HARRISBURG (February 26, 2015) – The House passed a bill on February 26 to undo the state's liquor and wine system which the House Republican leadership says will be part of the upcoming budget negotiations with Democratic Gov. Tom Wolf.
HB 466, which is nearly identical to a proposal the House approved in 2013, outlines a starting point on a top priority, said House Majority Leader Dave Reed, R-Indiana. Wolf said he would veto the bill in its current form.
House Democrats criticized the proposal during about five hours of floor remarks Thursday. It passed on a nearly party line vote, 114-87. Reps. Gene DiGirolamo, R-Bucks, Frank Farry, R-Bucks, Mark Gillen, R-Berks, and Tom Murt, R-Montgomery, joined the Democrats in opposing the bill. They also voted against the proposal in 2013.
While Democrats continued to oppose the legislation Thursday, a House Democratic spokesman on Wednesday called a debate and vote on the bill “premature” since liquor will be part of budget negotiations and Wolf is expected to propose something next week during his budget address.
Passage of the bill for a second time in as many years comes as different proposals to generate more money for the commonwealth are being floated by lawmakers as they face a $2 billion budget deficit.
HB 466, which is nearly identical to a proposal the House approved in 2013, outlines a starting point on a top priority, said House Majority Leader Dave Reed, R-Indiana. Wolf said he would veto the bill in its current form.
House Democrats criticized the proposal during about five hours of floor remarks Thursday. It passed on a nearly party line vote, 114-87. Reps. Gene DiGirolamo, R-Bucks, Frank Farry, R-Bucks, Mark Gillen, R-Berks, and Tom Murt, R-Montgomery, joined the Democrats in opposing the bill. They also voted against the proposal in 2013.
While Democrats continued to oppose the legislation Thursday, a House Democratic spokesman on Wednesday called a debate and vote on the bill “premature” since liquor will be part of budget negotiations and Wolf is expected to propose something next week during his budget address.
Passage of the bill for a second time in as many years comes as different proposals to generate more money for the commonwealth are being floated by lawmakers as they face a $2 billion budget deficit.
A Republican fiscal analysis said the proposal would generate $1.167 billion in one-time revenue through license fees: $404.6 million would come from the fees from 1,800 licenses (assuming 75 percent of the new 1,200 new wine and spirit licenses going to beer distributors, and current restaurant and hotel licensees, and 25 percent of the licenses from the 600 existing state stores); $138.2 million from 830 grocery store licenses (minimum of two per county based on 2013 census); $615.3 million from 30 wholesale licenses and fees (based on the 2013-14 PLCB costs of goods sold).
The GOP analysis assumes, in the first year after enactment, 75 percent of the 1,200 eligible wine and spirits licenses will be purchased by beer distributors and restaurant and hotel licensees, 830 grocery licenses will be purchased and 300 retail dispenser upgrade fees will be paid, adding $221.3 million in one-time revenue.
A House Democratic fiscal analysis stated “...it is reasonable to assume that the process would take at least two full years and as long as four years for the $1 billion in revenue to be realized.”
Democrats also raised concerns about the guarantee of the money, especially from sale of wholesale licenses. Their analysis said the total in one-time revenue from the wholesale licenses “assumes that all of the current brands would be purchased by the new wholesalers.”
“Some industry experts have estimated the wholesale value at approximately $325 million, which assumes potential wholesalers will purchase a limited number of lower-end brands, based on experience in other states,” the Democrats' analysis said.
Republicans pointed to declining revenues from the Pennsylvania Liquor Control Board. House Appropriations Committee Majority Chairman Bill Adolph, R-Delaware, said the agency′s projected growth in operating costs is outpacing its revenue growth.
During House floor remarks, some Republican proponents said the system is an archaic monopoly comparable to bygone statist governments.
“I remind everybody that state-run monopolies are something that are a thing of the past,” said House Liquor Control Committee Majority Chairman Chris Ross, R-Chester. “Even Russia and China have given up on the idea of a state-run monopoly, running these kinds of businesses.”
