Pennsylvania’s alcohol sales system on Monday was attacked as “an anti-consumer relic born out of one man’s disdain for the consumption of alcohol” and moments later was defended as a strong profit generator.

The clashing views of the Pennsylvania Liquor Control Board system came at a legislative hearing on a new attempt to privatize liquor sales.

The privatization proposal from Republican state Rep. Natalie Mihalek of Allegheny County differs from previous ones by its use of a constitutional amendment, allowing state voters to make the final decision.

Mihalek’s “one man” reference was to former Pennsylvania Gov. Gifford Pinchot, whom Mihalek said detested alcohol and was in office when the LCB was created in 1933 as a state monopoly.

Most states now have open, nongovernment alcohol sales systems. Testifiers at the hearing said 17 states have some level of government control.

David Wojnar, senior vice president of the Distilled Spirits Council of the U.S., testified that of those, only a “handful” - including Pennsylvania - control retail sales of liquor.

Mihalek’s proposal would add to the Constitution the sentence, “The Commonwealth shall not manufacture or sell, at wholesale or retail, liquor,” and it would be effective 18 months after voter approval. Proposed constitutional amendments must be approved by the Legislature in two sessions, then be approved by state voters.

Who profits

Wendell Young IV, a longtime privatization opponent and president of United Food and Commercial Workers Local 1776, said voters would get no choice at all since the bill says nothing about what would replace the state-run system. The UFCW represents LCB workers.

Young argued privatization would diminish tax revenue to the state, send alcohol prices higher, decrease choices for consumers and leave thousands without jobs. He said it was a “waste of time” to talk about Pinchot because the LCB system has changed greatly in 80-plus years.

Young said the LCB doesn’t cost taxpayers any money and generated “pure profit” of $265 million in its most recent year.

While Walmart stores in other states sell alcohol at a 3% profit margin and Target stores at up to 4.2%, the PLCB consistently sells at a profit margin of 10% or more, according to Young.

He attributed the higher margins to the efficiency of having one entity running both the retail and wholesale system.

Heated discussion

The hearing was contentious from the start.

Democrats claimed it wasn’t properly advertised; Republican Committee Chair Rep. Carl Metzgar of Somerset County rejected those claims.

Democratic Rep. Mary Isaacson of Philadelphia said past privatization proposals involved “thousands of pages” of information, contrasting that with the two-page bill presented to lawmakers at the hearing. Her motion to postpone the hearing for two weeks was defeated.

Metzgar blamed what he described as the Democratic Wolf administration’s unwillingness to work with the Legislature for Republicans’ use of the constitutional amendment process.

Mihalek had several pointed exchanges with Young.

When she asked Young how much he spent on political ads in the last five years, Young said he would get back to her. He said any ad he ran saying Mihalek’s bill was terrible was a “representational” charge.

Mihalek responded, “OK, as far as representational charges are concerned, how much do you plan to spend against me in political ads for introducing this initiative?’

Young said, “Everything we can.”

Other views

Members of the Pennsylvania Restaurant & Lodging Association strongly support privatization, Director of Government Affairs Zak Pyzik testified.

In Pennsylvania, he said, restaurants “pay some of the highest costs in the country for wine and spirits” and think the system is “inconvenient, limited and unreliable.”

Pennsylvania Chamber of Business and Industry President and CEO Gene Barr said he was “not convinced” there would be a dropoff in tax revenue.

LCB alcohol sales increased by 13.7% in the year ended June 30 to $2.3 billion. The system operates about 600 stores, where it provides about 5,800 jobs in addition to 850 administrative jobs.

Wojnar said spirits manufacturers think Pennsylvania is “woefully underserved” with a ratio of liquor stores to population about one-third of what other states have.

Rep. Manuel Guzman of Berks County and other Democrats asked for more hearings on what Guzman called a very complex issue.

Morning Call Capitol correspondent Ford Turner can be reached at fturner@mcall.com. This content was distributed via AP.