The Emperor’s New Liquor Stores

Act 39 flew through the House of Representatives and was signed by Governor Wolf too fast for us, and many others, to object. If we had a chance, we would have pointed out, as the IFO did soon after passage, that the estimates of new revenue from expanding wine and beer sales was way too high. And we would have added that much of the $106 million that the IFO expects will be generated by Act 39 is a one-time deal. Projections of additional sales of wine and beer at the new locations have to be weighed against the loss of sales at Wine and Spirit shops and beer distributors. 

And now, just weeks later, liquor privatizers are at again, loading up a bill to expand alcohol sales at the Democratic National Convention — as was done for the Republicans in 2000 — with a number of other proposals. One of them, a proposal to require discounts secured by the LCB to be passed on to consumers, could cost the LCB, and thus taxpayers, tens of millions. This proportional pricing requirement (which under current law is waived for the best selling wines and spirits) would undermine the LCB's ability to act like any other retailer and adjust prices to secure greater profits. And, ultimately it wouldn't even benefit consumers because it would diminish the LCB's incentive to secure better deals from its suppliers.

Another provision of the bill would reduce the fees that would be received from the casinos that secure licenses to sell wine and spirits.

These first two provisions of the law would undermine the profits of the LCB which ultimately flow to taxpayers. Additional provisions direct revenues from the sale of new licenses to the general fund instead of sending them to th ethe LCB and then onto the general fund. The purpose here is to undermine the appearance of the LCB's profitability, with the hope that this will make it easier to dismantle it in the future. 

Proponents of the legislation say, as they always do, that the aim is to benefit consumers. But proposals to modernize the state store system can do that as well. And they can do so without jeopardizing the three key reasons to sustain the system. 

The first is to regulate and discourage excessive alcohol consumption in part by managing prices. Alcohol remains by far the most dangerous drug, legal or illegal on the market. 

The second is to provide the $500 million plus in revenue that the LCB provides to the state.

And the third is to protect good-paying jobs.

All three goals would ultimately be undermined by Act 39.

It’s that third purpose, we suspect, that really motivates the privatizers. And it motivates us, their opponents, as well. Good paying, unionized public sector jobs — like the minimum wage, prevailing wage laws, and laws that protect labor organizing — help sustain good paying private sector jobs. As the middle class gets ever more squeezed in this country, this is not the time to be undermining those public sector jobs. 

It’s fine to be concerned about consumers. But we need to be even more concerned about the wages that allow people to consume. It’s high wages that create an economy in which prosperity is shared rather that concentrated at the top. And we need to be concerned about the taxpayers who will be asked to pay more as LCB contributions to the state decline. 

The emperor’s new liquor stores being pushed by the privatizers may serve consumers in some ways. But if we keep taking steps that undermine working class wages and consumption, they might not have customers for anything but expensive wines and single malt scotch. And no one except the 1% will benefit from that. 

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