Republicans push to privatize Pennsylvania's liquor stores after decades of state control

One of the two states in the country that still exert total government control over the booze business soon could be handing the reins of the liquor industry back to the private sector.

A Republican-backed plan to privatize Pennsylvania's 600 state-operated liquor stores won historic support this week, advancing out of the House and marking the closest the state has come to unraveling its Depression-era -- and some say antiquated -- system.

"We're actually telling our citizens that we know you're adults and you should have the ability to choose, and you should have convenience," Republican Gov. Tom Corbett, who supports the bill, said at a news conference.

Pennsylvania and Utah stand alone as the only states that control the wholesale and retail arms of the liquor business. Both would be sold under the Republican plan, which faces opposition from Democrats and union critics, who say it could cost 5,000 jobs.

Lawmakers have tried before, and failed, to privatize the industry, but on Thursday the state House approved the bill on a 105-90 vote after about seven hours of debate. No Democrats supported it.

The bill would give existing beer distributors the priority in purchasing 1,200 wine and spirits licenses. It also would allow groceries to sell wine and enshrine their current ability -- won through court rulings -- to sell takeout beer.

The bill now heads to the Senate side, where it likely will face changes, according to MyFoxPhilly.com.

Corbett and other Republican supporters argue that the state's system is outdated and that the liquor business is not a function of government. They say private businesses would improve customer service, create jobs and put an end to a Depression-era system of state control that was almost unheard of across the country. They said sales would increase in part by recapturing customers from Pennsylvania who purchase wine and liquor from other states, particularly New Jersey.

Democrats warn, though, that it would put thousands of state store employees out of work, cost more and generate less revenue than supporters predict and that it would make alcohol more widely available, bringing with it a range of social problems.

"This is not a business-friendly bill," Democratic state Rep. Margo Davidson said. "This measure has the potential to destroy small businesses and ravage communities."

Both sides said the proposal was likely to see changes in the state Senate, where the Republican leader said discussions would soon begin regarding how that chamber will respond.

Corbett said the fees from the licenses -- at least hundreds of millions, perhaps as much as $1.1 billion -- should go to improving public education.

But the bill does not dictate how the money is spent, only that it should be deposited in a special account. Legislative officials said the spending would be determined in separate, future legislation.

Democrats were skeptical of the revenue projections.

"To get to that $1.1 billion, you'd almost have to have a perfect storm," said Rep. Joe Markosek, the ranking Democrat on the Appropriations Committee. "Something far lower is far more likely to occur."

Under the bill, the state would continue to operate liquor stores in otherwise underserved markets until the number of stores dips below 100. It provides for special job placement benefits for displaced Liquor Control Board employees. State taxes, including the 18 percent Johnstown Flood Tax, would continue to be levied, and supporters noted that the private retail operators would also be contributing payroll and business taxes.

It also provides a system by which those buying licenses can finance them over four years.

The Associated Press contributed to this report.