Liqour selections

Contentious hearing on proposed privatization of liquor stores

By Victor Skinner | The central square

A selection of products inside a fine wine and spirits store in 2020. File photo.

Pennsylvania lawmakers held a contentious hearing Monday on a proposed constitutional amendment to privatize the Commonwealth liquor monopoly, including a special interest pledge to target the bill’s sponsor.

The House Liquor Control Committee hosted numerous representatives from labor and trade groups, as well as the Pennsylvania Liquor Control Board (PLCB), to testify on a proposed constitutional amendment to dissolve the Commonwealth sales monopoly, House Bill 2272 , sponsored by Rep. Natalie Mihalek, R-Pittsburgh.

The bill would insert language into the state constitution that reads: “The Commonwealth shall not manufacture or sell, wholesale or retail, liquor.”

While the PLCB and other groups, including the American Distilled Spirits Alliance and the Distilled Spirits Council of the United States, have vowed not to take a position on the legislation, others have made clear their support and opposition to the law Project.

Wendell Young IV, president of the United Food and Commercial Workers, was the most outspoken against the plan, which he said would cost the jobs of thousands of workers currently dependent on the state system.

Young pointed to statistics on income and selection in stores comparing the Pennsylvania system to the states with private liquor sales as evidence that the Commonwealth-controlled system is superior, and he specifically cited 300 million of PLCB annual profits and $24 million per year in pension liabilities as primary considerations.

Young cited estimates that pension commitments for the state-run system would cost taxpayers $24 million a year for the next 30 years, money that is covered by revenues from the current system that are expected to be replaced.

Young argued that by not providing voters with the context of the complexities of eliminating the PLCB, such as pensions and the impact on selection and pricing, “you’re not giving them a choice.”

“You don’t show them what you’re replacing it with,” he said.

Mihalek asked Young about his union’s spending on “political ads” in recent years to fight proposed changes to improve the system, prompting a tense exchange between the two.

“How much do you plan to spend against me to introduce this bill?” Mihalek asked.

“Anything we can,” Young replied.

PLCB Chairman Tim Holden stressed the agency would not take a position on HB 2272 and focused on the numbers for the current system, which generated $2.91 billion in sales and taxes the year last.

That included $185 million transferred to the general fund, $29.2 million for state police and $5.3 million for drug and alcohol programs, he said.

Holden also noted that because it is the PLCB’s mission to serve the entire Commonwealth, the agency runs “30 to 35 unprofitable stores” in rural areas to ensure access.

David Wojnar, senior vice president of the Distilled Spirits Council of the United States, and Matt Dogali, president of American Distilled Spirits, both testified about how the PLCB’s pricing practices hurt producers and consumers, but neither of the two groups took a position on HB 2272.

Both testified that the PLCB’s price controls “continue to be a big problem” by making it difficult for producers to lower prices for consumers, while the agency continued to impose out-of-stock fines that have been lifted by other states amid supply chain issues.

Under the current system, the PLCB “can keep the discount offered by the supplier” instead of lowering the price to the consumer, as expected, Dogali said.

“Through flexible pricing, the PLCB … is able to capture as much margin as possible from the supplier,” Wojnar said.

Representatives from the Pennsylvania Restaurant and Lodging Association, the Pennsylvania Food Merchants Association, and the Pennsylvania Chamber of Business and Industry all spoke in favor of HB 2272, citing numerous issues of inflexibility with the PLCB during the pandemic.

“The current system we have is not only unuser-friendly, it’s designed not to be user-friendly,” said Gene Barr, president of the Pennsylvania Chamber.

The three representatives assured the House Liquor Control Committee that the private sector was willing and able to support sales from the Commonwealth’s 600 stores, citing a history with other controlled substances like cigarettes, beer and wine.

“Monopolies don’t work, they’re inherently bad for consumers,” Barr said. “Certainly we are not going to have an economic armageddon.”

“More than 60% of Pennsylvanians support the government’s withdrawal from the liquor business,” said Zak Pyzik, director of government affairs for the Restaurant and Lodging Association.

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