Poll finds 66 percent favor privatizing liquor stores

HARRISBURG -- A new poll shows that two-thirds of Pennsylvania voters would support privatizing the state-owned liquor stores as a way to erase or reduce a hefty deficit that's projected for the next state budget.

According to a Quinnipiac University poll released Wednesday, 66 percent of the 1,584 people surveyed from Dec. 6 to 13 favor dismantling the state's long-held system for selling liquor and wine and turning the stores over to private enterprise in order to ease state financial woes.

Only 26 percent opposed the idea of selling the state's liquor stores to help balance the state budget, said Peter A. Brown, a Quinnipiac poll official. In Allegheny County the margin was even wider, with 69 percent supporting privatization and 22 percent opposed, and the rest undecided. The poll has a margin of error of plus or minus 2.5 percentage points.

The poll assumes that the state faces a major budget deficit for the fiscal year that begins July 1, but almost no one doubts that. A deficit is due to the ongoing economic slowdown, rising state costs for pensions and other things, and a loss of federal funds. Most estimates for fiscal 2011-12 put the red ink in the range of $3 billion to $5 billion.

In the poll, 60 percent of respondents called the state budget problems "very serious," with another 33 percent calling them "somewhat serious."

Most officials see only three options -- raising taxes, cutting spending or turning state assets over to private hands. Not surprisingly, poll respondents strongly disliked the idea of raising taxes, by a 65 to 32 percent margin.

Also, Gov.-elect Tom Corbett, who takes office Jan. 18, has said he's opposed to raising taxes or fees. So legislators have only two real options -- reducing or eliminating state programs (and laying off workers), or selling or leasing state-owned assets, such as the wine and spirits stores, the Pennsylvania Turnpike or state parks, to private operators.

Mr. Corbett supports the idea of privatizing the state Liquor Control Board, even though efforts by previous GOP governors -- Dick Thornburgh in the 1980s and Tom Ridge in the 1990s -- failed.

"Pennsylvania consumers have always favored privatization of the LCB, and this poll demonstrates that again," said Corbett spokesman Kevin Harley. "What's been lacking is the political will to sell the liquor stores. But now the atmosphere has changed, and we're facing the most dire economic times, much worse than under Govs. Thornburgh or Ridge.

"But it still won't be easy. It will be politically challenging. There are vested interests seeking to keep the status quo."

While poll respondents opposed higher taxes, they said, by 51 to 41 percent, that they're "OK with laying off state workers to reduce the red ink," Mr. Brown said. The poll did not, however, ask which specific state programs should be eliminated or reduced.

On another matter, the Quinnipiac poll also asked respondents about the idea of leasing the turnpike -- but they opposed that idea, by a 52 to 36 margin.

"Pennsylvanians do not appear to be ideological on the issue of privatizing state assets," Mr. Brown said. "They support selling the liquor stores, while they oppose leasing the turnpike. They apparently want the state in the driving business but not the drinking business."

The poll didn't ask voters specifically why they opposed leasing the turnpike. Gov. Ed Rendell tried unsuccessfully to do that in 2007, but legislators refused, in part due to fears of hefty toll increases by a private operator. Also, the turnpike system has historically been a patronage haven for relatives and friends of legislators.

The state LCB, which has 620 retail stores for selling liquor and wine, plus a wholesale operation that supplies the stores, has about 3,000 unionized clerks and other workers, plus several hundred nonunion workers. The state-run system has existed since Prohibition ended in 1933.

Wendell Young, president of the clerks union, United Food and Commercial Workers, blasted the idea of selling the liquor stores, saying it's based on inaccurate financial projections from new House Majority Leader Mike Turzai, R-Bradford Woods.

Mr. Turzai, a longtime backer of privatizing liquor operations, has estimated that the state could get a one-time payment of at least $2 billion (and maybe as much as $6 billion) from selling licenses for 750 retail stores (the current stores plus 130 new ones) and about 100 wholesale liquor licenses.

Mr. Young contended that Mr. Turzai's projection of $2 billion or more was much too optimistic and inaccurate, adding, "I think he pulled those numbers from thin air."

Mr. Young said each license would have to sell for more than $2 million in order to raise the kind of revenue Mr. Turzai projected. A potential retailer in a small town in the state wouldn't pay such an inflated price for a liquor sale license, he contended.

"In small towns no one would pay more than $50,000 for a license," he argued. He said retail liquor store licenses in New Jersey vary in price from $50,000 to $250,000, depending on the population of an area.

Mr. Young also said that when Mr. Ridge tried to privatize the liquor stores in 1997, he thought he could generate $1 billion. But Mr. Young said the accountants then being used by Mr. Ridge later lowered that estimate to $300 million.

The LCB now turns over about $500 million a year to the state budget, which would be lost if the system is privatized, Mr. Young also argued. That loss could force the Legislature to raise other taxes to make up for it, he added.

He also said that "binge drinking by teens" and driving-while-intoxicated offenses could rise if liquor is sold by private enterprise and the number of stores is increased.

Mr. Turzai said New Jersey has about 2,000 retail liquor stores, so the price of each license would be less than what could be charged in Pennsylvania. He said the state would set a minimum price and then the licenses would be auctioned to the highest bidder.

He said the vast majority of the revenue the LCB turns over to the state budget is from the Johnstown flood tax and sales tax on liquor, which would still be generated if the LCB was disbanded.

He said he thinks his $2 billion estimate is "conservative" and said selling the system is preferable to raising taxes. He said a bill to sell the liquor stores will be introduced sometime in 2011 but wouldn't be more specific.

First published on December 16, 2010 at 12:00 am