Privatizing State-Owned Liquor Stores Not a Simple Decision
By Rep. Gary Day (R-Berks/Lehigh)
Pennsylvania is facing a multi-billion dollar budget shortfall, and one of the proposals on the table involves privatizing the state monopoly known as the Wine and Spirits Shoppes in our Commonwealth.
When considering whether to privatize the state-owned liquor stores in Pennsylvania, many factors should be considered in order to effect a successful transition from a government-operated liquor distribution system to one driven by private sector entrepreneurs.
The first factor focuses squarely on the market and how the stores operate in terms of supply and demand. The terms “market” and “competition” are the heart and conscience of our economy and are the basis for business decisions, whether government or private industry is involved. I believe that the motivation of owning one’s own store or business is what makes people put in countless hours of production in their job. These business owners will likely be the bidders for various stores in the system.
The market will be a tremendous factor on successful privatization and should whittle down the best bidders who will be the future owners of the stores across Pennsylvania.
Another factor focuses on the thousands of state employees who currently work in these stores and who are on the front lines of both selling alcohol and ensuring that the state’s liquor laws are upheld.
If the Commonwealth decides to privatize liquor stores, the sale should be conducted as a decision where a responsible employer takes into account the concerns state store employees may have. The chief concern would include a fair process for employees to be able to exhibit their skills and knowledge of the business to future employers. This process would give employees who have invested many years into their positions a chance at continuing their careers.
Employees must understand that their value to – and compensation from – their new employer will be based on their productivity and contributions toward profitability. These factors would include things like actual labor in a retail operation and their ability to understand regulations that will be crucial to being profitable. Right now, the Pennsylvania Liquor Control Board is a paradox: it must strive to sell alcohol and meet customers’ needs while also keeping a tight rein on its sale. That is one of the key reasons why many states have abandoned their state stores and why many feel Pennsylvania’s system is outdated and ineffective.
The other factor – and one that is the major focus – is the amount of money to be gained by privatization. The Commonwealth’s budgeting process has included finding one-time windfalls as a “fix” for Harrisburg’s spending addiction. It was – and still is – wrong to deplete all reserves or Rainy Day funds, as public sector budgets need a degree of planned flexibility.
That is why I believe any one-time revenues realized from the sale of the state Wine and Spirits Shoppes should be utilized across the next four annual budgets. I know it makes this year’s budget harder, but I believe it puts our budget process and mindset back toward aligning ongoing revenues and expenses.
Finally, selling the system for the distribution, purchase and consumption of alcohol products should include a regulation package which will duplicate the safety and controls embedded in our current system. This system is one which many Pennsylvanians have grown accustomed to throughout our lifetimes. This regulation structure could be developed through “process review” activities which are common in private sector manufacturing operations, and I continue to advocate for them in all departments and bureaus of state government.
As more specific proposals are unfolding, I’m not sure how the sale of this system will look at its beginning or end. Should there be tiers of sellers to allow for large and small operators? What will be the regulation structure to inspect for compliance? Is it separate or a department of the state police? Should Pennsylvania maintain the position of purchasing wholesale and continue to leverage the buying power of the volume of consumption in the Commonwealth? Will we allow these entities to advertise freely?
As you can see, the privatization of our liquor stores is not a simple decision and it will take time to sort out the details and ensure that this public policy is done in the best interest of all Pennsylvanians. I welcome your thoughts and ideas. Please contact me at my district office at (610) 760-7082, by e-mail at email@example.com or thought my website at RepGaryDay.com.
State Representative Gary Day
187th District, Pennsylvania House of Representatives
Contact: Jennifer Keaton