Legislation privatizing the Commonwealths liquor stores will be introduced on Monday, according to a memo from Representative Mike Turzai who co-sponsored the legislation.
Gov. Tom Corbett’s plan to privatize the entire liquor retail and wholesale system has been branded as a way to fund a four year $1 billion grant to schools in Pennsylvania that comes with the added convenience of purchasing six packs of bottled beer and wine where you buy groceries.
And it comes with a price.
House Bill 790 would allow grocery stores to sell six-packs of beer and up to six bottles of wine at a time to a single purchasers for an initial and annual renewal fee of $25,000; grocery stores with annual sales in excess of $2 million will have to pay an initial and annual fee of $30,000.
Convenience stores would be able to sell one six-pack of beer for an initial and annual fee of $10,000.
Big-box retail stores would be able to sell beer by the case and up to six bottles of wine for an initial and annual fee of $35,000.
Pharmacies would be able to sell two six-packs of beer and up to six bottles of wine for an initial and annual fee of $17,500.
On top of these changes beer distributors would be able to sell “unlimited quantities of wine for consumption” and “the ability to break the case of beer and sell down to a minimum 42 ounces” the memorandum says.
Paul Mangione, president of Crescent Beer Distributor Inc., said he is speculative of the proposal until all the language of the bill has been fleshed out.
“They’re going to open up the amount of outlets and everything else to make it more accessible; is that something we really need?,” he said.
As a distributor Mangione provides to local bars and restaurants and if the bill is passed he could add drug stores and other locations to his list.
“It’s kind of putting a lot of burden on the existing system and could potentially drive a lot of these places (local bars that rely on package sales for a significant portion of their income) out of business.”
Mangione also said he’d like to see the Governor’s proposal compared to one sponsored by Sen. Charles McIlhenney that would keep the state stores open while allowing beer retailers to buy special licenses to sell wine and liquor.
The proceeds from the Governors plan could bring an additional $3,690,635 to the Warren County School District over a four-year window, according to a Feb. 12 release from the Governors office detailing the Passport for Learning Block Grant program. The program proposes using an estimated $1 billion in proceeds from the sale of the state’s liquor system and would be divided among the Commonwealths school districts.
“Let’s get Pennsylvania out of this outdated system of selling alcohol once and for all, and re-invest the proceeds into Pennsylvania’s future – our children,” Corbett said last month at a conference with legislators, educators and business leaders. “Selling liquor is not a core function of government; education is.”
That promise to fund education across the state with proceeds from liquor privatization won’t restore the $1 billion in education cuts made since Gov. Corbett has been in office, Warren County Education Association President Claudia Solinko said.
“For one thing, he’s trying to plan an education budget with money that doesn’t even exist – for the last 30 years, every plot to sell the liquor stores had failed. Even if he sold the liquor stores, it’s one-time funding – the very same thing that he blames for the education shortfall,” she said.
Solinko said the Center for Disease Control and Prevention advises that privatizing and expanding liquor stores and alcohol availability into communities results in higher rates of alcohol abuse, higher rates of underage drinking and increases a range of social problems from domestic abuse to drunk driving fatalities.
“Bottom line: our schools and our students are the foundation of our communities, our economy, and our society. If education is a priority, we shouldn’t have to rely on a liquor store on every corner to properly fund our schools,” she said.
Warren County School District officials have declined to comment on the proposal.
Malt Beverage Distributors Association of Pennsylvania President Mark Tanczos said in a recent editorial the move to privatize will likely result in the closure of 1,200 small family-owned beer distributors.
“We operate these family businesses in a niche market that sells beer by the case, with 80 percent of the beer being served by 1,200 distributors. Those of us who are in this business got there by borrowing and investing. Corbett’s plan collapses this “niche” market by adding 6,200 new sellers. Diluting the market would result in the closure of our businesses and put more than 10,000 employees out of work,” Tanczos.
Consumers should be worried about increased prices passed onto them by retail establishments who pay the new merchant fee, Tanczos said.
“As alcohol prices in Pennsylvania increase, so will border bleed. Consumers will travel out of state to take advantage of the lower prices of alcohol – and the lower taxes – in neighboring states,” he said.
That short drive to the New York border to buy alcohol is already happening, Mangione said.
“All you have to do is go to Wegmans or Sams Club on any given weekend and you see people from Pennsylvania shopping,” Mangione said. “It’s a convenience factor.”