Radio PA Roundtable – February 21, 2014

On this week’s Radio PA Roundtable, we bring you more from the state budget hearings in Harrisburg, checking in with the PLCB, the State System of Higher Education and the Department of Environmental Protection.

Radio PA Roundtable is a 30-minute program featuring in-depth reporting, commentary and analysis on the top news stories of the week.

Click the audio player below to hear the full broadcast:

Gov’s Office Releases Liquor Privatization Study

The long-awaited and near 300-page analysis from the PFM Group concludes that privatization would improve the current liquor sales system and benefit Pennsylvanians financially.  PFM says it’s possible to structure a fiscally neutral system, while delivering an upfront windfall of $1.1-billion to $1.6-billion.  That’s a small number to privatization critics.  “It’s going to cost thousands of jobs in Pennsylvania,” says Bill Patton, spokesman for House Democratic Leader Frank Dermody (D-Allegheny).  “It does not raise the kind of money that its proponents claim.” 

Money isn’t Governor Tom Corbett’s biggest gripe with Pennsylvania being one of only two states that control all aspects of the wholesale and retail distribution of wine and liquor.  “I don’t care how much it is, we need to get out of the business completely,” Corbett said on Radio PA’s monthly Ask the Governor program.  Corbett also expressed dismay with the Pennsylvania Liquor Control Board’s ubiquitous advertising campaigns.  “The LCB controls and regulates alcohol,” Corbett says.  “When we advertise, we’re encouraging people to drink more.  We shouldn’t be doing that.”   

Governor Corbett favors a privatization model that limits the number of retail outlets in PA.  Under that approach, the PFM report suggests some minor price increases based on a fiscally neutral system.  The report goes on to suggest that competition in highly-populated areas would mitigate any prices increases.  “Even if you believe that competition will drive down prices… you’d end up with only 18-counties that are winners versus 49 losers,” says UFCW Local 1776 President Wendell Young.  “In order to match the revenues we already have today, taxes are going to go up and consumers will be forced to pay more.” 

The starting point for liquor privatization talks going forward will be House Republican Leader Mike Turzai’s proposal.  Turzai stresses that PLCB expenses are growing much faster than its revenues.  Turzai says, “It is time to sell Pennsylvania’s state liquor and wine stores.”

Auditor General’s Report Critical of Wine Kiosk Program

There has been more criticism of the PLCB‘s wine kiosk program, this time from a special performance audit.   Auditor General Jack Wagner says the program does not meet the goals of greater convenience or increased profitability, or reaching under-served areas.  He says unless there are radical changes in the contract with the vendor, the LCB should terminate the contract.

Wagner says there are still 22 kiosks operating at supermarkets in Pennsylvania since Wegman’s pulled out of the program, but sales at those stores are running far below the LCB’s original projections.

Wagner the kiosks were not even open on Sunday. He adds the General Assembly needs to take the handcuffs off the LCB, permitting all of the state stores to be open seven days a week, 12 hours a day.   

Joe Conti, CEO of the Pennsylvania Liquor Control Board, says the future of the kiosk program depends on the resolution of a financial dispute with the vendor over cost reimbursement.  The vendor was declared in breach of the contract.  There is a 45 day cure period which expires September 19th.

Conti agrees with Wagner that the state stores should be able to change their hours of operation.  He says they need a legislative amendment to the liquor code to expand those hours.  He says one was adopted last session but vetoed by then-Governor Ed Rendell.  Conti says there is legislation moving again to expand the hours.

Conti called Wagner’s report very fair and balanced.  He says they will certainly review the recommendations.

Wagner’s report recommends that if the contract for the kiosks is not terminated, the LCB should explore other options for testing blood alcohol concentrations at the kiosks and be more aggressive in holding the vendor accountable for ensuring the kiosks are fully functional at all times.

It recommends the LCB work with the General Assembly to pass legislation that would allow all stores and kiosks to be open seven days a week, with state stores open from 9 a.m. until at least 9 p.m. and kiosks available from 9 a.m. until midnight if they are housed in stores open during those hours.   It also recommends the kiosk offer liquor sales as well as expand wine offerings.

The report finds the kiosks had more than 900 malfunctions before they were shut down last December for repairs.  Even after they were brought back on line in January, there were more than 100 malfunctions reported from late January into late February.

The report also finds that the LCB has spent 1.12 million dollars more than it took in over two fiscal years on the program. The board has billed the vendor for the costs, but the vendor has not paid, resulting in the breach of contract situation.