“Mr. Wolf, tear down this bureaucracy,” said Rep. Stephen Bloom, R-Cumberland, paraphrasing President Ronald Reagan’s 1987 reference to the Berlin Wall, which was torn down in 1990.
Democrats said the system should be modernized to be more efficient. “This is not a time to blow the system up,” said Rep. Curtis Thomas, D-Philadelphia. “This is a time to improve delivery of the system” so it remains “not just as a profitable asset to the commonwealth but as a real benefit to the people of Pennsylvania.”
Democrats also raised concerns about thousands of unionized employees who would lose their jobs under the proposal.
“Roughly 4,000 full- and part-time workers would lose their jobs, which would cost the state millions in workers compensation and payout costs,” said House Appropriations Committee Minority Chairman Joe Markosek, D-Allegheny.
The Democrats' fiscal analysis said the cost of unemployment compensation is “unknown.” It also says “nothing forces businesses to change their current structure or guarantees that businesses will view the price of licenses as a reasonable value.”
Reed told reporters he doesn't expect the Senate to rubber-stamp the House's proposal. The Senate Republican leadership said its top goal is to change the public pension system, although Senate President Pro Tem Joe Scarnati, R-Jefferson, earlier this week did acknowledge changes need to be made to how liquor is sold in Pennsylvania.
The GOP analysis assumes, in the first year after enactment, 75 percent of the 1,200 eligible wine and spirits licenses will be purchased by beer distributors and restaurant and hotel licensees, 830 grocery licenses will be purchased and 300 retail dispenser upgrade fees will be paid, adding $221.3 million in one-time revenue.
A House Democratic fiscal analysis stated “...it is reasonable to assume that the process would take at least two full years and as long as four years for the $1 billion in revenue to be realized.”
Democrats also raised concerns about the guarantee of the money, especially from sale of wholesale licenses. Their analysis said the total in one-time revenue from the wholesale licenses “assumes that all of the current brands would be purchased by the new wholesalers.”
“Some industry experts have estimated the wholesale value at approximately $325 million, which assumes potential wholesalers will purchase a limited number of lower-end brands, based on experience in other states,” the Democrats' analysis said.
Republicans pointed to declining revenues from the Pennsylvania Liquor Control Board. House Appropriations Committee Majority Chairman Bill Adolph, R-Delaware, said the agency′s projected growth in operating costs is outpacing its revenue growth.
During House floor remarks, some Republican proponents said the system is an archaic monopoly comparable to bygone statist governments.
“I remind everybody that state-run monopolies are something that are a thing of the past,” said House Liquor Control Committee Majority Chairman Chris Ross, R-Chester. “Even Russia and China have given up on the idea of a state-run monopoly, running these kinds of businesses.”
“Mr. Wolf, tear down this bureaucracy,” said Rep. Stephen Bloom, R-Cumberland, paraphrasing President Ronald Reagan’s 1987 reference to the Berlin Wall, which was torn down in 1990.
Democrats said the system should be modernized to be more efficient. “This is not a time to blow the system up,” said Rep. Curtis Thomas, D-Philadelphia. “This is a time to improve delivery of the system” so it remains “not just as a profitable asset to the commonwealth but as a real benefit to the people of Pennsylvania.”
Democrats also raised concerns about thousands of unionized employees who would lose their jobs under the proposal.
“Roughly 4,000 full- and part-time workers would lose their jobs, which would cost the state millions in workers compensation and payout costs,” said House Appropriations Committee Minority Chairman Joe Markosek, D-Allegheny.
The Democrats' fiscal analysis said the cost of unemployment compensation is “unknown.” It also says “nothing forces businesses to change their current structure or guarantees that businesses will view the price of licenses as a reasonable value.”
Reed told reporters he doesn't expect the Senate to rubber-stamp the House's proposal. The Senate Republican leadership said its top goal is to change the public pension system, although Senate President Pro Tem Joe Scarnati, R-Jefferson, earlier this week did acknowledge changes need to be made to how liquor is sold in Pennsylvania.
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