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House of Representatives
Session of 2015 - 2016 Regular Session


Posted: December 5, 2014 09:39 AM
From: Representative Gene DiGirolamo
To: All House members
Subject: Alternative to Privatization, Liquor Code Amendments

I am pleased to offer for your co-sponsorship consideration a bill to amend the Pennsylvania Liquor Code as an Alternative to Privatization. This legislation would provide greater convenience to the customer and increase the profit of the PLCB to enhance the return for the taxpayer.

In fiscal year 2013/2014 the PLCB returned over $566 million in taxes and profit as revenue for the General Fund on sales of $2.2 billion. The fiscal year financial performance net of taxes is more illustrative:

Sales Net of Taxes……………$1,786,502,000
Net Income (Profit)……………$123,683,000 a profit of 6.92%

These figures are provided by the Comptroller of the PLCB in Governor Corbett’s Office of the Budget not the PLCB.

This legislation would amend the liquor code in the following ways with measurable increases of profit as testified by the PLCB during this year’s Appropriation hearings:

Sources of Additional Revenue
  1. Remove Sunday Sales Limitation on Store Openings and Hours of Operation-current law limits the Sunday store openings to 25% of all stores and limits the hours of operation of these stores to noon to 5 PM. This legislation would remove the 25% cap and allow appropriate hours of operation for the Sunday consumer.
  2. Pricing/Customer Relations Management-current law mandates a proportional mark up on all items to the cost paid for said item. This mandate does not benefit the customer as sale prices must come from a purchase price reduction offered by the supplier. This places the PLCB at a competitive disadvantage as compared to retailers in open states and inhibits the best price available for the customer. This legislation would afford the PLCB to use best retail pricing practices to secure the very best price for the customer. Also, loyalty programs (Customer Relations Management Programs) are prohibited. This legislation would remove the statutory limitations on loyalty programs.
  3. Right-Locating Fine Wine and Good Spirits Stores – this legislation would recommend that the PLCB should look at right-locating Fine Wine and Good Spirits Stores to help enhance consumer convenience. The PLCB should look to expedite the process of re-locating stores to more convenient and consumer-heavy locations to enable Pennsylvania consumers more accessibility to these stores.
  4. Expedited Review of PLCB Leases by the Department of General Services-this legislative mandate is very important for the aforementioned “right-locating Fine Wine and Good Spirits Stores”. PLCB lease review has been intentionally slowed down by DGS from a one month review in prior administrations to over one year currently. Every lease, whether new or renewal, is subject to this unfortunate time line. Of the over 600 PLCB stores, around 250 are located in shopping centers with supermarkets or retail stores. The PLCB would like to re-locate this stores adjacent to these supermarkets and retail stores for customer convenience. This legislation would mandate a 45 day review window on all leases approved by DGS. Proper location of PLCB stores for the benefit of customer convenience would take place in several months rather then years and also would benefit the Pennsylvania developers and landlords of these properties, as mentioned in the effort to right-locate Wine and Spirits stores.
  5. Direct Shipment of Wine and Spirits-this legislation would permit Pennsylvania residents to receive shipments of wine and spirits to them in Pennsylvania and also enable the PLCB to ship out of state.
  6. Lottery Sales-this legislation would enable the PLCB to work with the Pa Lottery to place the self attended lottery machines in over 600 new outlets for the benefit of the customer and the enhanced revenue for lottery programs.
  7. Consortium Product Buying-this legislation would make clear that the PLCB may take the lead in joining some of the other 18 control states, like Michigan, Virginia, Ohio and New Hampshire, in buying product in unified fashion to help secure the very best price for the Pa consumer on the PLCB store shelf.
The fiscal impact of increased profits of these initiatives as projected at the conclusion of year one of implementation is as follows:

Additional Projected Revenue
  1. Sunday Sales………………...….….$22,500,000
  2. Pricing/CRM………………………...$75,000,000
  3. Right-Locating Stores……….....….$25,000,000
  4. Expedited Lease Review…….....…$25,000,000
  5. PLCB Out of State Shipping.…......$25,000,000
  6. Lottery Sales………………...……….$3,000,000
  7. Consortium Buying…………......…$10,000,000
This $185,500,000 in additional profit would raise the $123,683,000 of 2013/2014 to over $300,000,000 in profit after the first full year of adoption.

Please consider supporting this long overdue Pennsylvania Liquor Code amendment reform as an alternative to privatization for the benefit of the Pa customers of wine and spirits and enhanced revenue for the General Fund.

Introduced as HB228