HARRISBURG, PA — In passing legislation to privatize Pennsylvania’s public state-owned beer, wine and liquor industry, which is run by the Pennsylvania Liquor Control Board (PLCB) Republicans in the House and Senate were counting on the revenue such a move would bring to help balance the state’s budget next year. Gov. Wolf vetoed the Republican budget and the privatization legislation on July 2, and Republicans don’t have the votes to override the veto, so the lawmakers will continue to negotiate. But the arguments regarding privatization will remain.

Supporters of privatization say government should not be in the business of selling spirits to the public, and only one other state, Utah, has a system in which the government has a monopoly in the realm of alcohol. Supporters of the plan say more stores, privately run, will result in lower prices.

But that’s not what the Alcohol Research Group (ARG) found to have happened in the aftermath of privatization in Washington State in 2012. A study by ARG found “spirit prices increased significantly, while prices in the bordering states of Idaho and Oregon only showed small increases.” The price of smaller bottles of liquor increased about 15.5% and larger bottles increased 4.7%

The study said, “However, price changes varied greatly by store type with no increases found for liquor superstores such as Total Wine and More or wholesale stores such as Costco. The largest price increases were seen at independent liquor stores, most of which bought their licenses at auction.

“Our results confirm that replacing a government-controlled system with a private system and taxes designed to achieve the same revenues to the state at a given sales level will result in substantially higher prices to consumers on average,” said senior scientist and lead author William C. Kerr of ARG, which is a program of the Public Health Institute.

In the Pennsylvania privatization plan, taxes would be changed to insure that the state receives as much revenue from the industry as when it was a public monopoly, as was the case with Washington.

A chief concern for opponents of the plan was that the 4,500 or so workers who now, as state employees, have good benefits with a state pension plan, would suddenly find themselves without jobs or benefits. Representative Paul Costa, the Democratic chairman of the House Liquor Control Committee, said, “Gov. Wolf understood what was at stake. The hardworking men and women who operate the wine and spirits shops are our friends and neighbors, people we know. They contribute a great deal to our economy.”

Republicans said that in rejecting the privatization scheme Wolf was protecting supporters. Speaker of the House Mike Turzai said, “By vetoing this bill and denying a broad-based, bipartisan-supported measure, the governor has signaled clearly that his policies have very little to do with what the people want and everything to do with protecting a small segment of special interests.”

Turzai’s statement notwithstanding, the vote was not bipartisan in that not a single Democrat in the House or Senate voted in favor of privatization. Further, Republicans have not been able to reach an agreement on the privatization issue for the past four years, and now they’ve passed legislation even though Wolf has promised for months that he would veto it.

Wolf has said he is in favor of improving and updating the state liquor store system. He said in a statement, “Modernization of our state liquor system would provide additional revenues to the Commonwealth and save important, family-sustaining jobs. We can support and bolster consumer convenience without selling an asset and risking higher prices and less selection for consumers. I am open to options for expanding the availability of wine and beer in more locations, including supermarkets.”