Pa. Liquor Stores Post Record-High Profit

By Melissa Daniels | PA Independent

HARRISBURG — Gov. Tom Corbett and a swath of Republican lawmakers may still try to shutter Pennsylvania’s state-owned liquor stores, but the Pennsylvania Liquor Control Board reports its retail operation is doing better than ever.

That’s a record high, and $24.9 million, or 24 percent more, than the system earned the previous year. The increase was due in part to a 6 percent increase in wine sales, and a 3.7 percent increase in spirit sales.

Overall, PLCB stores earned nearly $2.2 billion in revenue in 2012-13.Most of that, about $1.2 billion, went towards purchasing wine and spirits to keep stores stocked.

A 15-year high of $512 million went back to the state’s General Fund in one way or another, including $311 million from the liquor tax and $121 million in state sales tax.

PLCB also made a $80 million transfer to the General Fund. Each year, PLCB and the Office of the Budget negotiate that number, according to PLCB spokeswoman Stacy Kriedeman. In the past, it’s been as high as $150 million, but the transfer has lowered to $80 million the last two fiscal years.

PLCB transfers are also made to the Pennsylvania State Police and the Department of Drug and Alcohol Programs.

Though keeping the state in the liquor business means such transfers will continue, some accuse the PLCB of cloaking its numbers and not telling the full story behind its finances.

Following PLCB’s release of its numbers, the pro-privatization, free-market think tank Commonwealth Foundation issued a press release calling these figures the “same stunt the PLCB pulled last year,” by failing to mention negative net assets. At the end of the 2011-12 fiscal year, the foundation pointed out, PLCB had $9.8 million in negative net assets. And they pointed out tax revenue would go to the general fund regardless of who owned the stores.

“The PLCB wants you to believe that without them ‘record revenue’ dries up,” the released continued. “But in 2011-2012, more than 80 percent of the PLCB’s $500 million in ‘profits’ was generated from taxes.  Privately-owned liquor stores would produce the same revenue or more, as private companies pay additional taxes and licensing fees.”

Supporters of the state store system, like those Democrat lawmakers who took a unified stand against privatization proposals earlier this year, were quick to jump on the news.

House Minority Leader Frank Dermody, D-Allegheny, said state-owned liquor stores are a “resounding success story” for Pennsylvania taxpayers.

Sen. Jim Ferlo, D-Allegheny, one of the more vocal opponents of privatization in the higher chamber, is the prime sponsor for Senate Bill 800 to “modernize” the state store system. That would involve changing PLCB’s rules for pricing, hiring and contract procurement, aimed at helping the agency earn more money each year.

To Ferlo, the agency’s returns are reason enough to avoid privatization.

“The liquor privatization issue is far from settled in Harrisburg,” Ferlo said in a statement following PLCB’s announcement. “I hope that my fellow lawmakers will see today’s news from the LCB, recognize its success, and do whatever necessary to safeguard this vital public asset.”