, president of the MBDA of PA.  Tanczos outlined his position in a letter to the General Assembly.

Governor Tom Corbett can be counted among the high-profile proponents of liquor store privatization.  Corbett recognizes this won’t be the final legislative product, but wants to get the ball rolling nonetheless.  “Let’s get this first step done,” Corbett emphasized to reporters this week.

House debate could resume as early as Monday.

State Capitol Facing North Office Building

Redistricting Panel Seeks to Beat the Clock

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A five member state panel has 90-days to craft a preliminary redistricting plan for Pennsylvania’s 253-House and Senate districts.  If Wednesday’s meeting is any indication, they’re up for the challenge.  In mere minutes, the Legislative Reapportionment Commission allocated its $4.8-million dollar budget, OK’d a new website that allows the public to track its progress, set two public hearings for September and deemed the new US Census data “usable.”   

State Rep. Mike Turzai (R-Allegheny)

House Majority Leader Mike Turzai talks to the media following Wednesday's Legislative Reapportionment Commission meeting.

“I have every confidence that we will work through the process and get it done in a timely manner,” says Senate Minority Leader Jay Costa (D-Allegheny).  House Majority Leader Mike Turzai thinks they can even beat the 90-day deadline.  “You have to give the electorate an opportunity – before the petition process – to know exactly where the lines are,” Turzai said after Wednesday’s meeting.

The Legislative Reapportionment Commission is comprised of all four legislative floor leaders in Harrisburg and their court-appointed chairman.  They are tasked with using the new population data to redraw Pennsylvania’s legislative map in time for the 2012 elections. 

The two Democratic members voiced concerns over precinct-level data to be used in 129 of the 9,254 voting precincts in the state.  “Right now, we’re trying to maintain the integrity of the voting precincts that have existed for 40, 50-years,” says House Minority Leader Frank Dermody (D-Allegheny).  Turzai, however, doesn’t concede that there are problems and the panel agreed to make any necessary refinements as they go. 

Good government advocates will be watching to see that every district has an equal size population, that no existing geo-political area is unnecessarily divided and that districts are compact and contiguous.  Turzai says it’s too soon to talk specifics: “Some districts have to get larger, some districts have to get smaller and as a result there may be some shifts within the state.  Those are decisions that the commission’s going to have to address.” 

Once the preliminary map is ready, there will be a 30-day window for public comment.  Then, the commission will have another 30-days to adopt a final redistricting plan.