Corbett pushes liquor privatization during Scranton stop
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#1 Feb 15, 2013
The $500 million annual tax revenue would, more or less, remain whether in state or private hands. There is some debate on how the state would replace the $103 million in annual net profit afforded by the LCB. Not much is said of the other $100 million given annually to private landlords, the state police, or various scholarship funds. But what is not even remotely guaranteed is the $1 billion windfall projected by the governor. Not even Sheetz is keen on paying the exorbitant license fees.
Here are the last four states that privatized elements of their liquor sales.
Iowa went private with retail operations of wine in 1985, and liquor in 1987.
West Virginia privatized liquor retail operations in 1991.
Both states earned less than $20 million each. Operational costs were greatly reduced, but the expected windfalls never materialized.
In 1986, Iowa earned $71.6 million. In 1987 -$43.6 million. Sales tax revenue did not return to pre-privatization levels until 2004. They chose to retain wholesale operations, because they would have lost $60-70 million/year.
In 2004, Maine earned $125 million for a 10 year lease of their wholesale operations, but since, has lost over $100 million due to revenue sharing with the wholesale distributor.
In 2011, we know that Washington’s liquor sales contributed $461 million to their general fund, roughly equal to our PLCB. When they privatized in 2012, Washington only earned $150 million for wholesale rights,$30.8 million for their existing stores, and a new liquor/wine/beer license is only $166.00. They exploded from 300 to over 1,400 stores, many open until 2:00 AM. Unit sales only increased by 8%, which strongly suggests the state was adequately served by the original 300 outlets.
Since 2011, the governor’s windfall estimate has been $1.6 billion. Today it is $1.0 billion. Ironically, the governor’s billion dollar number and the real market comparables are both deal killers.
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