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Pennsylvania: Hard liquor – Reform efforts lack consensus as potential action on state budget nears

Pennsylvania: Hard liquor – Reform efforts lack consensus as potential action on state budget nears


Republican-led efforts to reform the state-run liquor monopoly are still short of agreement. In an effort to breathe new life into the debate, Senate Republicans have sent a proposal to Gov. Tom Wolf for review.


Source: Penn Live

Charles Thompson

December 05, 2015


While the hard task of selling a new state budget – and the new taxes needed to balance it – began in earnest at the Capitol Friday, a key Republican desire is still proving just as contentious: liquor reform.


In an effort to generate some forward momentum, Senate leaders sent to Gov. Tom Wolf Friday a new proposal that would take significant steps toward making wine and liquor available for purchase outside of the roughly 600 state-owned liquor stores.


But the bill, importantly, does not have support from House Republicans who have been championing full liquor privatization in Pennsylvania because it does not spell out a definite end to the state’s role in the business.


Meanwhile, a coalition of beer industry groups including breweries, wholesalers, distributors called Friday for a complete suspension of the current liquor debate, for fear that a rushed product tied to the overdue state budget might cause unforeseen problems for their businesses.


According to Sen. Chuck McIlhinney, R-Bucks County and chair of the Senate’s Law and Justice Committee, the new Senate plan would open the door to limited wine-to-go sales in grocery stores, restaurants and other businesses with existing ‘R’ liquor licenses.


The draft would give also beer distributors the option to seek enhanced licenses that would permit them to offer wine and other liquors as true one-stop alcohol shops.


But at present, it is not acceptable to House Republicans who have led the charge for privatization of all liquor sales in Pennsylvania.


That’s because the Senate draft does not set a definite date by which the state would end its monopoly as the sole middle-man for all liquor sold in Pennsylvania, or close the existing state-owned retail liquor stores.


Instead, it would establish a study commission to analyze future divestiture or leasing of the current wholesale and retail businesses.


Drafts of the new Senate proposal have not yet been released publicly.


But in an interview Friday, McIlhinney said an impartial, independent study is exactly what has been missing from Pennsylvania’s privatization debate thus far. “We want to do it the right way,” he said.


The commission’s final report would have to be considered by the General Assembly, but House critics argue that merely entails a fresh lawmaking effort that may or may not pass, and that could still be subject to a gubernatorial veto.


That, House Liquor Control Committee Chairman Chris Ross said, is too loose a commitment to privatization for him.


Ross, a Republican from Chester County, has argued keeping wholesale distribution of wine and alcohol under the control of the Pennsylvania Liquor Control Board would have a chilling effect on any effort to grow a private-sector wine and spirits business in Pennsylvania.


He cites the analogy of a retailer being required to buy all of his or her merchandise from the nearest Wal-Mart.


“It doesn’t make any sense at all… so the idea that we will leave in doubt going private on the wholesale side is generally unacceptable, I believe, to the House Republican caucus and it is certainly unacceptable to me,” Ross said.


Meanwhile, Democrats – who prefer to modernize the existing state-owned liquor store network – also panned the latest proposal as undermining efforts to permit the existing state stores to maximize their profits.


Wendell Young, president and chief spokesman for the union representing Pennsylvania’s liquor clerks, argued it makes no sense to start privatizing the liquor as you launch a study of privatization.


Other Democrats also complained that the Senate’s proposed study commission make-up doesn’t guarantee fair representation from all stakeholders.


As of Saturday morning there was nothing from the Wolf Administration, whose most recent proposal on liquor has been to turn the current state monopolies over to a private manager.


Wolf’s Press Secretary Jeff Sheridan confirmed the governor’s office has received a fresh liquor reform proposal from the Senate. Sheridan said Friday he could not comment on it pending completion of the governor’s review.


As long as the two Republican caucuses – the GOP holds commanding majorities in both the House and Senate – are in disagreement on liquor reform, the issue seems in danger of stalling.


That, in turn, could have a ricochet effect on other aspects of the fragile budget framework Wolf has been seeking to turn into a $30.8 billion spending package for 2015-16.


On the other hand, if privatization advances, legislative Democrats might withhold key votes on tax measures needed to balance the budget if they feel it or an unrelated public pension reform proposal are bad deals for their public-sector union allies.


With no consensus emerging, McIlhinney, who has stressed since July that there is no sense in sending Wolf another liquor reform bill that he will veto, said Friday that getting the governor’s input on the new ideas may help break the logjam.


To date, the governor – who has been wary of plans that he believes would undermine the current system’s value before a divestiture attempt – has not shown support for anything as far-reaching as the new Senate proposal.


Meanwhile the beer distributors and brewers sent a letter to lawmakers calling for postponement of all liquor discussions at a time when lawmakers are pressing to complete a budget within two weeks.


“Any changes to how beer, wine and spirits are marketed or sold will impact our entities and will pick winners and losers,” the coalition, which claims to represent businesses with tens of thousands of employees, wrote.


“We urge you not to create unintended, adverse impacts on existing Pennsylvania businesses… by rushing through a Liquor Code bill that has not been properly vetted as a complete document.”


The coalition includes Pennsylvania-based craft brewers, major companies like Anheuser Busch, and the retail distributors that sell cases and kegs across the state.


Beer distributors, in particular, are worried that as more outlets are permitted to sell more products, their traditional niche businesses will lose business to supermarkets, convenience stores and big-box retailers.