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Sell state liquor stores, use proceeds for schools: Pennsylvania governor

By Hilary Russ

(Reuters) - Pennsylvania Governor Tom Corbett proposed a plan on Wednesday to sell off state-run retail and wholesale liquor stores, saying the privatization would generate $1 billion that would fund public education.

The Republican governor said his plan would not impact state revenues. The money it would sacrifice from liquor sales would be offset in part by increased fines and fees and heightened regulation, he said.

"My plan gets the state completely out of the liquor business," he said in a statement. "The state will no longer be a marketer of alcohol; instead, it will now focus on its role as a regulator."

The sale process would take about four years, with revenue coming in during different phases. Corbett expects the state to generate the most money, about $575 million, from wholesale licenses, he said.

Corbett's proposal could double the number of wine and spirits stores in the state, to 1,200, by authorizing the sale of as many as 600 more retail store licenses, according to the plan.

The Pennsylvania Liquor Control Board is the largest purchaser of wine and spirits in the United States. The state has an 18 percent liquor tax.

Revenue from liquor and malt beverage sales, cigarette sales and table games totaled just over $138 million in December. That brought the total for 2012 to $759 million, about $20 million, or 2.7 percent, below estimates, according to the state revenue department.

Pennsylvania and Utah are the only two states in the nation with full state control over their liquor sale systems, owning and operating retail and wholesale operations, he said.

The proposal sparked anger from organized labor.

"There is absolutely no good reason to let this governor dismantle a valuable, publicly held asset that delivers for consumers and the entire state," said Wendell Young IV, president of United Food and Commercial Workers Local 1776, in a statement. The union represents some of the workers.

In August, Corbett's office announced a new labor contract with liquor store employees that would save the state an estimated $28.5 million by freezing all wages for a year and hiking employee healthcare contributions.

The contract covers about 2,800 store clerks.

Corbett is also pushing ahead with controversial plans to privatize the state lottery, the only one in the United States that dedicates proceeds entirely to services for seniors. Other states often use their lottery revenues to fund education and other social programs.

(Editing by Philip Barbara)

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