This was a real cop-out answer Rep. Brian Sims gave Randy LoBasso on alcohol reform:
“Here is the truth of the matter,” says state Rep. Brian Sims (D-Philadelphia). “If you and I were going to sit down and rewrite our state’s constitution right now, we would never, ever put Pennsylvania in charge of selling liquor in the state. But it is so engrained in our system right now that I don’t think that selling it off for a billion dollars is going to see us recapture enough revenue in the long run to make it worthwhile.”
The amount of revenue we’re talking about is small. The PLCB contributes $105 million to the general fund every year. In the past 3 years, its operating profit was around $72 million. They’ve actually been contributing more to the budget than they are even earning.
For example, in fiscal year 2009-10, the state claims that it took $105 million in “profits” from the liquor board. This would suggest that the PLCB’s 2009-10 operations were in the black to the tune of $105 million.
It still transferred $105 million in cash to the state, but the $32.4 million difference did not come from its 2009-10 profits. That was in fact the year that PLCB’s rainy day fund went below zero.
Let’s be generous and say that their operating profits get back to $105 million. Maybe it’s just the recession.
That’s $105 million, out of a $27 billion budget. That’s a lot of money, but compared to the size of the budget it is pretty small. A politician who actually wanted to reduce barriers to entry and redesign this market in a more consumer-friendly way would have no difficulty coming up with some pay-fors. Raising the very-low beer tax a bit would probably do the trick:
What Brian Sims really means is that he just doesn’t want to do it:
“[Privatization] almost virtually eliminates an entire union,” says Sims. “More than 5,000 really quality union jobs. And I think more importantly, the revenue that we see from the sales of liquor is just simply not going to be made up with one single sale. We get four, five, six years out, and then we have a massive budget gap again. And then what do we sell off to make up for that?
“I think this is the system that we’re stuck with,” he says. “But the system has worked really well for us.”
The whole point of alcohol reform is that this separate wine and liquor sector shouldn’t exist anymore, and the job of selling alcohol should fall to the supermarkets, convenience stores and bars and restaurants. So it’s true this would mean a cut in compensation if people went from working in a state liquor store to working at Target. And you’d expect to see that happening more in low-population areas in the middle of the state, where many liquor stores operate at a loss because there’s no market.
But that’s not what would happen in Brian Sims’s own district. Since Brian Sims presides over some very nice Philadelphia neighborhoods, his district would likely see an influx of fancier niche liquor stores – stores that pay at the higher end of the retail wages scale since their workers have to be knowledgeable about wine.
Printing more tavern licenses in order to reduce the cost, which is unfortunately not on offer in the Corbett plan, would unquestionably be a net job creator in Brian Sims’s district. Giving more restaurants the ability to cross-subsidize their food with booze would give them a nice cash flow cushion, and allow them to pay workers better and take more risks with the menu.
Increasing consumer choice and lowering barriers to entry to selling alcohol would be a huge win for consumers in the bigger metros – a majority of the state’s population, and far far more people than the 5000 (at most) who would be inconvenienced by closing the state stores.
The only reason that the majority of consumers are “stuck with” this arcane alcohol market is that the politicians whose districts would actually benefit from a more competitive alcohol market, like Brian Sims, don’t want to vote for it. They’re feeling more heat from special interest group pressure than from their districts’ consumers, so they’re taking the cowardly way out. As Lincoln proved, we’re never actually “stuck” with any policy regime, no matter how entrenched it is. It’s difficult to overcome the political economy of a problem like this, but the first step is wanting to do it, and the most important thing Brian Sims is saying here is that he doesn’t want to do it. It’s too bad. If all the people whose districts would be better off would vote for the bill, it would pass easily.