Pennsylvania lawmakers held a contentious hearing Monday on a proposed constitutional amendment to privatize the commonwealth’s liquor monopoly, including a promise from one special interest to target the bill’s sponsor.
The House Liquor Control Committee hosted numerous representatives from union and trade groups, as well as the Pennsylvania Liquor Control Board (PLCB), to testify on a proposed constitutional amendment to dissolve the commonwealth’s monopoly on sales, House Bill 2272, sponsored by Rep. Natalie Mihalek, R-Pittsburgh.
The bill would insert language in the state constitution that reads: “The commonwealth shall not manufacture or sell, at wholesale or retail, liquor.”
While the PLCB and other groups, including the American Distilled Spirits Alliance and Distilled Spirits Council of the United States, vowed not to take a position on the legislation, others clearly outlined their support and opposition to the bill.
Wendell Young IV, president of the United Food and Commercial Workers, was the most outspoken against the plan, which he claimed would cost the jobs of thousands of workers who currently rely on the state system.
Young highlighted statistics on revenue and selection in stores in comparing Pennsylvania’s system to states with private liquor sales as evidence the commonwealth controlled system is superior, and he specifically cited $300 million in annual profit from the PLCB and $24 million a year in pension liabilities as prime considerations.
Young cited estimates that pension liabilities for the state-run system would cost taxpayers $24 million a year for the next 30 years, money that’s covered by revenue from the current system that would need to be replaced.
Young argued that by not providing voters with context about the complexities of eliminating the PLCB, such as the pensions and impact on selection and pricing, “you’re not giving them a choice.”
“You’re not showing them what you’re replacing it with,” he said.
Mihalek grilled Young about his union’s spending on “political ads” in recent years to fight against proposed changes to improve the system, prompting a tense exchange between the two.
“How much do you plan on spending against me for introducing this bill?” Mihalek questioned.
“Everything we can,” Young replied.
PLCB Chairman Tim Holden stressed the agency will not take a position on HB 2272 and focused on figures from the current system, which generated $2.91 billion in sales and taxes last year.
That included $185 million transferred to the general fund, $29.2 million for state police and $5.3 million for drug and alcohol programs, he said.
Holden also noted that because it is the PLCB’s mission to serve the entire commonwealth, the agency runs “30 to 35 stores that are unprofitable” in rural areas to ensure access.
David Wojnar, senior vice president of the Distilled Spirits Council of the United States, and Matt Dogali, president of American Distilled Spirits, both testified about how the PLCB’s pricing practices hurt producers and consumers, but neither group took a position on HB 2272.
Both testified the PLCB price controls “continue to be a big issue” by making it difficult for producers to lower prices for consumers, while the agency has continued to levy out of stock fines that have been waived by other states amid supply chain issues.
In the current system, the PLCB “can keep the discount offered by the supplier” instead lowering the price for the consumer, as intended, Dogali said.
“Through flexible pricing the PLCB … are able to grab as much margin as possible from the supplier,” Wojnar said.
Representatives from the Pennsylvania Restaurant and Lodging Association, Pennsylvania Food Merchants Association, and the Pennsylvania Chamber of Business and Industry all spoke in support of HB 2272, citing numerous issues with inflexibility with the PLCB during the pandemic.
“The current system we have is not only not consumer friendly, it’s designed not to be consumer friendly,” Gene Barr, president of the Pennsylvania Chamber, testified.
All three representatives assured the House Liquor Control Committee the private sector is willing and able to take over sales from the commonwealth’s 600 stores, citing a history with other controlled substances like cigarettes, beer and wine.
“Monopolies don’t work, they’re inherently bad for consumers,” Barr said. “Certainly we’re not going to have an economic armageddon.”
“More than 60% of Pennsylvanians support getting government out of the liquor business,” said Zak Pyzik, director of government affairs for the Restaurant and Lodging Association.
