House Majority Leader Mike Turzai and numerous other legislators want to sell the state Wine & Spirit stores in an attempt ot fill the budget gap. They “claim” they can raise $2 billion by using outdated figures arrived through bad math and bad intentions. The stores bring in over $513 Million in annual revenue. Over 4,500 family-sustaining jobs would be lost should the privatization scheme prove successful.
Facts & Talking Points
Societal Impact Studies: How privatized stores hurt communities
Privatization is Expensive Solution
Pennsylvania Liquor Control Board (PLCB) Fact Sheet
Plan to privatize stores doesn’t add up, critics say
BILL O ’ BOYLE boboyle@timesleader.com
from The Times Leader, January 28, 2011
WILKES-BARRE – John Chernesky of Kingston is a retired state store worker who opposes privatizing the liquor system and says House Majority Leader Mike Turzai’s math doesn’t work.
The Pittsburgh lawmaker’s prediction that $2 billion can be raised by divesting “is a myth,” Chernesky said. “That equates to selling each liquor store license for $2.5 million or more. In New Jersey, the average liquor store license goes for $250,000.”
“Plus it would mean the loss of more than 5,000 jobs in an already fragile economy,” he said. “The LCB doesn’t cost taxpayers anything; it’s the only state agency that is self-sufficient.”
Chernesky worked 25 years in the state liquor store system and served another 10 as a business agent for unionized workers. He said state stores generate all the revenue to pay salaries, benefits, rent, overhead, administrative costs and product.
“The state stores were good to me,” Chernesky said. “I made a nice middle-class income and sent two kids to college. It provided me a good life with benefits, health care and retirement.”
But, Kevin Harley, Gov. Tom Corbett’s press secretary, said many of the state store workers will find jobs with the new license holders if the sale is ever completed.
“We might look at including a condition in the legislation that the private sector entities hire a certain percentage of the affected employees,” Harley said. “Many of those workers have considerable expertise in wines and liquors and would be valuable assets to private owners.”
Harley also said some of the workers could pool their resources and purchase a license.
Wendell Young, president of the United Food and Commercial Workers Union, Local 1776 in Plymouth Meeting, represents the state store workers. He has served as head of the bargaining committee for contract negotiations. Young also opposes the privatization idea.
“I think it’s a bad idea; a risky scheme,” Young said. “If Rep. Turzai had taken the time to do his homework, he probably wouldn’t be proposing it.”
Young said Turzai’s proposal is similar to others offered in the past in the Legislature. He said there isn’t much difference.
“It didn’t add up then, and it doesn’t add up now,” he said.
Young, like Chernesky, said $2 billion is not a realistic expectation for the sale. He said there are 620 state liquor stores in operation right now. He said Turzai’s plan would call for the sale of 750 retail liquor licenses and 100 wholesale licenses.
“But nowhere in the country does anyone pay $2.5 million for a license,” Young said. “It’s nonsense.”
Young bristled when told that Turzai has proposed a study be done to determine a realistic expectation of how much the state would receive from the sale.
“Turzai has everybody whipped up into a frenzy and 5,000 people may be out of a job, and a study hasn’t been done yet?” he said. “That’s just too hard to believe.”
Young said he doesn’t think many of the state store employees would be hired by private owners, and certainly not at the same pay scale. He said that in West Virginia, when that state privatized its liquor system, 75 percent of the licenses were purchased by drug stores and convenience stores.
The other 25 percent, Young said, were sold to big-box retail chain stores and grocery chains.
“I would expect the same to happen in Pennsylvania,” Young said. “None of those stores in West Virginia hired any more employees; they just reallocated shelf space. The same person who rings up your gas and bags your milk would sell the alcohol.”
“As everyone learns the truth, it will be hard for any legislator to support Turzai’s risky scheme,” he said.
