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Booze Is Still Big Business for States Booze Is Still Big Business for States

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Policy

Booze Is Still Big Business for States

Don't bet on liquor-store privatization: States such as Pennsylvania are still making a lot of money off alcohol sales.

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A customer shops at a state-run liquor store in New Hope Pa. (AP Photo/Matt Rourke)

On Tuesday morning, the conservative group FreedomWorks put forward a call to action: "Are We Ready to Battle for Private Booze?" For FreedomWorks, state control over liquor sales is just another example of government overreach: "It turns out that when you get government out of a business it didn't necessarily belong in originally, people don't perish en masse."

The thing is, though, privatizing liquor in the 17 states that have a booze monopoly isn't so easy. That's in part because, as FreedomWorks notes, liquor is big, big business for some states. Just look at Pennsylvania.

 

This week, the Pennsylvania Liquor Control Board announced a record-breaking 2012-13 fiscal revenue of $2.17 billion, ending on June 30. That's a 4.5 percent increase over last year. Much of that money went to the government—with $660 million in fiscal contributions, including $512 million in sales taxes, liquor taxes, and contributions to the state's general fund. Of the revenue, only $302 million was spent on store, warehouse, and transportation costs, while $1.192 billion was spent on buying the booze itself. The overall net income was $128.4 million.

Pennsylvania Democrats have been quick to hold up these numbers to defend the state's 600-plus liquor stores. A spokesman for the state House Democrats called the new numbers "another example of a truly valuable asset setting records thanks to the hard work of state employees." A House GOP spokesman, meanwhile, called the sales numbers obvious because the state stores are "the only show in town" and "the private sector would do a better job and bring in more taxes through sales to the state coffers."

Pennsylvania's embattled Republican governor, Tom Corbett, has made liquor privatization a major focus. A bill to privatize passed the House earlier this year along partisan lines, but has so far made limited progress in the state Senate.

 

Outside of Pennsylvania, there's been some recent movement on the drive towards privatization. Alabama Republicans are looking at the issue, and a debate is heating up in Oregon. Again, there's a lot of money at stake.

Washington state privatized liquor sales effective June 1, 2012. In the four months following privatization, liquor sales were boosted by 7.9 percent in the state, despite some higher prices. That trend has continued into 2013. In Oregon, the Northwest Grocery Association, a grocery-store lobbying organization, is getting ready to help get some of that money for the state's food stores.

All of that sounds pretty promising for privatization. But then there's this: for 2011-2013, the Oregon Liquor Commission sold a record $974.8 million worth of booze, a 12 percent increase over the previous two years. With that much money on the line, change won't come easy.

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