State Watch

Pennsylvania Republicans pitch privatized booze

Associated Press/Orlin Wagner
A customer leaves a liquor store in Lawrence, Kan., Thursday, March 26, 2015. There are proposals to allow grocery stores to sell liquor, wine and full-strength beer, amid strong lobbying efforts on both sides of the issue.

Pennsylvania Republicans want to give voters the right to decide whether to privatize the state-run liquor industry, a measure that would dramatically overhaul one of the last remaining state-run alcohol monopolies in the nation. 

The state House Liquor Control Committee held hearings on a new proposal from state Rep. Natalie Mihalek (R) that would allow voters to decide a constitutional amendment to reshape the nearly century-old system of alcohol sales. In a December memo outlining her proposal, Mihalek said incremental steps toward liberalized alcohol sales in recent years had fallen short.

“It has been 88 years since the end of Prohibition, and it is time for the Commonwealth to modernize the sales of liquor once and for all,” Mihalek wrote.

Pennsylvania’s strict liquor laws date to the reign of Gov. Gifford Pinchot, a Republican and Progressive also known for creating the U.S. Forest Service. Pinchot, who saw alcohol as a moral sin, created the Pennsylvania Liquor Control Board in 1933 to regulate sales even as Congress rolled back Prohibition.

The legacy of those Prohibition-era laws reverberates today. There is less than one liquor store per 10,000 Pennsylvania consumers, according to the Distilled Spirits Council of the United States, the industry’s trade group. Nationally, there are more than three outlets per 10,000 consumers.

Republicans in recent years have tried to roll back the state’s monopoly. Their last effort, in 2015, ran into a roadblock when Gov. Tom Wolf (D) vetoed a bill to privatize the liquor system.

By proposing a constitutional amendment, Republicans could take the matter straight to voters and around Wolf’s veto pen.

The state-run liquor industry is a boon for Pennsylvania’s coffers. Tim Holden, the former congressman who now heads the Liquor Control Board, told legislators on Monday that his body had returned $764 million to the state general fund. 

Some Democrats cited that potential for lost revenue as a reason to oppose privatization. In a statement, state Rep. Dan Deasy (D) called the proposed amendment “a disaster in the making.” 

“It’s deceptive, and I fear it would result in even more confusion and frustration for Pennsylvanians,” Deasy said. “It’s premature because there is nothing in place to address how that privatization would work, not to mention how it would impact state revenue or the 5,000 state store workers.”

Restaurants and the Pennsylvania Chamber of Commerce broadly favor privatizing liquor laws. In testimony before the committee on Monday, the top lobbyist for the Pennsylvania Restaurant and Lodging Association said privatization would mean lower costs for both consumers and businesses.

“Pennsylvania bars and restaurants pay some of the highest costs in the country for wine and spirits,” Zak Pyzik, the group’s director of government affairs, told legislators. “This constitutional amendment would bring Pennsylvania into the 21st century and allow consumers to benefit from free-market competition.”

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