Jun 20, 2014

Molovinsky On State Store Privatization

Local State Representative Justin Simmons has recommended selling the State Stores to meet this year's budget shortfall. Although perhaps privatizing liquor sales 95 years ago wasn't the best idea, it now is a steady revenue flow for Pennsylvania. Over the last two decades the state's retail venues have been modernized, and match or exceed private retailers elsewhere in selection. At this point in time, to sell a dependable, inflation proof, producing asset for a very short term gain, makes no business sense, what-so-ever. Although Simmons is straight party line, and wrong on this topic, at least he takes a stand. That is much more than can be said for my opponent, Julie Harhart, who only offers smiles, handshakes and birthday cards. Think independently.

photograph from Pennlive

24 comments:

Anonymous said...

Mike,

Not in your district but if I was you just lost my vote. The good people who work in the state stores are public employees/part of the state's pension problem. On a more practical basis, anyone who enjoys wine knows the selections offered are far inferior to what can be found in similar private stores in surrounding states.
Scott Armstrong

michael molovinsky said...

scott@7:21, surprised to see you as a one issue person, thought you would be more sophisticated than that, but then again, i keep forgetting what a partisan you are. i support the toblish(sp) amendment, which leaves the pensions as is, for current employees, but changes the formula to a 401 type for all future employees after the first 50k if salary. after the electric deregulation, you have more faith in this state house than i do. btw, toblish is a republican.

michael molovinsky said...

scott@7:21, according to the new district map, you're still in the 132nd by one quarter of a block. unless you're going to vote for mike schlossburg (D) you apparently won't be voting at all, because the republicans failed to field a candidate, once again.

Anonymous said...

Mike,

Calling me a partisan does not address my concerns regarding the state monopoly on liquor sales. Taxpayers should not be paying the salary, pensions, and health benefits of those involved in the liquor trade. As well, there is general agreement the state fails to provide consumers the same high level retail choices available in surrounding states where government bureaucrats are not in charge.

Scott Armstrong

michael molovinsky said...

scott@11:29, corbett also wanted to sell the turnpike to a german company, and hire an english company to run the state lottery. i don't trust harrisburg to end the liquor control board, and reduce the employees by a significant amount. we will lose a revenue stream and still have a bureaucracy.

100 Proof said...

Scott is also not looking down the road.
In the short term, the sale will create a windfall of money that will be spent to meet a budget shortfall and what is left (if any) will be wasted on other boondoggles. The amount of state employees who lose their jobs won't affect the bottom line of the pension debt much.
When the money from the sale is gone, higher taxes on booze, including the coveted "selection" of reserves for those with a sensitive palette.
What will really be lost is a guaranteed revenue stream from a state run business that isn't in the red.
That's a rarity.

Bethlehem Native said...

There are some states that run liquor stores quite well. They have a great selection, friendly staff and decent prices. New Hampshire comes to mind. Pennsylvania however, does none of those things I mentioned. I walked out of the state store on Airport Rd. a couple of years ago after standing at the register for a few minutes, bottle of tequila in hand, waiting for one of the 3 employees to be bothered to ring up my sale. No such luck. I wound up leaving, minus the tequila.
After living in states with private liquor stores, I'm left with little but contempt for PA's state store system.
My advice to those who live close to PA's borders is to buy your liquor out of state and bring it back. Yes, I am aware that practice is illegal in PA.
If you want to keep it for the revenue generator it is, then it will need to be improved. Otherwise public pressure will eventually force privatization to occur.

michael molovinsky said...

simmons and proponents of privatization claim that the state profits about $550 million from liquor annually, and they want to sell the system for $1.3 billion. most business owners want a 10X factor to justify a sale. they also estimate that the state will still realize about as much annually through various assorted license fees. now this is the same group which overestimated this year's revenue by over $1billion. their plan reminds me of jack in the beanstalk.

Unknown said...

You got this one just right Mike. You sell the milk, not the cow.

Anonymous said...

Folks,

The state can maintain current revenues or even improve on them through privatization. Sorry to break this to you.One need not be a wine snob to be frustrated with the limited/parochial selection of wines and other beverages at the stores. While I am at it, we can't PA residents purchase even basic wines at the supermarket when they purchase their other groceries?
Those defending the current system will find that position very unpopular with the vast majority of the buying public.

Scott Armstrong

Guy Williams said...

