Op Ed: State Stores vs. Privatization

As Budget Issues Loom, We Must Continue the Fight to Privatize State Stores

As we enter the FY2012-13 budget process, I was hopeful that our state would already be seeing revenue form the sale of the state-run liquor store system and on-going revenue from the operation of privately owned-stores.  Instead, getting the state out of the liquor business has run into the many disparate forces of Harrisburg aligned for their own parochial concerns.

With a majority of Pennsylvanians supporting it for the convenience, lower costs, and—let’s face it—common sense, passing a comprehensive liquor privatization plan should have been easy.  Unfortunately, forces afraid to relinquish monopolistic control have teamed with those afraid to give up government funding of their interests to stop this effort in its tracks.

Early on, the Liquor Control Committee worked hard to address the concerns of these forces.  And while the result of their effort—House Bill 11—technically expanded access to wine by allowing beer distributors to sell wine, it in no way freed Pennsylvanians from the bureaucracy that dictates pricing and allocation rather than letting the market decide. 

Bottom line: You still can’t buy a nice wine next to the fresh fish counter of your local supermarket.  And wasn’t that the real point – to make life more convenient for our state's residents?

What is most frustrating is that the public overwhelmingly backs privatizing this relic from Prohibition. 

A Quinnipiac University poll from June showed seven out of 10 Pennsylvanians support selling the state liquor stores.

Pennsylvania consumers living near lower-cost states like West Virginia and Delaware continue crossing the border to buy wine. In fact, a study commissioned by the LCB showed that 45 percent of residents in Philadelphia and its surrounding counties purchase some or all of their alcohol outside of Pennsylvania and brought it home, even though it is illegal to do so.  

These cross-state purchases cost the state $40 million in tax losses, and $180 million in lost sales.  Instead of losing this revenue, shouldn't we be making our state as competitive on price and convenience than those in other states?

Privatizing government-run liquor stores would generate up-front revenue for the state by auctioning off retail licenses, wholesale licenses, and the current inventory of state liquor stores. It would generate on-going revenue (like we get from the state stores now) in coming years.  And while the amount of revenue generated by these licenses would depend on the number of licenses available and the length and time of the contracts, have no doubt it would be substantial – and a significant help as our state faces looming budget issues due to a continuing lagging national economy.

Of course, trumping the dollars-and-cents argument is a simple fact: government has no business being in the liquor business.  And that’s why I will continue my effort to sell off this system. 

Pennsylvanians deserve better than to be chased over the state border like bootleggers just because they want to buy a case of wine unavailable from the monolithic state store system – or wish to buy wine at a competitive price when money is tight.

We should treat them like the adults they are.

Marc February 07, 2012 at 02:21 PM
You must be one of the three out of ten in favor of perpetuating this fraud on the public. Mr. Kampf has done a good job in summarizing the facts as most residents understand them to be. The only reason that his common sense solution to the problem is once again stalled in Harrisburg is due to the efforts of the special interests who are only concerned with their interests.
Bill February 07, 2012 at 03:17 PM
Rep.Kamp offers all of the myths associated with privatization. No, Mr. Kamp, selling the Wine and Spirits stores won't create a windfall for PA. All of the evidence shows that taxes and prices for consumers will go up; revenues to the state will go down; we'll have rat-trap stores selling booze to kids on every other corner, and people in rural areas won't have access to stores at all. Check out what's happened in other states. Higher prices, poorer selection of products, and even some counties with no stores at all. Do you really think that Walmart is going to carry the selection you find today in PA's stores? No way.
Bob Frank February 07, 2012 at 03:31 PM
Rep. Kamp, You are entitled to your own opinion but not your own facts. Are you aware that high income wine enthusiasts (like me) buy from PLCB stores precisely because the standard mark up depresses prices for higher priced items and I can find or special order just about any wine I want from anywhere in the world and have it available in a couple of days (at most) in my local store in Bryn Mawr? No, repeat NO, private store system will be able to match that level of selection and service.
Allan Snyder February 07, 2012 at 06:45 PM
No Bob, you can't buy any wine in the world from the plcb, not even close. I have to assume you really don't drink much wine, haven't ever left the police enforced monopoly of PA, and haven't actually looked at what the plcb sells vs how many wines are produced in the US. There are 70-100,000 wines commercially released in the US every year, PA has just 10,000 skus of all vintages. The selection in PA sucks, and you can buy anything in the state unless the braintrust of former state store clerks says you can.
Allan Snyder February 07, 2012 at 06:51 PM
Should be "can't buy anything in the state". Compare the stock at Total Wine to any state store, especially most of the miserable strip mall stores that I'm stuck with, or look at the whole inventory of the plcb online. No contest, Total wins. We aren't losing millions to border bleed based on a myth.


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