Corbett Ties Liquor Privatization to School Funding

By Eric Boehm | PA Independent

HARRISBURG — Gov. Tom Corbett has unveiled a plan to privatize Pennsylvania’s monopoly liquor store system, simultaneously executing a deft political move intended to accomplish a goal of his administration while undercutting some of his loudest critics.

Read More: Pa. State Store Privatization OK with Lehigh Valley Lawmakers

In Pittsburgh, Corbett said the proceeds from selling off the state liquor stores – estimated at more than $1 billion – would be used to increase funding for basic education over the next four years. The revenue could be used to enhance school safety and security and create a grant program for school districts to use for early education, individualized learning and math, science and technology courses.

“Our plan gives consumers what they want by increasing choice and convenience, and helps to secure our future by adding $1 billion in funding toward the education of our children, without raising any taxes,” Corbett said.

By linking the issues, Corbett is doing more than just moving dollars from the revenue to the spending side of the ledger. He is likely hoping to short-circuit the opposition for liquor privatization by promising a boost to schools.

That element was missing in previous efforts by Gov. Dick Thornburgh in the 1980s, Gov. Tom Ridge in the 1990s and Corbett last year to privatize the liquor stores, said Terry Madonna, professor of political science at Franklin and Marshall College.

Ridge’s 1997 liquor plan, for example, was tied to funding for new sports stadiums, arenas and civic centers.

“This is the first time privatization has been linked to major funding for something like education,” Madonna said. “(Corbett) can leverage the political support for funding education.”

Labor unions have been the loudest opponent of the liquor store privatization plan, lead by the UFCW Local 1776, which represents about 3,000 state workers in the liquor store system.

But the labor unions are also among the loudest voices calling for more funding for education. On that front, they are led by the Pennsylvania State Education Association, or PSEA, with more than 180,000 members.

Michael Crossey, president of the PSEA, said in a statement linking privatization to $1 billion in new revenues for schools was “holding students hostage to the governor’s political agenda.”

Pennsylvania has about 620 state-owned and operated liquor stores. The privatization proposal would allow 1,200 licenses for the sale of wine and spirits.

Corbett’s plan would also allow wine and beer to be sold in supermarkets and would give beer distributors the right to sell six packs and the chance to buy a license to add wine and spirits.

However, it would keep the taxing structure in place, Corbett said, including the much-maligned 18 percent “Johnstown Flood Tax.”

Corbett said the PLCB would remain in place as an administrative and regulatory body.

“It all comes down to competition,” Corbett said. “What have we been running now for 75 years? A monopoly. We have laws against monopolies in this country, but we’re saying the state can still remain in a monopoly when it comes to selling wine and liquor.”

Linking the new education block grant to revenue from the liquor stores is a strong play by a governor criticized for his inability to make deals on major issues during his first two years in office. It may signal the turning of a corner for Corbett.

“This is a departure from the last two years. It shows his willingness to use carrots to negotiate with the Legislature on his agenda,” Madonna said.

But he still has a fight to deal with lawmakers.

Tuesday, Senate President Joe Scarnati, R-Jefferson, said he wanted to explore a series of bills authored by state Sen. Chuck McIllhinney, R-Bucks, aiming to “modernize” the existing liquor monopoly by allowing them to change pricing structures and operating hours, among other things.

Scarnati said he wanted to “put both trains on the tracks,” and also criticized the potential linking of key issues, calling it “Washington-style politics” and “hostage-taking.”

And after Corbett’s announcement Wednesday, state Sen. John Yudichak, D-Luzerne, said Corbett’s interwoven plan was a “bizarre and unhealthy attempt to tie education achievement to what can only be described as a one-time alcohol funded stimulus package.”

In a statement, the PLCB said  it would “continue to look for ways to improve convenience and ensure that we run the agency as efficiently as possible.”

Corbett made it clear Wednesday that he was not aiming for half-measures, and he’s dangled an incentive that will surely give more lawmakers a reason to support privatization.

Melissa Daniels contributed to this story.

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

— Edited by John Trump at jtrump@watchdog.org