The privatizing of liquor stores sounds too familiar to the water deal in allentown. Short term big buck long term disaster.All or just urban stores need better merchandising if that is where the improvement suggests.

michael molovinsky said...

scott@4:43, i don't factor popularity in my positions. i offer myself as a pragmatic person, who evaluates each situation based on current reality, not utopia. we have an operating, profitable state system. if the selection doesn't satisfy you at 19th and allen, drive to a larger store, such as crest plaza.

Anonymous said...

Mike,

That's the problem with state run enterprises, don't like it too bad, go somewhere else. The private market can't afford to work that way and that benefits the consumer. That's real pragmatism.

Scott Armstrong

Bill Coker said...

Mr. Molovinsky,

Not sure what planet you're on but I'm 70 and even I realize it isn't 1950. State store money could be realized easily through licensing fees, liquor taxes, etc. without the expense of salaries, pensions, maintenance, utilities, etc. of state stores by privatizing. The pension and benefit expense becomes zero at some point and then it is all profit. Sales would go up through better choices of wine and liquor especially in border areas where residents wont go out of state to buy. While I agree with you on parks, change is not always bad/

Dreaming of Justice said...

As a transplant I can tell you what the biggest turn off is about buying alcohol here in Pennsylvania actually is: the abhorrently high taxes on it.

There are plenty of state run stores, if you want to whine about your wine, find a store with a better selection- they're everywhere.

michael molovinsky said...

bill@11:49, as i said at the get go, i wouldn't have advocated for a state system, the question now is do we end it? it's a steady revenue flow, which can't be said about the other flows, thus the deficit. it's effect on the pension problem is miniscule, because the state has over 73,000 other employees, and that's not including teachers. i recommended a proposed amendment directed at the pension problem. the state would still have a liquor control board bureaucracy. the state has a lousy track record implementing all it's transitions. in this case, i'd stick with the devil i know.

michael molovinsky said...

scott@8:14, you might want to speak to the electric customers, who were slammed by the deregulation with bills 200% higher than the teaser rate, which they switched into. there is too much political desperation in harrisburg this election cycle to trust that these current proposals really serve the long term interests of the residents.

Anonymous said...

You're right Mike, because of deregulation of electricity, we should keep the government in charge of liquor sales. Make that argument on the stump and see where it gets you.
By the way, remember buyer beware? Or do we need the government to hold the consumers hand and control his/her choices for their own benefit?

Scott Armstrong

michael molovinsky said...

scott@8:01, again, you're confusing me with politicians. i won't be on the usual stump. i haven't gone from high school or college straight to the state house. i don't have a party, with partisan operatives, who will argue, to the cows come home, that their candidate is correct, even if experience dictates otherwise. to answer your comment specifically, the state now must enact new regulations to protect consumers from all the electric brokers, which have deceived them. hopefully, julie harhart will debate me, rather than a party partisan.

Anonymous said...

WOW! Didn't this open a big verbal bucket of Booze...OOPS! I meant Worms!!...HA! Very interesting discourse on over regulating "free enterprise"
To paraphrase the late Speaker of the House "Tip" O'Neil
"All politics start and spread from a local level"
Thank You All...Very interesting!....PJF

michael molovinsky said...

pjf@12:45, corbett has given the state house an ultimatum for him to sign the budget, either pass tobash's pension reform amendment, or privatize the liquor. what of course is needed for the states short and long term future is pension reform. ironically, scott armstrong has written multiple op-eds stating that, but now defends a republican wanting to instead privatize the liquor. how partisan can you get? voting for pension reform is politically risky with all the state employees, teachers and union, but the tobash bill is fair. it protects current workers, and changes the rules for new ones. i would be willing to explore the liquor options after pension reform, and after the november elections.

doug_b said...

State Stores - ahh yes. I remember them fondly - before I left PA, 35 years ago.

The word dinosaur, comes to mind when I hear 'state store'. There are so many wines / liquors / craft beers - I can't imaging the State of Pa having any idea of what modern times.

The government is there for infastructure - not retail business.

michael molovinsky said...

doug@1:38, i remember when people were arrested for gambling, now the state operates a lottery, and advertises that you gotta play to win. i can relate to your libertarian preference, but both this post and myself are pragmatic.

Anonymous said...

This state makes millions off of alcohol, gambling and the prison system. They hand out sentences before you've had legal council. Everything is about money.