Pennsylvania: $100M in revenue boosters in Pa. Liquor Control Board’s sights

Source: Tribune

BY KARI ANDREN 

Feb. 25, 2016

State lawmakers grilled officials from the Pennsylvania Liquor Control Board on Thursday about how much more money could be wrung from the state-owned liquor system, while largely faulting themselves for not enacting laws to do so.

LCB Chairman Tim Holden told the House Appropriations Committee the agency will turn over $100 million to the state this year in addition to the taxes it collects. He said the LCB could generate another $100 million annually if changes were made to the agency’s operations, including:

. Expanding Sunday sales.

. Selling lottery tickets in 320 state stores.

. Increasing license fees, which haven’t risen in about 30 years.

. Giving the agency more flexibility in buying products and setting prices.

. Offering store coupons or a customer loyalty program.

“It really doesn’t make sense to be closed on the second-busiest shopping day,” Holden said about Sunday sales.

Opening more stores on Sunday and for longer hours could increase revenue by about $15 million annually, he testified.

By law, the LCB can open only 25 percent of its about 600 state stores on Sundays, and hours are limited to noon to 5 p.m.

The LCB’s proposals aren’t new; the agency has been pleading for so-called modernization for years. Lawmakers typically have been unwilling to enact piecemeal changes while debating fully privatizing the system.

“The changes that will create more revenue and convenience … those changes aren’t within the purview of the board. They’re here in the legislature,” said Rep. Joe Markosek of Monroeville, the committee’s ranking Democrat. “We have left a lot of money on the table. If we are not going to privatize – and that’s been an extremely elusive item – then let’s do the next best thing. Let’s modernize the system.”

Appropriations Chairman Bill Adolph, R-Delaware County, called the state’s alcohol system, one of only two in the nation in which the state fully owns the wholesale and retail sale of wine and spirits, archaic.

“We’re all to blame. We need changes,” Adolph said. “This is certainly (like) Groundhog Day to me.”

He told Holden, board member Michael Negra and LCB Executive Director John Metzger they aren’t at fault for the lack of changes.

“Employees of the LCB are not to blame,” Adolph said. “We (lawmakers and Gov. Tom Wolf) have to get together and develop a system that sells assets, that can become more valuable and improve our system.”

LCB officials rebuffed lawmakers’ efforts to engage in debate or speculation about privatizing the system.

“If we’re making a profit out of a state-run agency, I don’t see the sense of privatizing it,” said Rep. Leslie Acosta, D-Philadelphia. “I know you don’t want to go there.”

House lawmakers have approved measures to privatize the state store system, but the Senate hasn’t agreed to those proposals, so the issue hasn’t made it to the governor’s desk.

Wolf proposed leasing the wholesale and retail operations of the LCB last fall as part of a working state budget compromise that never came to fruition, said Jeff Sheridan, spokesman for Wolf.

He said Wolf believes the LCB is “an underperforming asset.”

As part of the 2016-17 state budget, Wolf proposed creating a bipartisan working group to look at maximizing the profitability of the LCB and to assess the various proposals before the legislature, Sheridan said.

“The governor will work to make strides in increasing customer convenience and revenue to the Commonwealth,” Sheridan said.